What happens to your crypto if an exchange goes bankrupt?

When a crypto exchange goes bankrupt, customers usually lose access to their accounts while a court sorts out the company's assets and debts. What you eventually get back depends on the platform's terms, how well it kept customer assets separate, and how much is left to distribute. It can take years.

Is crypto on an exchange customer property in bankruptcy?

Not always. Crypto held on an exchange is in its custody, as explained in exchange vs wallet. In a bankruptcy, the key question is whether those coins belong to the customer or to the company's estate.

The Celsius case is the clearest example. In January 2023, a US bankruptcy judge ruled that deposits in Celsius's interest-paying Earn accounts belonged to the company, not the customers. The judge found the terms of use unambiguously transferred ownership to Celsius. About 600,000 Earn accounts holding roughly $4.2 billion were affected, and those customers became creditors with claims instead of owners of specific coins.

What happens if Coinbase goes bust?

No one can say for sure, because a large US exchange bankruptcy with custody terms like Coinbase's has not been tested in court. In May 2022, Coinbase disclosed in a filing that customer crypto held in custody could be subject to bankruptcy proceedings and that customers could be treated as general unsecured creditors. Its chief executive responded that customer funds were safe and that its terms of service gave strong legal protections, while acknowledging these had not been tested in court for crypto. An unsecured creditor has no claim to specific coins and shares in whatever the estate can pay.

What happened to FTX and Celsius customers?

FTX filed for bankruptcy on November 11, 2022. Its customer claims were valued in dollars at prices on that petition date, not at later prices. Small claims of up to $50,000 began receiving payments in February 2025, and larger distributions were set to begin on May 30, 2025. FTX said most creditors would get at least 118% of their claim value in cash, but some customers argued this was misleading because crypto prices had risen several times over since 2022. The guide on what happened to FTX covers the collapse itself.

Celsius froze withdrawals and filed for bankruptcy in July 2022. The FTC later said the company had misused more than $4 billion in customer deposits, and its settlement was structured so remaining assets could go back to consumers through the bankruptcy.

Does insurance protect crypto if an exchange fails?

Usually not. Deposit insurance and investor protection schemes generally do not cover crypto losses from an exchange failure. The details are in is crypto insured. Some exchanges publish proof of reserves to show they hold customer assets, though such reports have limits.

Rules differ by country and change often. Check the regulator or a qualified professional for your own situation.