Issue link: https://digital.shearman.com/i/1479657
U.K. and U.S. Case Studies (cont.) 03 Cryptoassets & Insolvency 41 There was a prepetition transfer of 3,000 bitcoins, which were worth $363,861.43 at the time of the transfer but had grown over the case's pendency to reach over $2.3mm. If the bankruptcy trustee could have proven that the transfer qualified as fraudulent or preferential, the trustee would have been entitled to a recovery under section 550 of the Bankruptcy Code. However, the nature and value of that recovery depended on (i) whether bitcoin is a currency representing U.S. dollars or a commodity for purposes of the Bankruptcy Code; and (ii) what the precise nature of the recovery should be. Section 550 of the Bankruptcy Code allows a bankruptcy court to order the return of either the property or its value to the bankrupt estate. However, the Bankruptcy Code does not state when such value should be determined. The Bankruptcy Court ruled that bitcoin should be classified as intangible personal property, and consequently, the tokens were deemed an asset of the bankruptcy estate, particularly as to avoidable transfers under section 550 of the Bankruptcy Code. The parties dismissed the case before the bankruptcy court could decide all the issues presented. In re Hashfast Technologies LLC (2016) 04