What Happens to Your Crypto If an Exchange Goes Bust?
Quick answer. It depends on whether your crypto is still legally yours under the terms, segregation and local law. If so, it may be returned; if not, you are likely an unsecured creditor, repaid late, in cash or in part.
Video transcript
Is the crypto on your exchange still yours? If so, it may be returned. If not, you are likely an unsecured creditor, repaid late, in cash or in part.
In a bankruptcy, your crypto is either your property, outside the estate, or estate property you share with every other creditor.
Four things decide which side you land on: the terms of service, segregation, legal structure and jurisdiction.
Even careful structures are untested. Coinbase's 2025 annual report warns customers could be treated as general unsecured creditors.
Recent collapses show the range. FTX repaid in cash. Celsius Earn deposits were ruled estate property. Voyager returned bank-held cash but shared its crypto. Mt. Gox repays in bitcoin, now until October 2027.
FTX's plan pays most creditors about 119 percent of their allowed claims. But claims were fixed in dollars at November 2022 values, so customers missed the later rise in crypto.
SAFU funds and insurance pay for some losses, but do not change ownership. And the FDIC says its insurance does not cover crypto exchange bankruptcies.
Before you deposit, read the terms for title, keep Earn balances apart, confirm segregation, check proof of reserves with liabilities, and leave only what you trade.
Guardian's regulatory assessments test segregation, key storage and recovery against custody rules. Read the full article, or talk to Guardian at guardian.security.
Every exchange failure raises the same question: is the crypto in my account still mine?
Recent collapses gave different answers. FTX's plan repays customers in cash at November 2022 values. A court ruled that Celsius Earn deposits belonged to Celsius.
This article explains the technical and security side of exchange insolvency. It is not legal advice; confirm how it applies to you with counsel.
Property or Unsecured Claim
In a bankruptcy, the crypto in your account is either your property or part of the exchange's estate.
- Your property: it should sit outside the estate, beyond the reach of the exchange's creditors.
- Estate property: you are usually an unsecured creditor, sharing what is left with everyone else.
Four things decide which side you are on.
| Factor | The question | Example |
|---|---|---|
| Terms of service | Does title pass to the exchange? | Celsius Earn terms gave it "all right and title" |
| Segregation | Are assets separate onchain and in the ledger? | NYDFS expects both from New York custodians |
| Legal structure | Are assets held in custody, as agent or on trust? | Coinbase relies on UCC Article 8 |
| Jurisdiction | Which entity holds them, under which law? | MiCA requires legal segregation from the estate |
Even a careful structure may be untested. Coinbase believes UCC Article 8 keeps custodied crypto out of its estate.
Its 2025 annual report still warns that, in a bankruptcy, customers "could be treated as our general unsecured creditors." Courts "have not yet considered" the question, it says.
What Four Collapses Show
| Case | Year | What customers got |
|---|---|---|
| FTX | 2022 | Cash, at November 2022 dollar values |
| Celsius | 2022 | Earn deposits ruled estate property |
| Voyager | 2022 | Bank-held cash returned; crypto shared among creditors |
| Mt. Gox | 2014 | Bitcoin and bitcoin cash, repaid until October 31, 2027 |
FTX: claims in dollars
In December 2022, the SEC alleged an "undisclosed diversion" of FTX customers' funds to Alameda Research, its affiliated trading firm.
Judge John Dorsey confirmed FTX's plan on October 7, 2024. It pays 98% of creditors about 119% of their allowed claims.
Those claims were fixed in dollars as of the November 2022 filing, and are paid in cash, not the original crypto. By confirmation, bitcoin had risen about 260% since FTX failed, CNBC noted.
A full dollar recovery is not the same as getting your coins back.
Celsius: the terms decided
On January 4, 2023, Judge Martin Glenn ruled that assets in Celsius's Earn accounts were property of the estate. They were worth about $4.2 billion when Celsius filed.
Celsius's terms gave it "all right and title" to deposits, "including ownership rights." That left Earn holders as unsecured creditors.
The product mattered. The month before, the court had ordered Celsius to return $44 million in crypto to Custody and Withhold account holders.
Voyager: cash and crypto split
In August 2022, Judge Michael Wiles approved returning $270 million that Voyager customers held in a custodial account at Metropolitan Commercial Bank.
Voyager said the rest, just over $1 billion, belonged to the estate, to be shared among all creditors. It had warned recoveries might not come in the form deposited.
Mt. Gox: the long wait
Mt. Gox entered bankruptcy in Japan in April 2014. The Tokyo District Court moved it to civil rehabilitation in June 2018, and a plan was confirmed in October 2021.
Repayments in bitcoin and bitcoin cash were announced in June 2024. The trustee says they are largely complete for creditors who finished the procedures.
Many have not. On October 16, 2026, with the court's permission, the trustee moved the deadline from October 31, 2026 to October 31, 2027.
What the Rules Now Say
Five texts in the US, EU and UK bear on how customer assets are treated.
| Text | Status | What it says |
|---|---|---|
| SEC SAB 121 | Staff bulletin, March 31, 2022; rescinded | Platforms book a liability and matching asset at fair value |
| SEC SAB 122 | Staff bulletin, January 23, 2025 | Rescinds SAB 121; any liability judged under loss contingency rules |
| NYDFS custody guidance | Guidance, September 30, 2025; replaced the January 2023 letter | Segregate; treat assets as belonging "solely to customers" |
| MiCA Article 75(7) | EU regulation, applies since December 30, 2024 | Custody assets legally segregated; creditors have no recourse |
| FCA CASS 17 | Final rules (PS26/11), from October 25, 2027 | Client cryptoassets held on trust by default |
SAB 121 and 122 change how platforms account for custody, not who owns the assets. The SEC notes its staff bulletins are not Commission rules.
The NYDFS guidance covers BitLicensees and New York limited purpose trust companies that hold customer crypto. It expects a custodial relationship, not a debtor and creditor one, and prior approval for any new sub-custodian.
Omnibus wallets should be held in the custodian's name as agent or trustee for customers. Our guide to omnibus vs segregated wallets covers the tradeoffs.
MiCA says custody assets "shall be legally segregated" from the provider's estate, "in accordance with applicable law." The aim: its creditors have no recourse to them, "in particular in the event of insolvency."
In the UK, CASS 17 makes a trust the default from October 2027, with targeted exceptions. Our CASS 17 guide covers the detail.
SAFU Funds and Insurance
Exchange funds and insurance pay for some losses. They do not change who owns your assets.
Binance used its SAFU fund to cover a May 2019 hack in full. It says SAFU and company funds cover its October 2026 losses.
Both were security incidents at an exchange that kept operating. Neither statement promises anything in a bankruptcy.
Deposit insurance does not help either. In the US, the FDIC says its insurance "does not protect against the default, insolvency, or bankruptcy of any non-bank entity," including crypto exchanges.
Private policies carry limits and exclusions. Our crypto insurance guide maps them.
Checks Before You Deposit
Ask these before you deposit, and again before you leave assets idle.
- Read the terms for title: does ownership of deposits pass to the exchange?
- Keep yield, Earn and lending balances apart from plain custody.
- Find the legal entity that holds your account, and its regulator.
- Ask whether customer assets are segregated onchain and in the ledger.
- If wallets are omnibus, check they are held as agent or trustee.
- Read the exchange's own disclosure on bankruptcy treatment, if it publishes one.
- Check your balance in its proof of reserves, with liabilities included.
- Ask where your cash sits: a custodial bank account, or the exchange's own.
- Leave on the exchange only what you trade.
For the security side, our exchange security guide lists what to ask about keys, withdrawals and past incidents.
How Guardian Helps
Guardian's institutional practice reviews the custodians you would depend on "as concentrations of risk rather than as logos on a slide."
Guardian's regulatory assessments test segregation, key storage, signing thresholds, cold storage ratios and recovery against the custody rules a license carries.
Risk Monitoring watches a firm's contracts and internet-facing hosts, and keeps a rating it can show an exchange, a bank partner or an allocator.
Frequently Asked Questions
What happens to my crypto if my exchange goes bankrupt?
It depends on whether it is still legally yours. The terms of service, segregation, legal structure and jurisdiction decide. If it is estate property, you are likely an unsecured creditor sharing what is left, as Celsius Earn customers were.
Did FTX customers get their crypto back?
No. FTX's plan, confirmed in October 2024, pays 98% of creditors about 119% of their allowed claims. Claims were fixed in dollars as of November 2022 and paid in cash, so customers missed the later rise in crypto prices.
Is crypto on an exchange FDIC insured?
No. The FDIC says deposit insurance does not cover crypto assets or protect against the insolvency or bankruptcy of non-bank entities, including crypto exchanges. Exchange funds such as Binance's SAFU are the exchange's own commitments.
Is it safe to leave crypto on an exchange?
Only as safe as its structure. Check that the terms keep title with you, assets are segregated and the proof of reserves covers liabilities. Avoid idle balances in yield products, and keep only what you trade there.
Sources
- SEC: SEC Charges Samuel Bankman-Fried with Defrauding Investors in Crypto Asset Trading Platform FTX (December 13, 2022)
- FTX via PR Newswire: FTX Receives U.S. Bankruptcy Court Confirmation of Its Plan of Reorganization (October 7, 2024)
- CNBC, via NBC10 Philadelphia: FTX bankruptcy judge approves more than $14 billion payback plan two years after exchange collapsed (October 7, 2024)
- Decrypt: FTX Will Return $16 Billion to Customers Following Court's Bankruptcy Approval (October 7, 2024)
- Decrypt: Judge Rules Celsius Earn Account Funds Belong to Estate, Not Users (January 4, 2023)
- Morrison Foerster: Celsius Bankruptcy Court Holds Customer Deposits in Earn Accounts Are Estate Property (January 9, 2023)
- Decrypt: Bankrupt Crypto Broker Voyager Digital Approved to Return $270 Million to Clients (August 5, 2022)
- CryptoSlate: Voyager Digital gives update on recovery plan, reinstating user account access (July 12, 2022)
- MtGox Co., Ltd.: Rehabilitation Trustee announcements (read November 5, 2026)
- MtGox Rehabilitation Trustee: Notice Concerning Change of Repayments Deadline (October 16, 2026)
- SEC: Staff Accounting Bulletin No. 121 (March 31, 2022, rescinded by SAB 122)
- SEC: Staff Accounting Bulletin No. 122 (January 23, 2025)
- NYDFS: Guidance on Custodial Structures for Customer Protection in the Event of Insolvency (January 23, 2023, replaced September 30, 2025)
- NYDFS: Updated Guidance on Custodial Structures for Customer Protection in the Event of Insolvency (September 30, 2025)
- ESMA Interactive Single Rulebook: MiCA Article 75, Custody and administration of crypto-assets
- EUR-Lex: Regulation (EU) 2023/1114 on markets in crypto-assets (MiCA), Article 149 (May 31, 2023)
- FCA: Overview of our cryptoassets regime policy statements (June 30, 2026)
- Coinbase Global, Inc.: Annual Report on Form 10-K for 2025 (filed February 12, 2026)
- Binance: Binance Security Breach Update (May 7, 2019, with an October 30, 2026 update)
- FDIC: What the Public Needs to Know About FDIC Deposit Insurance and Crypto Companies (July 28, 2022)
- Guardian: Institutional
- Guardian: Risk Monitoring and Rating
Know where your counterparties hold your assets
Guardian reviews custodians and the segregation, keys and recovery behind them, so you know what stands between your assets and an exchange failure.