CRYPTOCURRENCY AND RECEIVERSHIPS

Doulgas Wilson Companies

Why digital currency is raising concerns for receivers

Since its origins in Bitcoin following the onset of the Great Recession, cryptocurrency has made inroads into all areas of finance and investing, from blockchain-enabled real estate transactions to cross-border money transfers. With more than 20,000 different cryptocurrencies in existence today, the market continues to evolve with more applications than ever before.

As receivers and advisors, we need to stay up to date on cryptocurrency happenings and trends as we increasingly encounter crypto in our assignments. There are a few general areas where we are observing digital currency as a mechanism by which organizations and individuals are holding and transferring value.

For one, as an alternative to land and other traditional assets, cryptocurrency can be utilized by organizations to store and transfer cash. Digital assets can be kept in trusts to hold

Dwc Personnel News

New Hires and Promotions individual or corporate wealth, and due to the anonymous nature of crypto wallets, these assets can be extremely difficult to track. Some recent Ponzi schemes have been conducted solely via cryptocurrencies — promising high returns on short term currency investments — which can be much more challenging to trace than traditional accounts.

All of these applications are leading to a rising prevalence of digital currency in receiverships. A few common challenges we’ve encountered:

Access. Because digital currency can only be accessed via unique digital keys, we need to continue to be aware of how to find and manage cryptocurrency assets. Additional challenges exist due to the presence of both “hot” (online) and “cold” (offline) wallets where currency can be stored.

Visibility. In some criminal cases, organizations hide funds in digital wallets and attempt to leverage these hidden assets to their future benefit.

Transference. Digital currency owners often move currency quickly and frequently from wallet to wallet. Despite having anonymous owners, however, we can begin to detect patterns by observing the ongoing transfer of cryptocurrency.

Liquidation. In the recovery of assets, liquidation of digital currency can be challenging. Because value fluctuates rapidly and has been marked by many “crashes” throughout the years, receivers may be tasked with deciding whether to return recovered assets as cryptocurrency or sell at a present value and return the value in cash.

“Cryptocurrency will be an inevitable part of receiverships going forward,” says DWC Vice President Ryan Baker. “Almost every federal equity receivership we’ve seen recently for the SEC has some crypto element involved, and the uses are becoming increasingly sophisticated.”

As the company positions for new projects and assignments, we are pleased to announce two new personnel updates.

Kristine Bickings has been promoted to Project Associate. In her time at DWC, Ms. Bickings has worked extensively on a $1.2 billion SECappointed receivership case, including forensic analysis and executive team coordination. In her new role, she facilitates project progress, manages deadlines, and provides essential project-level and communications support.

Kristina Godinez has joined DWC as Project Associate. Ms. Godinez brings extensive receivership industry experience to her role, including paralegal and project management work in cases spanning state, federal and bankruptcy courts. In her role, she works closely with DWC’s project, receivership and executive teams.

James Johnson has joined the firm as Office Administrator. In his role, he manages and coordinates a variety of administrative projects for DWC, including executive level support, operational functions and project details. In addition, he is responsible for DWC’s document management and facilities-related activities. Mr. Johnson brings to the firm 26 years of legal industry experience.

DWC congratulates Kristine, Kristina and James and looks forward to introducing them in their new roles to our clients and network.

TODAY’S OPPORTUNITY FOR REAL ESTATE OWNERS

One of the most meaningful lessons I have learned throughout my career is that periodic real estate downturns can be full of opportunities. I had a mentor who often stated that wealth is created when you “buy your straw hats in the winter.” This simple quote summarizes the notion that these cycles should be a time to reposition existing assets and acquire new ones at a discount.

The Legacy Asset Management platform that DWC created about five years ago allows us to provide objective guidance to many families whose wealth is primarily held in real estate. Our nearly 35 years of experience spanning $15 billion of assets of all product types has given us a strong foundation from which we can provide objective advice to owners. This is particularly true among families that are in the process of transferring properties to the next generation, which can often present challenges. In many cases, these properties have been in the family for many years and are in need of a third-party review to determine how they might be best positioned for the future as markets are always evolving.

The strong leadership team we have in place to carry our brand forward is going to increase our focus on the Legacy platform as the transfer of real estate wealth is poised to surge in the years ahead. Our success to date in this area is based upon our real-life experience as both a principal developer as well as having the integrity of being a court-appointed fiduciary on over 1,200 projects across 35 states. We combine an entrepreneurial spirit with an institutional pedigree to work hard toward achieving the best outcomes for our clients.

Sincerely,

Douglas P. Wilson