Perhaps the most valuable lesson I may ever have learned in law school was when an exasperated professor cut off a long-winded student by saying “Stop thinking great thoughts and just read the contract.” A number of recent decisions in crypto bankruptcies and lawsuits illustrate a similar point — that the plain text of the contracts between platforms and users often matters far more to defining their rights than any of the policy debates or philosophizing that sometimes can occupy the FinTech community and press.

Escaping the Clutches of Bankruptcy

Bankruptcy Judge Martin Glenn’s Jan. 4 decision in In re Celsius Network, LLC, 647 B.R. 631 (Bankr. S.D.N.Y. 2023), addressed a question that has attracted a great deal of concern in the recent spate of crypto bankruptcies: When a cryptocurrency platform goes into Chapter 11 proceedings, can account holders withdraw their account balances from the platform and transfer them elsewhere? Or must those balances stay with the platform as part of its bankruptcy estate—with the account holders relegated to the often unhappy status of general unsecured creditors of the estate who will recover only a modest fraction of their claims at such time as the bankruptcy is finally concluded?

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