Expert explains case of cryptocurrency realization to settle debts in Russia

Discussing the prospect of foreign cryptocurrency exchanges collaborating with bankruptcy trustees is premature at this stage; however, Russia has already had a precedent of the debtor’s digital assets being realized. This was said to ForkLog by Pavel Zamalaev, founder of the project #банкротствопочестному.

He noted that at present in Russia there are four bankruptcy cases in which digital assets are involved to some extent.

Moreover, in only in one case did the insolvency practitioner manage to realize the cryptocurrency.

According to case materials, in 2022 the insolvency practitioner obtained access to the digital assets through negotiations with the debtor and secured a restriction on the debtor’s travel outside the Russian Federation.

“Probably, the debtor’s willingness to cooperate was influenced by the low price of the coins — 72,896 Dagcoin were ultimately realized for 21,000 rubles 50 kopecks,” noted Zamalaev.

In other cases, court orders to compel debtors to provide information about digital assets or access to crypto wallets have remained unexecuted.

According to the expert, the readiness of several Bitcoin exchanges to share information with bankruptcy trustees, announced by Sberbank, remains at an early stage.

“I suppose that responses may have been obtained for individual requests. But, at least for now, this has not led to the ability to identify specific coins, nor to enforcement against them,” explained Zamalaev.

BitOK analysts agree with him — the readiness of platforms to interact with banks does not yet imply that data has been transferred.

“Such cases are rare; typically debtors use non-custodial wallets and P2P exchanges.”

Earlier, Evgeny Akimov, head of the Enforcement and Bankruptcy Department of Sberbank, said that their side has established cooperation with the Dubai exchange Bybit, European Bitstamp, Singaporean Bitrue, American Gate.io and OKX, registered on the Seychelles. Allegedly, the platforms already report to the trustees about the existence of crypto wallets and their addresses for their clients.