Consumer Bankruptcy

One year ago, the value of cryptocurrencies exploded. Some invested their life savings to purchase crypto, [1] and some made lucrative, life-changing returns doing so. [2] By the summer of 2022, though, crypto had crashed. Many consumers had purchased and held their crypto using phone-based apps hosted by popular — and wildly successful — cryptoexchanges. However, as the value of crypto plummeted, so did the value of those exchanges, driving two exchanges to freeze customer accounts and file for bankruptcy soon after. What happens, then, to customers’ crypto when it is held by a bankrupt exchange? Unfortunately, there is no clear answer.

Not reaching the merits, the Ninth Circuit nonetheless vacated a BAP decision because the case became moot during the appeal.

Affirming the bankruptcy court, the Sixth Circuit BAP won’t exempt proceeds from the prepetition sale of a home, even though the proceeds were identifiable and in escrow.