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Court Will Not Seize Crypto as Debt Payment from Bankrupt Citizen in Russia

Court Will Not Seize Crypto as Debt Payment from Bankrupt Citizen in Russia

The Moscow bankruptcy court has ruled that cryptocurrencies of a bankrupt debtor will not be seized to pay his creditors. The trustee for the case has failed to convince the judge to include the debtor’s cryptocurrencies in the bankruptcy estate.

Also read: Indians Look to Buy Bitcoin Overseas as Regulations Tighten

Court Rejects Crypto in Bankruptcy Estate

The Moscow Arbitration Court ruled this week that cryptocurrency cannot be used to pay creditors in the bankruptcy case of Russian citizen Ilya Tsarkov, who filed bankruptcy in October of last year.

Court Will Not Seize Crypto as Debt Payment from Bankrupt Citizen in RussiaInterfax reported from the courtroom that the appointed trustee for the case, Aleksey Leonov, proposed “to collect [Tsarkov’s] digital savings as a debt payment.” He claimed that cryptocurrency “is definitely an asset that can be sold,” adding that it will not contradict the country’s current legislation, the news outlet detailed, as translated by Crime Russia.

While Leonov “insisted on the inclusion of digital currency in the bankruptcy assets,” the publication elaborated that “the court noted that the laws of the Russian Federation do not recognize cryptocurrency as property.” The court therefore “refused to include cryptocurrency discovered on the accounts of insolvent Ilya Tsarkov in the bankruptcy assets,” the news outlet wrote, adding:

The court did not agree with the Leonov’s position. As they indicated in the decision, the concept of cryptocurrency is not set out in the current legislation, which does not allow to recognize digital money as property and, thus, include it in the bankruptcy assets.

Crypto Not Recognized by Russian Law

Tsarkov reportedly voluntarily disclosed having a crypto wallet with Blockchain.info, but opposed the seizure of his cryptocurrencies, citing that “Russian legislation does not consider cryptocurrency assets as property, [so] it is impossible to foreclose on them,” Interfax noted. Earlier this month, the court ordered him to disclose his cryptocurrency holdings, following the request by Leonov.

Court Will Not Seize Crypto as Debt Payment from Bankrupt Citizen in RussiaTsarkov’s representative at the court also stressed that cryptocurrency is not part of the Russian Civil Code. “The legal regime of the cryptocurrency is not given in any legal act, the cryptocurrency is information that can not be included in the bankruptcy mass,” he was quoted by Interfax.

Kommersant recently reported that the Russian Ministry of Economic Development and the Federal Financial Monitoring Service (Rosfinmonitoring) both believe that:

The lack of a statutory financial status of digital financial assets does not yet allow them to be used in bankruptcy proceedings.

What do you think of the court’s decision? Let us know in the comments section below.

Images courtesy of Shutterstock.

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arbitration, bankrupt, Bankruptcy, Bitcoin, Blockchain.info, Court, creditors, Cryptocurrencies, debtor, Digital Currency, estate, ether, Ethereum, Judge, Legislation, Moscow, N-Economy, payment, property, Regulation, Russia, russian, Trustee, Virtual Currency, Wallet
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Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.