How Will Bankruptcy Courts Measure Customer Crypto Claims?

In the wake of the industry's recent significant bankruptcy filings, crypto watchers are focusing for the first time on which crypto-entities are eligible for chapter 11 relief under the U.S. Bankruptcy Code (the "Bankruptcy Code") and, if so, whether, and under what circumstances, crypto-assets held by the debtor may become property of the debtor's "estate." As previously posted, if a customer's crypto-assets are deemed part of the debtor's estate, the customer may be treated as a general unsecured creditor and, thus, potentially stand to lose some or all of the value of the crypto-assets held by the Debtor. Conversely, if the customer's crypto-assets are not held to be part of the debtor's estate, such assets would not be available for distribution to the debtor's other creditors.