Racing to Zero: Legal Issues in Crypto Bankruptcies and Related Actions

At ETHDenver 2023, on the Decentralized Finance Stage, I led a fireside chat with litigator Brandon Orewyler on the wave of crypto-company failures — Celsius, Voyager, BlockFi, FTX, Genesis — and the thicket of legal questions that the collapses forced courts to answer in real time. I was then lead associate on the Celsius and Genesis Unsecured Creditors Committees at White & Case, and had just come off active work on the FTX matter.

The conversation covered the structural issues that most affected retail account-holders — whether terms-of-use language determines customer-property versus estate-property treatment, how bankruptcy courts valued BTC and ETH when prices moved faster than motion practice, and the growing overlap between bankruptcy proceedings and SEC/CFTC positions on token classification. We closed on the practical question for the DeFi builders in the audience: what operational choices now reduce the bankruptcy risk of a project later — custody architecture, account segregation, and how the protocol's terms describe who holds title to user funds.