By June Stacey Marks Partner at June Stacey Marks Attorneys | BCom (cum laude), LLB (cum laude), LLM (cum laude), LLD Candidate 20 October 2025

Insolvency used to mean padlocked doors, frozen bank accounts, and auctioning off boardroom chairs and staplers. Today? You're tracing a CEO who insists the company’s R200 million in Bitcoin “vanished” because he “lost his password.”

Welcome to insolvency in the digital age — where assets aren’t stored in vaults but in blockchain wallets secured by a twelve-word phrase hiding in someone’s gym bag.

And creditors? They’re learning the painful truth: you can’t liquidate what you can’t unlock.

DIGITAL ASSETS ARE PROPERTY — UNTIL SOMEONE ‘ACCIDENTALLY’ DELETES THEM

Courts across the globe are catching up:

✅ UK courts have granted freezing orders over Bitcoin.

✅ South African courts now treat cryptocurrencies as attachable assets.

✅ Liquidators can take control of crypto — but only if they get the keys.

Because here’s the legal sting: crypto is only “property” if someone hands over the private keys.

No key = no access = no payout. Just attorneys, affidavits and angry creditors.

THE THREE WAYS CREDITORS LOSE (EVERY TIME)

If you're a creditor, digital assets create three predictable nightmares:

Directors disappear. Liquidators despair. Creditors bleed. And lawyers? They get very, very busy.

NO WALLET, NO PAYOUT — CONTROL IS EVERYTHING

Crypto is not stored in banks — it’s stored in algorithms. If a liquidator doesn’t have one of the following, they have nothing:

The private key

The seed phrase

The hardware wallet/laptop

Exchange login credentials

That’s why insolvency now demands Anton Piller orders, forensic blockchain experts, mirror-imaged hard drives, and judges who know the difference between a cold wallet and a USB stick.

WHERE DO CREDITORS RANK IN THE DIGITAL ARMS RACE?

The hierarchy hasn’t changed — the battlefield has.

Secured creditors: Still first in line. But only if their security agreements mention digital assets. Spoiler — most don’t.

SARS & employees: Preferent claims apply, but only if any assets remain.

Unsecured creditors: They may as well be donating to the litigation fund.

HOW CREDITORS CAN ACTUALLY PROTECT THEMSELVES

If you're lending money, investing, or supplying goods — and your client touches crypto — here’s your legal survival checklist:

✔ Demand full disclosure of all wallets, exchanges, NFTs and tokens.

✔ Take security over digital assets — include them in suretyships, notarial bonds, loan agreements.

✔ Use multi-signature wallets — so one rogue director can’t empty the vault.

✔ In liquidation? Immediately freeze crypto accounts on Binance, Luno, Coinbase, Kraken, OpenSea.

✔ Apply for Anton Piller orders to seize devices, ledgers, seed phrases and laptops before they “go missing.”

✔ Trace the blockchain and claim voidable or fraudulent dispositions when transfers were made pre-liquidation.

WANT REAL PROTECTION? CHANGE THE LAW — OR CHANGE THE LOCKS

South African insolvency law was written for bank accounts and staplers, not Bitcoin and NFTs.

Here’s what needs to change:

Amend the Insolvency Act & Companies Act to define “digital assets.”

Criminalise deliberate destruction or concealment of private keys during winding-up.

Compel companies to disclose crypto holdings in annual financials.

Allow registered security interests over digital assets, NFTs, domains and tokenised property.

Use cross-border MLATs to freeze wallets sitting on foreign exchanges.

FINAL THOUGHT

Insolvency used to start with seizing the office keys. Because no matter how strategic your liquidation plan is —

you can’t liquidate a wallet you can’t unlock. Now it starts with seizing the blockchain keys. Because no matter how strategic your liquidation plan is — you can’t liquidate a wallet you can’t unlock.