News Russia: Court Rules Bitcoin Is Property In Landmark Bankruptcy Case

Russia classified cryptocurrency as property for the first time May 7 after a bankruptcy court forced a debtor to include his holdings in his personal wealth.

Moscow Court Demands Access To $1850 In BTC

As local news outlet RBC reports, the Ninth Arbitration Court of Appeal in Moscow obliged bankruptcy victim Ilya Tsarkov to disclose the contents of his Blockchain.info wallet to bankruptcy lawyer Aleksey Leonov as part of the real estate estimation process.

The move represents a first for Russia, and comes at a time when hard-and-fast laws classifying cryptocurrency are still being created.

In February, a court ruled out classifying Bitcoin holdings as property, citing a lack of official regulation – a decision the latest ruling appears to ignore.

According to RBC, Leonov’s debts total around 18 million rubles ($285,000). His Blockchain.info wallet contains 0.2 BTC ($1850).

Lawyer To Contest Decision

Despite the relatively small sums of cryptocurrency involved, the lawyer representing Tsarkov said he was preparing to challenge the decision.

“The finance manager should be working out options for asset sales and presenting them in court, but given the absence of practice in selling cryptocurrencies, the process will likely drag on, and we’ll have time to contest the ruling,” RBC quotes Genadiy Uvarkin as saying.

What appears to be an unlikely anomaly is nonetheless representative of Russia’s approach to cryptocurrency in law in previous years.

In 2017, a court in St. Petersburg banned the dissemination of information related to Bitcoin in a sudden ruling it subsequently overturned nine months later.

The legal package meant to govern aspects of status and trading of crypto is due to become law in July, but its first reading generated a considerable number of amendments from government critics.

What do you think about the Russian court’s decision? Let us know in the comments section below!

Images courtesy of Shutterstock</s>A Russian arbitration court of appeals has recognized cryptocurrency as a property with value in its ruling on Monday. This overturned a previous ruling by another court even though Russia currently has no legal framework for cryptocurrencies.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

The Ninth Arbitration Court of Appeals ruled on Monday that a bankrupt person’s cryptocurrency must be included in the debtor’s bankruptcy estate, local media reported.

The case involves Russian citizen Ilya Tsarkov who filed bankruptcy in October last year. The court has ordered his cryptocurrencies to be transferred to the trustee, Alexei Leonov, who is expected to be handed the private key to the crypto wallet belonging to Tsarkov soon. According to Vedomosti, Tsarkov owns almost 0.2 bitcoin which is worth approximately US$1,885 at current market rates.

“The cryptocurrency was first recognized as property in Russia,” Ris Novosti reported. Leonov commented that with this ruling:

Prior to Monday’s ruling, the case was heard in February by the Moscow Arbitration Court, which ordered Tsarkov to disclose his cryptocurrency holdings after he revealed to the bankruptcy trustee that he had a wallet at Blockchain.info.

Leonov requested the court to order the transfer of Tsarkov’s cryptocurrencies into the bankruptcy estate, but the court rejected his request at the time, stating that cryptocurrency cannot be used to pay creditors since “the laws of the Russian Federation do not recognize cryptocurrency as property.”

However, with Monday’s ruling, the Ninth Arbitration Court of Appeals overturned the judgment of the Moscow Arbitration Court after Leonov appealed. Russian Legal Information Agency Rapsi conveyed the court’s explanation:

Leonov cited “the position of the European Court of Human Rights on the issue of property and a bankruptcy case in Japan, where a court permitted to sell the debtor’s cryptocurrency,” the agency noted. “The lower court should have taken into account modern economic realities and new information technologies…bad-faith parties could exploit the fact that cryptocurrencies were excluded from bankruptcy estates by converting their assets and thus rendering them inaccessible,” he reportedly conveyed.

What do you think of the court’s ruling? Let us know in the comments section below.

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In a landmark bankruptcy case the Ninth Arbitration Court of Appeal in Moscow rules cryptocurrencies are property and demands access to a party's Bitcoin reserves.