When it comes to collection efforts, a creditor has a lot of tools at their disposal. When multiple attempts at collection have failed, a garnishment may be used. Money from all sources that the debtor may possess will be seized as part of the garnishment that will be applied against the debtor. These money sources can also include cryptocurrency assets held. A garnishment is requested through a writ of garnishment, and once it is carried out, the debtor cannot stop paying the amount owed.
Usually, a garnishment writ is served to a bank. This is a result of the bank’s debt to the customer, which is contingent upon the quantity of deposits made by the customer. When a customer makes a demand, the bank must transfer funds using the debtor’s payment method to the specified account. Any judgment creditor can execute a garnishment against the bank debt by seizing control of the debtor’s account because the bank owes the customer money for the deposits.
The body of case law pertaining to cryptocurrency accounts is relatively small. Certainly, in the event that a debtor has a specific quantity of cryptocurrency stored in a private storage No garnishment effort will be successful. This is because there will be no debt owed to the debtor.
Generally speaking, neither the crypto assets nor any transactions involving them will be discovered by the judgment creditor.
When a cryptocurrency is kept in a wallet like Coinbase, it functions similarly to a bank in terms of financial relationships. This suggests that Coinbase must liquidate every cryptocurrency upon a customer’s request. This is analogous to what a bank does for its customers.
But in terms of materiality, the agreement between the account holder and Coinbase differs from that with banks. The degree of state statutes and legal precedent that may be pertinent to Coinbase accounts demonstrates this distinction.
Most of the time, courts may find sufficient justification to declare a cryptocurrency to be required and to warrant a garnishment against an account. That would be different, though, if certain laws were to declare the account exempt.
Because Coinbase is governed by U.S. law, it is possible for it to be garnished. S. courts as a U. S. company. Additionally, Coinbase maintains agents in other states due to its headquarters being in California. Therefore, if cryptocurrency accounts are in other states, it might take a while to seize them depending on which state the account was opened in.
This may also be true for an exchange. The debtor may reside in one state while the assets, ledger, and keys are in another. For a judgment creditor to be able to garnish Coinbase, the judgment must be fulfilled in the state where the account is located.
Contact us right now if you are facing garnishment and you’re worried about how it might impact your cryptocurrency. After reviewing your case, we’ll decide what can and cannot be garnished.
Keywords: cryptocurrency garnishment. judgment creditor. bitcoin. crypto wallet. legal Simon PLC Attorneys & Counselors
In the past, debtors often hid their assets in traditional bank accounts or investment portfolios, making it difficult for judgment creditors to collect what they were owed. However, with the rise of cryptocurrency, a new challenge has emerged. Many people believe that cryptocurrency is anonymous and untraceable, making it the perfect place to hide assets from creditors.
However, this is not entirely accurate. In recent years, courts have increasingly ruled that cryptocurrency can be garnished by judgment creditors. This means that if you have a judgment against someone who holds cryptocurrency, you may be able to collect your debt.
What is Cryptocurrency?
Cryptocurrency is a digital or virtual currency that uses cryptography for security It is decentralized, meaning it is not subject to government or financial institution control Bitcoin, Ethereum, and Litecoin are some of the most well-known cryptocurrencies.
How is Cryptocurrency Stored?
Cryptocurrency is stored in digital wallets. These wallets can be software programs on your computer or mobile device, or they can be hardware devices that store your private keys offline.
Can Cryptocurrency be Garnisheed?
Yes, cryptocurrency can be garnished. In the past, there was some debate about whether cryptocurrency could be considered property under the law. However, courts have increasingly ruled that it can be. This means that judgment creditors can obtain a court order to garnish cryptocurrency held by a judgment debtor.
How to Garnish Cryptocurrency
To garnish cryptocurrency, you will need to obtain a court order. The process for doing this will vary depending on your jurisdiction. However, it will typically involve the following steps:
- Obtain a judgment against the debtor. This means that you must win a lawsuit against the debtor and be awarded a monetary judgment.
- Identify the debtor’s cryptocurrency holdings. This can be done by subpoenaing the debtor’s bank records or by using a cryptocurrency tracing service.
- File a motion with the court to garnish the debtor’s cryptocurrency. This motion should include evidence that the debtor has cryptocurrency holdings and that you have a valid judgment against them.
- If the court grants your motion, the debtor will be ordered to turn over their cryptocurrency to you.
Recent Case Study: Simon PLC Attorneys & Counselors
In a recent case, Simon PLC Attorneys & Counselors successfully garnished over $12,000 in cryptocurrency from a judgment debtor. The debtor had been hiding their assets in a cryptocurrency wallet, but Simon PLC was able to identify the wallet and obtain a court order to garnish the funds.
This case shows that it is possible to garnish cryptocurrency, even if the debtor is trying to hide their assets. If you are a judgment creditor, you should not give up on collecting your debt With the help of an experienced attorney, you may be able to recover your losses.
Cryptocurrency is a complex and ever-evolving area of law. If you are a judgment creditor who is considering garnishing cryptocurrency, it is important to consult with an experienced attorney who can advise you on the best course of action.
Frequently Asked Questions
Q: What are some of the challenges of garnishing cryptocurrency?
A: One of the biggest challenges of garnishing cryptocurrency is identifying the debtor’s holdings. Cryptocurrency is often stored in anonymous wallets, making it difficult to track. Additionally, cryptocurrency exchanges are not always cooperative with judgment creditors.
Q: What are some of the benefits of garnishing cryptocurrency?
A: One of the biggest benefits of garnishing cryptocurrency is that it can be a very effective way to collect on a judgment. Cryptocurrency is often worth a lot of money, and it can be difficult for debtors to hide.
Q: What are some of the risks of garnishing cryptocurrency?
A: One of the biggest risks of garnishing cryptocurrency is that the value of cryptocurrency can fluctuate wildly. This means that you could end up collecting less money than you are owed. Additionally, there is a risk that the debtor could move their cryptocurrency to a different wallet before you can garnish it.
Q: What are some of the things that judgment creditors should keep in mind when trying to garnish cryptocurrency?
A: Judgment creditors should keep in mind that garnishing cryptocurrency can be a complex process. It is important to consult with an experienced attorney who can advise you on the best course of action. Additionally, judgment creditors should be prepared to be patient, as it may take some time to identify the debtor’s cryptocurrency holdings and obtain a court order to garnish them.
Disclaimer
This article is for informational purposes only and does not constitute legal advice. Please consult with an attorney for advice on your specific situation.
When a cryptocurrency is kept in a wallet like Coinbase, it functions similarly to a bank in terms of financial relationships. This suggests that Coinbase must liquidate every cryptocurrency upon a customer’s request. This is analogous to what a bank does for its customers.
The body of case law pertaining to cryptocurrency accounts is relatively small. Certainly, in the event that a debtor has a specific quantity of cryptocurrency stored in a private storage No garnishment effort will be successful. This is because there will be no debt owed to the debtor.
This may also be true for an exchange. The debtor may reside in one state while the assets, ledger, and keys are in another. For a judgment creditor to be able to garnish Coinbase, the judgment must be fulfilled in the state where the account is located.
But in terms of materiality, the agreement between the account holder and Coinbase differs from that with banks. The degree of state statutes and legal precedent that may be pertinent to Coinbase accounts demonstrates this distinction.
Usually, a garnishment writ is served to a bank. This is a result of the bank’s debt to the customer, which is contingent upon the quantity of deposits made by the customer. When a customer makes a demand, the bank must transfer funds using the debtor’s payment method to the specified account. Any judgment creditor can execute a garnishment against the bank debt by seizing control of the debtor’s account because the bank owes the customer money for the deposits.
The contents of the wallet are subject to garnishment procedures, just like the money in a bank account or investment account. In fact, even though cryptocurrency and wallets are relatively new, it doesn’t seem like the garnishment laws need to be changed to handle this type of property.
In summary, take into account the newest technique for storing and possibly “hiding” property that judgment debtors are trying to It’s likely that judgment debtors will attempt to use it more and more frequently.
Not in a conventional bank account or a brokerage investment account, but where are cryptocurrencies kept? Rather, in keeping with the notion of attempting to stay “immune to government interference or manipulation,” cryptocurrencies are stored in “wallets,” which are supposedly immune to government meddling. A cryptocurrency “wallet,” according to Investopedia, is “used to send and receive [cryptocurrency] This is analogous to a physical wallet. However, the wallet stores the cryptographic data needed to access [cryptocurrency] addresses and send transactions rather than actual currency. ”.
The Ohio garnishment statute does not define “property” in any way. As such, cryptocurrencies can be included as “property. ”.
Troy, Michigan – Debtors often use even more cunning strategies to find locations for their assets and money that seem to be just out of reach of creditors, despite the fact that creditors and their attorneys can be quite inventive when it comes to locating and executing against a judgment debtor’s assets and money. The latest favorite “hiding place” is actually in plain sight. Consider the recent phenomenon of cryptocurrency and the cryptocurrency wallet.