Crypto Exchanges Collaborate with Russian Arbitrators in Bankruptcy Cases

Sberbank, one of Russia's largest banks, has revealed that major cryptocurrency exchanges, including OKX, Bybit, and Bitstamp, are cooperating with Russian arbitration managers in bankruptcy investigations.

According to "Vedomosti", Evgeny Akimov, head of Sberbank's enforcement and bankruptcy department, stated that Dubai-based Bybit, Bitstamp, Singaporean platform Bitrue, US-based Gate.io, and OKX are collaborating with Russian justice officials.

Akimov further explained that these exchanges are providing Russian investigators with information about clients' crypto wallets, and are even willing to share wallet address data.

Sberbank has previously encountered difficulties in recovering alternative assets, such as cryptocurrency, in bankruptcy cases. However, Akimov indicated that banks like Sberbank are now directly approaching exchanges to address this issue.

While Akimov did not specify whether these dialogues have resulted in the successful recovery of crypto assets, other Russian banks, financial experts, and legal observers have highlighted the challenges posed by the lack of crypto regulation.

VTB Bank, a competitor of Sberbank, noted that a growing number of borrowers are storing their funds in cryptocurrency, making confiscation difficult due to the unregulated nature of digital assets.

Despite being granted new crypto confiscation powers earlier this year, Russian bailiffs and prosecutors are still awaiting the implementation of many of these powers, leaving them powerless in many cases.

VTB called for the prompt establishment of new protocols for collecting cryptocurrency.

Eduard Davydov, a senior partner at the Emet Law Firm, stated that courts have approved the direct sale of cryptocurrencies on exchanges in some Russian bankruptcy cases.

Mikhail Zhuzhalov, a senior lawyer at Tomashevskaya & Partners, pointed out that seizing crypto stored in offline cold wallets is relatively straightforward, but seizing coins from hot wallets involves third parties like exchanges and wallet providers, making the process more complex.

Key Takeaways:

• Major cryptocurrency exchanges, including OKX, Bybit, and Bitstamp, are cooperating with Russian arbitration managers in bankruptcy investigations.
• Sberbank, one of Russia's largest banks, has faced difficulties in recovering alternative assets, such as cryptocurrency, in bankruptcy cases.
• Russian banks are now directly approaching crypto exchanges to facilitate the recovery of crypto assets.
• The lack of crypto regulation in Russia is hindering the ability of banks to seize crypto from bankrupt firms or individuals.
• New crypto confiscation powers granted to Russian bailiffs and prosecutors earlier this year are yet to come into full effect.
• There is a need for new protocols to be established for collecting cryptocurrency.
• Seizing crypto stored in offline cold wallets is relatively straightforward, but seizing coins from hot wallets is more complex due to the involvement of third parties.