Crypto Exchange Bankruptcies: Prepetition Crypto Withdrawals and Decentralized Finance (DeFi) Loan Repayments as Potential Avoidable Preferences | Practical Law
A Practice Note discussing the issues around whether customer withdrawals of cryptocurrency (crypto) and repayments or liquidations of decentralized finance (DeFi) loans in the lead-up to a bankruptcy filing might be deemed as preferential and avoided as preferences for the benefit of the estate. This Note also addresses potential affirmative defenses and safe harbors available to crypto customer and DeFi loan preference defendants.