December 2, 2023

Australian court allows cryptocurrencies to be used as collateral

The District Court of the Australian state of New South Wales allowed the prosecutor to use crypto assets forsecuring a pledge to cover legal expenses in case of losing the case.

As part of the libel case pendingThe New South Wales District Court, Judge Judith Gibson, allowed the use of cryptocurrency as a security deposit.

“It is a recognized form of investment,” — Gibson said of the cryptocurrency, also acknowledging its volatility, according to a local media report.

In the framework of the case for the protection of honor and dignity, the courtNew South Wales State said prosecutors should deposit $ 13,000 in a bank account secured by a court. If the prosecutor loses the case or refuses the claim, the funds will cover part of the legal costs of the accused.

Instead of depositing funds into a bank account, the courtallowed the plaintiff to use the account on the cryptocurrency exchange. Since the defendant's lawyers expressed concerns about a possible drop in the value of crypto assets, the plaintiff agreed to submit monthly reports on the state of the cryptocurrency account.

The court also required the plaintiff to notify the defendant's attorney if the value of the crypto assets fell below $13,000.

“I see the need to provide the defendant with timely information about the fall in the value of crypto assets held as collateral,” — said the judge. “The financial situation is currently unstable.”

Although the use of cryptocurrency asprovision — Although not the most attractive option for users of crypto assets, the precedent demonstrates the growing importance of the industry in the eyes of governments around the world. Let us recall that recently the Moscow Arbitration Court of Appeal classified cryptocurrencies as “other property,” and last summer the UK High Court for the first time recognized Bitcoin as property.