Bankruptcy filings from Celsius and Voyager have raised questions about what happens to investors’ crypto when a platform fails.
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Traders hoping to recoup their funds from failed cryptocurrency exchanges anytime soon are likely to end up disappointed, legal experts tell CNBC.
Crypto trading and lending firms Celsius and Voyager Digital filed for bankruptcy this month, leaving users’ assets trapped inside their platforms. Both firms froze client accounts after an influx of withdrawals led to liquidity issues.
Celsius operated much like a bank, taking customer deposits and lending them out or making risky gambles on so-called decentralized finance products to generate high yields.
Voyager had a similar model. The company got caught up in the collapse of high-profile crypto hedge fund Three Arrows Capital, which itself went belly up after defaulting on a $660 million loan from Voyager.
Such interconnectedness has left the crypto...
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