Quantifying Cryptocurrency Claims In Bankruptcy: Does The Dollar Still Reign Supreme?

In the past six months, four major players in the crypto space have filed for chapter 11 bankruptcy protection: Celsius Network, Voyager Digital, FTX, and BlockFi, and more may be forthcoming. Together, the debtors in these four bankruptcy cases are beholden to hundreds of thousands of creditors. The bulk of the claims in these cases are customer claims related to cryptocurrency held on the debtors' respective platforms. These customer claimants deposited or "stored" fiat currency and cryptocurrencies on the debtors' platforms. Some of these funds allegedly were commingled or rehypothecated, leaving customer accounts severely underfunded when liquidity crunches arose at the various entities. The total amount of such claims is estimated to be in the billions — that is, if these claims ultimately are measured in United States Dollars ("USD").