Under the current laws of Russia, Bitcoin just as any other cryptocurrency is outside the national legal environment. That was the standing of the arbitration court in Moscow in reviewing the case of bankruptcy of a Russian national, Ilya Tsarkov, initiated back in 2017.
During the hearing it was established that Ilya Tsarkov holds a cryptocurrency wallet and owns 0.2 Bitcoin placed there. Bankruptcy commissioner Alexei Leonov intended to have it included in bankruptcy assets, but the court was of a different opinion and ultimately that digital currency will not be part of bankruptcy assets.
“Based on the straightforward interpretation of the provisions of the law, a cryptocurrency is not a subject of civil laws, is outside the legal environment of the Russian Federation, and no deals or transactions involving a cryptocurrency are enforced by the state”, the ruling of the court stated.
Making cryptocurrency owned by Ilya Tsarkov part of the bankruptcy assets would not have helped to cover the outstanding debt which, according to the materials of the court case, amount to approximately RUR 19 mio ($334K) payable to Rikas Finance (the debt resulted from a surety agreement made back in 2006). According to the data of the court case and current market rates, the value of the cryptocurrency assets of Tsarkov is currently some RUR 111K.
The ruling as such can nevertheless produce an important precedent for the cryptocurrencies market and even more so for the bankruptcies market.
“If that happens, it will be an outrageous precedent. As a matter of fact, we will thus encourage debtors nearing bankruptcy to transfer their assets into cryptocurrencies”, counsel Elena Avakyan of Egorov Puginsky Afanasiev & Partners noted to Invest Foresight prior to the said decision by the court.