What happens to your crypto when an exchange goes bankrupt

Explained

August 20, 2026

4 min read

Explained

When a crypto exchange files for bankruptcy, customer holdings are frozen immediately, and there is no guarantee of getting back the same coins, or the same value, that were deposited. What a customer eventually receives, if anything, is normally set by a bankruptcy court – and in FTX’s bankruptcy, that turned out to be cash, calculated at the account’s value on the date the exchange filed, not the crypto originally handed over and not its later price.

The moment it happens: assets freeze

Celsius and Voyager Digital both filed for bankruptcy in July 2022. CNBC reported that the filings came after both firms had already suspended withdrawals, “leaving users’ assets trapped inside their platforms.” DailyCoin’s account, published in September 2022, adds that Voyager’s collapse followed the failure of the crypto hedge fund Three Arrows Capital, which had defaulted on a $660 million loan from Voyager. Once a filing happens, a customer stops being able to choose when, or whether, to withdraw. What happens after that is no longer up to the exchange – it is up to the bankruptcy process.

How much comes back: the FTX case worked through

FTX collapsed in late 2022. According to reporting by CBC citing Reuters, FTX itself has said it could not simply return customers’ original crypto, because those assets were gone – “misappropriated by Bankman-Fried.” Instead, the bankruptcy court approved a plan to repay customers in US dollars, based on the value of their accounts on the day FTX filed for bankruptcy, rather than returning the original tokens.

Al Jazeera, citing Reuters, reported on 8 August 2024 that a US court had ordered FTX to pay $12.7bn in relief to customers, implementing a settlement with the Commodity Futures Trading Commission (CFTC). That figure is made up of $8.7bn in restitution and $4bn in disgorgement, per the same report. FTX has said customers will receive “100 percent recovery” on their claims, measured against account value at the time of filing. The CFTC agreed not to collect from FTX until customers are repaid with interest, according to Al Jazeera.

That valuation method is also the source of complaint. Al Jazeera reported that the repayment plan has met opposition from some FTX customers, who argue that valuing their claims using November 2022 crypto prices – far below where prices later stood – leaves them undercompensated. Votes on the plan were due 16 August 2024, with FTX intending to seek final approval of its wind-down plan on 7 October 2024, per Al Jazeera. Separately, the outlet reported that FTX founder Sam Bankman-Fried was sentenced in March 2024 to 25 years in prison, and that the CFTC’s chairman said Bankman-Fried had stolen $8bn from customers.

Is the crypto in your account actually yours?

Before any of the 2022 collapses, Coinbase raised a separate and more basic question. In a Securities and Exchange Commission filing in May 2022, reported by Bloomberg Law, Coinbase disclosed that a bankruptcy court could consider customer assets that Coinbase holds as custodian to be property of Coinbase’s own bankruptcy estate. Coinbase CEO Brian Armstrong said at the time that the company faced “no risk of bankruptcy,” according to Bloomberg Law. The disclosure was about a hypothetical, not an event, but it named the legal question every exchange bankruptcy eventually turns on: whether customer crypto is legally the customer’s property, or the exchange’s.

The common misreading

The instinct is to assume the outcome is binary – either the same crypto comes back, or it is a total loss. FTX shows a third path: a court-approved cash payment, sized to a claim’s value on a fixed date in the past, which can diverge sharply from what the original crypto would be worth by the time the payment actually arrives, as the objections reported by Al Jazeera illustrate.

What this page does not tell you

This page cannot state what percentage of their holdings Celsius or Voyager customers actually recovered – none of the sources reviewed here report a final distribution figure for either case. The FTX numbers describe a court-approved settlement framework as of August 2024; they do not confirm that every customer class has since been paid in full. The Bloomberg Law source available for this page is a paywalled summary, not the filing itself, so the exact wording Coinbase used on estate-property risk is not reproduced here. DailyCoin’s claim that Celsius lent out or made high-risk bets with user deposits is attributed in that outlet’s own article only to an unnamed “reliable source” and is not corroborated by any other source held for this page, so it is not restated here as established fact. Finally, no source here sets out a general legal rule for when custodial crypto counts as customer property versus estate property – what evidence exists points to a single company’s own risk disclosure, not a settled standard that applies across exchanges.