Can judgment creditors garnish bitcoin?

There are many tools at a creditor´s disposal when it comes to collection efforts. Sometimes, a garnishment will be used when a collection effort has failed on several attempts. The garnishment will occur against the debtor and will include seizing money from any and all sources held by the debtor. These money sources can also include cryptocurrency assets held. When garnishment is sought, it is known as a writ of garnishment and there is no way that a debtor can avoid paying the debt once it is executed.

Commonly, a bank will be served with a writ of garnishment. This is because of an indebtedness that the bank has with the customer, which depends on the number of customer deposits made. When a customer makes a demand, money must be paid by the bank to the designated account through the use of a payment method used by the debtor. With the bank owing a debt to the customer for the deposits, any judgment creditor is able to execute a garnishment against the bank debt by taking control of the account held by the debtor.

When it comes to a cryptocurrency account, the amount of case law governing it is very little. Undoubtedly, when a debtor owns a certain amount of cryptocurrency in a private storage. No garnishment effort will be successful. This will be due to no debt being owed to a debtor.

In general, the judgment creditor will not be able to discover the crypto assets or even any transactions involving them.

When a cryptocurrency is held in a  wallet, such as Coinbase, it can be seen as a financial relationship like a bank. This can be seen as Coinbase must liquidate all cryptocurrency once requested by the customer. This is the same as a bank does with account holders.

However, the agreement between account holder and Coinbase is not the same as it is with banks as far as material is concerned. This difference is seen in the amount of legal  history and state statutes that can be relevant to accounts held in Coinbase.

In most cases, courts may have enough cause to find a cryptocurrency as being obligated to have garnishment warranted against an account. However, it would be different if the account is deemed as being exempt under certain laws.

Coinbase being garnished is possible due to the fact that it is under the jurisdiction of U.S. courts as a U.S. company. Not only that, but because of Coinbase having California headquarters, it maintains agents in other states. So, depending on which state the account was opened in, it may be a lengthy process to seize cryptocurrency accounts if they are in other states.

This may also be true for an exchange. The assets, keys, and ledger may be in one state, while the debtor resides in another state. In order for a judgment creditor to garnish Coinbase, the judgment must be executed within the state that the account exists in.


If you are being garnished and you are concerned about whether your cryptocurrency can be affected, then you should get a hold of us today. We will review your situation and determine what can and cannot be garnished.

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