Crypto Depositors Face Ownership Risks When Platforms Fail
Edited by Steinar Vigdel Kolnes, Editor, Oslo
Complex offshore structures and asset ownership terms can leave crypto platform customers as unsecured creditors in bankruptcy, according to Roshan Dharia.
Customers of centralized cryptocurrency platforms may face substantial losses if a provider collapses, with legal arrangements affecting their ability to recover deposited assets.
According to Roshan Dharia, users often give up legal ownership of their digital assets without understanding that they have done so. In bankruptcy, they can consequently be treated as unsecured creditors rather than owners seeking the return of their property.
Complicated offshore corporate structures can add to the exposure of retail depositors. When withdrawals stop and bankruptcy proceedings begin, customers may find that their legal position offers limited protection against losses.
Source: Bitcoin.com News
