Bitcoin’s dual role as a commodity and a currency can create financial recovery disputes when a company that pays for services using bitcoin goes bankrupt. A bankruptcy court judge made a ruling on Friday in one such case, stating that the cryptocurrency is not the same as U.S. currency, but making it clear that he wanted the ruling confined to a specific legal framework, according to The Recorder, a California legal and technology newspaper.
Bankruptcy Judge Dennis Montali in the Northern District of California said Friday that in the case of HashFast Technologies, a mining company that sued to recover bitcoin paid to a physician for his promotional services, that bitcoin is “intangible personal property” and not cash. This distinction allows the company’s bankruptcy trustee to recover the property or its value.
A Test Case On ‘Clawback’ Actions
The ruling is seen as a test case in how the cryptocurrency should be treated in “clawback” actions, the recovery of disbursed money.
The judge did not rule on the ownership issue involved