In early 2013, I started hearing exciting things from clients and friends about a new type of currency called Bitcoin. At the time, a Bitcoin was trading for less than $100 but it appeared to be on a sharp upward trajectory. I endeavored to learn as much as I could about this new type of asset and to find out whether it was something I should invest in or whether it was a fad, like pet rocks and Cabbage Patch dolls. And because Bitcoin was completely unregulated, I wanted to make sure I understood the legal risks of doing so.
Aside and apart from technological and security risks posed by hackers, which had begun to be widely reported, as a bankruptcy lawyer, I wanted to know how a bankruptcy court would address the potential competing claims and property interests that might be asserted with respect to crypto assets in the event a U.S. crypto exchange or a U.S. holder of crypto assets filed for bankruptcy.