Cryptocurrency, bankruptcy, and living in Minneapolis, MN
Welcome back to our series of blog posts on the history and philosophy of the economy, bankruptcy, and debt – today let’s talk about a more current topic: cryptocurrency. This post will merely skim the surface of current cryptocurrency issues, for what it is worth.
Cryptocurrency is a digital currency that can be exchanged via a computer network. It has no physical form, and has no centralized controlling authority. The specifics of how cryptocurrency works is slightly out of scope for now, but perhaps we will return to it in the future. For now, it’s worth noting that cryptocurrency eliminates the need for banks and that many securities regulations do not apply. The first cryptocurrency was Bitcoin, released in 2009, but there are many different crypto currencies, such as Dogecoin, Etherium, and Tether (among almost 9000 others).
For now, let’s focus on how cryptocurrency might affect a bankruptcy. It is an asset, treated similarly as standard financial investments such as stocks or bonds. Therefore, it must be protected by exemptions, which can be limited based on an individual’s circumstances, such as owning a home.
It is also worth noting that fraud in cryptocurrency transactions is becoming more and more prevalent. There are many different scams and they are increasing in complexity as time goes on. For example, a scammer might purport to offer investment advice, steering a potential mark to take loans and invest in certain cryptocurrency assets. Then, the scammer might empty the wallet and disappear, or hold the funds for ransom. The newer scams are even more sophisticated – such as coins embedded with programs which can empty your wallet into another, simply by being dropped into the wallet. Losses like these are a fine reason to reach out about filing bankruptcy.
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We will continue our discussion of cryptocurrency next time. If you are interested in the history and philosophy of the economy, bankruptcy, and debt, stay tuned for my blog posts. And, if you are thinking about filing, reach out to us at www.lifebacklaw.com.
