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Over the past few years, U.S. regulatory agencies have significantly increased their exertion of authority to regulate virtual currencies as well as their enforcement efforts over cryptocurrency transactions. This is not surprising given the potential for and actual abuse of the cryptocurrency markets, as well as the volatility of such markets. Cryptocurrency values have experienced significant volatility over the past year, the prime example being Bitcoin, which saw its highest value ever of $20,089 on Dec.
Bitcoin’s rise in popularity has disrupted many areas of commercial law. Agencies and industries have spent the last few years trying to classify cryptocurrencies using current formalities, which has proven difficult given the unique characteristics of cryptocurrencies[1] and the growing distinction between coins and tokens. Classification under the Uniform Commercial Code (UCC) is no different.
In the past several weeks, we have seen an uptick in crypto-related insolvencies; most recently Giga Watt, a Bitcoin-mining firm, filed for chapter 11 relief in the Eastern District of Washington. Often, the questions arising out of a crypto-related bankruptcy revolve around the value of Bitcoin or other cryptocurrency. However, while cryptocurrency is certainly how blockchain technology was first deployed, it is by no means its only utility.
Value is everything in bankruptcy: finding (or creating) it, preserving it, maximizing it, and ultimately allocating it in accordance with statutory priorities among many (and often competing) constituencies. Value can exist in many forms, including in the form of new technologies that have produced “cryptocurrencies.”[1]
On April 9, 2018, Hon. Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved third-party releases of nondebtor affiliate guarantors in a chapter 15 proceeding, even though not all of the parties bound by the releases had voted in favor of the releases.[1]
In the Second Circuit, § 109(a) of the Bankruptcy Code applies to cases brought under chapter 15, meaning that a foreign representative cannot seek recognition or any other type of relief under chapter 15 if the foreign debtor does not have a domicile, residence, place of business or property in the U.S.[1]
Recently, the U.S. Bankruptcy Court for the Southern District of New York was asked to decide whether an auditor was required to provide its work papers to a foreign representative who sought to compel such production pursuant to certain provisions of the Bankruptcy Code and the Bankruptcy Rules, including Bankruptcy Code § 1521.
