How are crypto holdings traced and substantiated in a bankruptcy?

By R.T. (Tyler) Dijst, blockchain investigator at Paucitas

Paucitas is an independent expert firm in the Netherlands that investigates investment fraud and crypto fraud and establishes legitimate crypto assets.

Paucitas traces crypto holdings in a bankruptcy and substantiates the findings in a report for the insolvency practitioner. We establish which holdings existed, where they went and on which data that conclusion rests.

What Paucitas does

We start from the known data in the accounts and from the bank accounts: every payment to or from an exchange is a lead. One anonymised case: the accounts showed only two small payments to an exchange, and following those two payments brought a holding into view that had been moved to a self held wallet shortly before the filing.

In Dutch insolvency proceedings the practitioner needs findings that hold up against a creditor and, if necessary, in a civil procedure. The report is therefore written with the source for every step.

What you supply

The insolvency practitioner supplies the accounts, the bank statements and whatever is known about platforms and addresses. Two bank lines are often enough to begin; a complete picture is not a condition for starting.

Where a director also held crypto privately, add what is known about that as well. Payments between a private wallet and the company are often the clearest lead, and they are frequently the only one recorded in the accounts.

What you receive

You receive a report with the addresses found, the timeline of the movements, the value on the relevant dates and an account of the method. Where the chain runs dead, for example at a platform that provides no data, that is stated explicitly in the report.

The report draws no legal conclusion about a transaction. It records what happened and when, which is what allows the practitioner to decide whether a step is worth taking.

For an international reader the Dutch frame matters. A Dutch insolvency practitioner needs findings that hold up against a creditor and, if necessary, in a civil procedure, so every step in the report carries its source. Where the chain runs dead, for example at a platform that provides no data, that is stated explicitly rather than left open.

The report draws no legal conclusion about a transaction. It records what happened and when, with the value on the relevant dates, which is what allows the practitioner to decide whether a step is worth taking.

How to get started

The insolvency practitioner contacts us with a short description of the file and the question. We will say what is realistic with the material available and what it will cost. Use the contact page for a first message.

Two bank lines showing a payment to an exchange are often enough for a first assessment. The practitioner can write with a short description of the file and the question, and we will say what is realistic and what it costs.

What the insolvency practitioner or the court does with the report, they decide themselves.

Frequently asked questions

Can crypto holdings in a bankruptcy be found?

Often yes. Payments to an exchange in the bank statements are the usual entry point, and from there the chain can be read on the blockchain.

What is enough to begin?

Two bank lines showing a payment to an exchange are often enough for a first assessment.

Is the report usable in proceedings?

It is written for that: every step carries its source, and what could not be established is stated as such.

Further reading

Your own situation

If you are reading this, you probably have a question about your own situation. That is exactly what Paucitas does.

The first step is contact by phone. We prefer to schedule that call through WhatsApp, so you do not have to wait. In the call we look together at what can factually be established in your case and what Paucitas can examine for you.

Go to the contact form