Russian Court Acknowledges Cryptocurrency as Valuable Property
On Monday, an arbitration court of appeals in Russia acknowledged digital currencies as a property that holds significant value. Although Russia currently has no legal framework in relation to cyber coins, yet the decisions of the court overruled a previous ruling by another court.
According to the reports published by local media, on Monday The Ninth Arbitration Court of Appeals recognized that digital currency held by a bankrupt person should be included in debtor’s bankruptcy estate. The case was filed by a Russian citizen named Ilya Tsarkov who claimed bankruptcy in October 2017. As of now, the bank has ordered Tsarkov to transfer digital currencies to Alexei Leonov, the trustee. It is believed that the private key of Tsarkov’s crypto wallet will be handed to Leonov soon.
Vedomosti, a business daily published in Moscow, reported that Tsarkov holds around 0.2 bitcoin which is valued at US$1,885 at current market values.
Ris Novosti, domestic Russian-language news agency, reported, “The cryptocurrency was first recognized as property in Russia.”
On the other hand, Leonov stated, “The court indirectly recognized the cryptocurrency as property and recognized its value.”
Before Monday’s decision, the case was presented in Moscow Arbitration Court in February. When Tsarkov informed the trustee that he had a wallet in Blockchain.info, he was ordered to confess his crypto holdings.
At that time, the court rejected Leonov’s advice to release an order to transfer digital currencies held by Tsarkov into the bankruptcy estate. The court stated that digital currencies could not be a means to pay creditors as “the laws of the Russian Federation do not recognize cryptocurrency as property.”
But, this Monday the decision taken by Moscow’s Arbitration Court was overruled by the Ninth Arbitration Court of Appeals after Leonov appealed. Rapsi, Russian Legal Information Agency, came out with court’s explanation; “Currently Russian legislation does not provide the definition of cryptocurrency, and there are no requirements for its circulation. There is no way to tell if it is property, information or a ‘surrogate’…it is impossible to regulate the relations involving cryptocurrency.”
The agency informed that 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.”
He continued that the lower court did not take “modern economic realities and new information technologies” into consideration. Leonov concluded, “bad-faith parties could exploit the fact that cryptocurrencies were excluded from bankruptcy estates by converting their assets and thus rendering them inaccessible.”
Russia has no regulations regarding digital currencies which have created a state of confusion in the country. It is also being reported that the government is planning to launch a fiat digital currency that would operate beside the Russian ruble. It would be interesting to see when the government will clarify the dust as such incidents will occur in the future too. No wonder, people will lose some funds and criminal minds will try to gain advantage amidst this turbulence. It will be interesting to note where things go from here.