Are Crypto Assets Property in Insolvency? Understanding the 420% Surge in Cases

The rapid rise of cryptocurrency and digital assets has changed the financial landscape, and now it is reshaping insolvency and bankruptcy too. Over the past five years, the number of insolvency cases involving crypto assets in the UK has grown by an astonishing 420%, according to the Insolvency Service. In response, the Service recently appointed its first dedicated crypto asset specialist to trace and recover digital assets in insolvency proceedings.

This surge reflects a new challenge for insolvency practitioners, regulators and company directors alike. As more businesses and individuals hold value in cryptocurrency, a pressing question arises: are crypto assets considered “property” in insolvency?


Two landmark UK cases, AA v Persons Unknown (2019) and Ion Science Ltd v Persons Unknown (2020), have helped establish the legal framework for answering that question. In this article, we explore how the courts have approached crypto assets, what these rulings mean in practice, and how insolvency professionals such as those at Simple Liquidation are adapting to this evolving area.

Cryptocurrency’s popularity has exploded over the last decade. From Bitcoin and Ethereum to stablecoins and tokenised assets, digital currencies have moved from speculative investments to mainstream business tools. Many UK companies now accept crypto payments, hold tokens as investments or use blockchain-based contracts.

When a company enters insolvency, the appointed liquidator must identify, recover and distribute all assets belonging to the company, including digital ones. Yet crypto presents unique challenges:

  • It is decentralised, existing outside traditional banking systems.
  • Ownership can be difficult to prove, as holdings are tied to private keys rather than names.
  • Values fluctuate dramatically, complicating asset valuations.
  • Transfers can occur instantly and anonymously across borders.

As a result, insolvency practitioners increasingly require specialist knowledge and forensic tools to trace and recover crypto holdings. The Insolvency Service’s creation of a dedicated crypto-asset role demonstrates just how important this area has become.


Crypto Assets Property in Insolvency 

Location: United Kingdom

Comments

Post a Comment

Popular posts from this blog

Role of Government in Shaping Insolvency Outcomes in the UK

Image
Insolvency is a critical aspect of any robust economic system, providing mechanisms for businesses to either restructure or close down while ensuring fair treatment for creditors and other stakeholders. In the United Kingdom, the government plays a pivotal role in shaping insolvency outcomes by designing legislation, providing oversight, and facilitating mechanisms to resolve financial distress. At Simple Liquidation, we understand the importance of government involvement in ensuring that insolvency processes remain transparent, fair, and effective. As one of the UK’s most appointed insolvency practices, we are committed to helping businesses navigate financial challenges in alignment with established regulations. Government’s Role in Insolvency Framework The UK government’s involvement in insolvency is multifaceted, encompassing regulatory, legislative, and policy-making responsibilities. Key areas of influence include: 1. Legislative Framework The foundation of insolvency proceeding...
Read more

How Does the Liquidation of 77-Year-Old Clarkebond Reflect the Changing Industry Landscape?

Image
The sudden liquidation of Clarkebond (UK) Ltd in December, just three months after its acquisition by Independent Design House Group (IDHG), has shocked many in the engineering sector. A firm with a proud 77-year legacy, its abrupt collapse raises important questions about the changing dynamics in the industry, particularly concerning mergers and acquisitions, management practices, and the impact of new ownership on established businesses. In this blog, we explore how the Clarkebond liquidation highlights broader trends in the engineering and consultancy industry and what it means for companies navigating an increasingly complex business environment. Clarkebond was once a leading engineering consultancy, trusted by clients for nearly eight decades. However, the acquisition by IDHG, a specialist in temporary works, marked a significant shift. IDHG’s leadership saw the acquisition as an opportunity to expand its footprint, increase its workforce, and diversify its services. They were opt...
Read more

Types of Bankruptcies in the United Kingdom

Image
Bankruptcy and insolvency can be daunting concepts, but understanding the different forms they take in the United Kingdom is essential for anyone facing financial challenges—whether as an individual or a business owner. UK insolvency law is designed to help manage unpayable debts and protect the interests of both debtors and creditors. While the term “bankruptcy” is often used colloquially to refer to any financial collapse, it specifically applies to individuals, while companies face liquidation, administration, or voluntary arrangements. This blog provides a comprehensive look at the main types of bankruptcies and insolvency procedures in the UK, including who they apply to, how they work, and what their consequences are. We’ll also highlight why expert guidance from professionals like Simple Liquidation is invaluable during these critical moments. Personal Bankruptcy Bankruptcy in the UK is a legal process available to individuals who are unable to repay their debts. It is typicall...
Read more