Crypto

According to the Insolvency Service, the number of insolvencies where crypto has been identified as an asset has increased 420% over the last five years. They also confirmed that over £500,000 in crypto assets was identified in insolvency cases over the last year – this was 364 times higher than in 2019/20.

Cryptocurrencies have a long-term role as a digital asset class, though their form and impact are still evolving and the technology underpinning them and space surrounding them are still relatively new. They have the ability to deliver fresh sources of liquidity and continuous trading opportunities. Being able to operate around the clock, and without geographical boundaries, has made them highly attractive. The march of cryptocurrencies into the financial mainstream has been accelerated by the backing of the current US administration and the gradual easing of restrictions around the globe, including in the UK.

Our experience in dealing with multi-jurisdictional cases

Utilising our strategic offshore locations, our team has been engaged on a number of high-profile cryptocurrency cases, including Atom Holdings, Emergent Fidelity Technologies Ltd (Antigua) and Eqonex Limited (Singapore, USA).

In 2023, our international lead, Luke Furler, was appointed as liquidator of AAX Asia Private Limited and AAX Singapore Private Limited by the Singapore High Court. This appointment followed Chapter 15 recognition at the US bankruptcy court for the Southern District of Florida of Foreign Main Proceedings in the Cayman Islands and Singapore as the Foreign Representatives of Atom Holdings. In July 2023, a team from Quantuma was appointed joint official liquidators (JOLs) of Atom Holdings.

Tracing and recovering misappropriated digital assets

The decentralised nature of cryptocurrency and other digital assets can enhance transactional ease, speed and confidentiality. Yet it can also increase the risk of fraud, theft and loss by enabling ‘bad actors’ to use pseudonyms, mixers and decentralised exchanges to cover their tracks.

There are however techniques that our specialist forensic investigators use to successfully trace and uncover misappropriated digital assets. In the complex world of their recovery, our investigators bring together blockchain tracers and investigative forensic accountants to trace, analyse and recover assets by uncovering complex blockchain transactions to identify fraud.

Deploying multidisciplinary teams

Close collaboration between investigation and legal teams is a critical part of a successful recovery process where digital assets have been misappropriated. We ensure that the data collected is presented in a clear and understandable format for admission to court. As investigators, we also work closely with lawyers to pursue claims and ensure the integrity of the digital evidence of the clear connections in the blockchain data that determine our conclusions.

Crypto asset regulation

Our specialist team works closely with clients and professional bodies to track and help inform regulatory developments relating to cryptocurrencies, non-fungible tokens (NFTs) and other digital asset classes. In our capacity as insolvency practitioners, a key part of our work includes collaboration with lawyers and creditors to trace digital assets and assemble supporting evidence for freezing orders and other court actions. Our support is enhanced through the use of the latest tech-enabled forensic investigation techniques.
For some insights on what developing crypto asset regulation means for clients dealing with asset recovery, restructuring and insolvency please see our article: Lifting the crypto veil

Senior specialists to support you

By deploying our multi-disciplinary team of specialists with our blend of financial advisory, restructuring, special situations and regulatory expertise, we deliver actionable results. Our approach is complemented with unrivalled experience in working with the key regulatory stakeholders to foster collaboration, ensure compliance with applicable laws, ethical standards, transparency, accountability and effective reporting.