This past Monday, during the ruling at a Russian arbitration court of appeals, has defined cryptocurrency as a property with value. However, another court in Russia had already made a verdict concerning cryptocurrencies, setting aside the previous decision taken. With all these rulings, Russia does not even have a legal framework for cryptocurrencies.
One local news outlet reported that The Ninth Arbitration Court of Appeals ruled on Monday that a bankrupt person’s cryptocurrency must be included in the debtor’s bankruptcy estate. One example of this is a recent case of a Russian Ilya Tsarkov who filed for bankruptcy in October of last year. After filing, the court gave the order to transfer his cryptocurrencies to the trustee, Alexei Leonov. Alexei Leonov will be given the private key to the crypto wallet belonging to Tsarkov.
As stated by a media outlet called Vedomosti, Tsarkov owns almost 0.2 bitcoin which is worth approximately $1,885 at the current market rates. Ris Novosti stated that the cryptocurrency was first recognized as property in Russia. However, Leonov reflected on that statement and noted that: The court indirectly recognized the cryptocurrency as property and recognized its value.
Before Monday’s verdict, there was a previous hearing back in February by the Moscow Arbitration Court, which decided that Tsarkov should reveal his cryptocurrency holdings after he had disclosed to his trustee that he had a wallet at Blockchain.
Info. Leonov has asked for the court to instruct the transfer of Tsarkov’s cryptocurrencies into the bankruptcy estate, however, the court turned down his request. The court then stated that cryptocurrency cannot be used to pay creditors since the laws of the Russian Federation does not recognize cryptocurrency as property.
The Russian Legal Information Agency (RAPSI) conveyed the court’s explanation stating that: “Currently, Russian legislation does not provide the definition of cryptocurrency and there is no way to tell if it is property, information or a surrogate.. it is impossible to regulate the relations involving cryptocurrency.”
Leonov quoted the RASPI stating that: “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.” He also added that 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.