integrated into the distributional community.
This article contributes to the bankruptcy law literature by showing how case content has evolved. Bundling emerges as the legal mechanism through which creditor control is exercised. More broadly, the computational doctrinal framework developed here is applicable to other areas of statutory law.
Silver Medal Winner Simge Aslan, University of Nottingham Digital Assets and Automated Transactions in Insolvency
In the last decade, digital assets( also referred to as crypto assets) collided with insolvency proceedings at full force. At the point of collision, it exposed critical pressure points. In this article, I aimed to examine those points and assess whether they ricocheted off the existing principles of insolvency or the impact was strong enough to crack part of the foundation.
My focus was on digital assets, and the article begins by exploring how their decentralised nature and storage in various types of wallets complicate the identification and recovery of assets in insolvency proceedings. It highlights the distinction between ownership and control of digital assets, especially when they are held via intermediaries or in cold wallets. Although acknowledging the special concerns that arise with the insolvency of intermediaries, the focus of the article was issues that arise in the insolvency of any company that owns or holds digital assets.
In addition to the idiosyncrasies of holding digital assets, the article also addresses a particular application. Automated scripts, which can perform pre-set transactions without human intervention, are identified as particularly problematic. Once triggered, these scripts can transfer assets despite an automatic stay being in effect, potentially undermining the collective treatment of creditors. The article draws
analogies with traditional self-help mechanisms, like starter interrupters, and escrow arrangements to evaluate how courts might handle these challenges. Once the issues are identified, they are analysed against the backdrop of universally recognised goals and mechanisms of insolvency. I use the UNCITRAL Legislative Guide’ s goals— such as balancing the interests of stakeholders, maximising estate value, and ensuring collective creditor treatment— to assess the compatibility of current insolvency frameworks with digital assets. The analysis shows that while some issues( e. g., tracing assets or identifying ownership) can be managed with existing tools and investigatory powers, other aspects— like the rigidity of automated scripts or the difficulty in halting transfers— may require bespoke legal interventions or further guidance.
Finally, the article addresses the conceptual debate on whether on-chain asset transfers create a“ new” asset or merely change control, which has direct implications for tracing and recovery.
In the end, I observed a pattern emerge when looking at the various issues that take the forefront of discussions regarding digital assets. Every aspect that appears to require further legal guidance is caused by the same characteristic of the technology that underlies digital assets – the ability to subject the assets to factual exclusive control. As such, to be able to effectively accommodate digital assets in any legal framework, the novelty of factual control needs to be considered.
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