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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

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Speaker 1: The House has passed a bill that would recognize same

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Speaker 1: sex marriages under federal law and extend legal protections to

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Speaker 1: all married couples. Now, Senate Democrats are trying to build

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Speaker 1: Republicans support for the Respect for Marriage Act, which passed

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Speaker 1: the House with forty seven Republicans joining all Democrats. Jim O.

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Speaker 1: Burger Fell, who was the plaintiff in the Supreme Court

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Speaker 1: decision that legalized same sex marriage, says the threat to

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Speaker 1: marriage equality is real. We have a sitting Supreme Court

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Speaker 1: justice who has made it clear he does not believe

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Speaker 1: marriage equality should stand, and he has given a clarion

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Speaker 1: call to opponents of marriage equality across the nation to

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Speaker 1: come after marriage. My guest is Katherine Frankie, a professor

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Speaker 1: at Columbia Law School and director of the Center for

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Speaker 1: Gender and Sexuality Law x lame. Why it's important to

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Speaker 1: condify same sex marriage. Well, there's some fear that after

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Speaker 1: the Job's decision and the way that the Court approached

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Speaker 1: the over ruling of roversus Wade, that decisions like Oberga

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Speaker 1: Fell from that's secured marriage rights for same sex couples

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Speaker 1: maybe next on the chopping block in the Supreme Court.

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Speaker 1: So advocates in the LGBTQ community and others are worried

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Speaker 1: about what might happen in the Supreme Court over the

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Speaker 1: next couple of years, and so the Congress wants to

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Speaker 1: take some action to at least partially secure marriage rights

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Speaker 1: um in anticipation of those rights perhaps being reversed in

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Speaker 1: the Supreme Court. As the constitutional matter, what would the

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Speaker 1: respect from marriage at do well, Some of the media

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Speaker 1: has covered it as codifying or putting into law the

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Speaker 1: old berga Felt decision, which it does not do. What

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Speaker 1: it does do is repeal the Defensive Marriage Act, which

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Speaker 1: was a law that was passed some time ago and

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Speaker 1: challenged in the Supreme Court successfully that defined marriage as

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Speaker 1: the union between one man and one woman for federal

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Speaker 1: legal purposes, for all federal benefits. So the first thing

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Speaker 1: it does is repeal the Defensive Marriage Act and thereby

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Speaker 1: removing a discriminatory definition of marriage which would spring back

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Speaker 1: into action because it was never repealed by Congress. Should

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Speaker 1: the Supreme Court reverse the ol bergh Felt decision and

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Speaker 1: possibly another decision involving a challenge to doma itself. So

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Speaker 1: the first thing it does is repealed DOMA. The second

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Speaker 1: thing it would do is say that every state has

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Speaker 1: to respect a legal marriage from any other state. So

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Speaker 1: say you live in Texas and your state decides that

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Speaker 1: it will no longer recognize same sex marriages, and you

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Speaker 1: traveled to New York and get married and then return

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Speaker 1: to Texas. Texas has to recognize that marriage, just as

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Speaker 1: it does with everny other kind of marriage. And it

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Speaker 1: says that those states also cannot refuse to recognize legal

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Speaker 1: marriages from another state if the basis for doing so

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Speaker 1: is discrimination based on race, sex, national origin, or ethnicity.

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Speaker 1: And hear, what we're looking at is Congress trying to

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Speaker 1: create a kind of equality principle when it comes to marriage,

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Speaker 1: not just for same sex couples, but for interracial couples

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Speaker 1: and for couples that may be discriminated against based on

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Speaker 1: their national origin or ethnicity. You know, the United States

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Speaker 1: has a long history of discriminating against Asian people in

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Speaker 1: access to marriage. When male Chinese workers were brought into

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Speaker 1: the United States to do a lot of labor in

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Speaker 1: the nineteenth century, they were not allowed to bring wives

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Speaker 1: or women from China who they might marry and China,

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Speaker 1: these men were prohibited from marrying white women, and the

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Speaker 1: idea was that they wanted a fixed labor source of

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Speaker 1: male Asian workers, but they didn't want them to be

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Speaker 1: able to set up families and have children. And there

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Speaker 1: are a number of other federal laws that were passed

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Speaker 1: in the nineteenth century and actually we're not found invalid

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Speaker 1: until well into the twentieth century that discriminated in marriage

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Speaker 1: on the basis of one's Asian identity, and so including

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Speaker 1: national origin and ethnicity in the federal law actually goes

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Speaker 1: beyond same sex marriage and recognizes the history of racial

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Speaker 1: and other forms of discrimination in our sad history. Unfortunately,

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Speaker 1: two Republican senators are co sponsors of the bill, two

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Speaker 1: others have signals support for the bill. Eight other Republican

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Speaker 1: senators have indicated they would vote against it. Do you

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Speaker 1: think they can get the votes to pass this in

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Speaker 1: the Senate, Well, it's always a heavy lift to get

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Speaker 1: over the filibuster and to get sixty votes in the Senate.

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Speaker 1: I will say that same sex marriage polls very positively nationally,

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Speaker 1: and Republican senators are aware of that. They've recently voted

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Speaker 1: against securing abortion rights, whether it's ROVERSUS weight or even

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Speaker 1: more aggressive measures to protect access to the full range

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Speaker 1: of reproductive health care. And as they go into the

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Speaker 1: election season in the fall, there are some Republicans who

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Speaker 1: may want to distinguish themselves as not bigoted across the

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Speaker 1: whole spectrum of issues, but actually in favor of some

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Speaker 1: civil rights measures, including access to marriage for same sex

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Speaker 1: couples and prohibiting discrimination on the basis of race, or

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Speaker 1: ethnicity or national origin. So as a messaging matter, it

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Speaker 1: might not be a bad idea for some Republicans to

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Speaker 1: support this when it's otherwise a pretty popular issue. Thankfully,

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Speaker 1: we haven't seen them retreat in support for same sex

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Speaker 1: marriage rights that we have seen, of course, in the

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Speaker 1: last many years in abortion rights. Some Republican senators have

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Speaker 1: indicated that this bill isn't necessary. Senator Marco Rubio called

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Speaker 1: it a stupid waste of time. Well, it's easy to

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Speaker 1: call something a stupid waste of time if your marriage

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Speaker 1: is not on the chopping block. And part of why

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Speaker 1: I think that Representative Nadler, who moved this in the

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Speaker 1: House moved so quickly was that he was getting thousands

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Speaker 1: and thousands of calls from constituents and others across the country,

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Speaker 1: people who were in marriages, who were afraid their marriages

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Speaker 1: would be undone by the Supreme Court and that they

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Speaker 1: might lose their children and their homes. I mean, this

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Speaker 1: is a real important issue, not on just the symbolic level,

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Speaker 1: but on the everyday kind of legal status of lesbian

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Speaker 1: and gay people in this country. And they're really frightened

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Speaker 1: that what is happening around a portion will also start

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Speaker 1: happening in the gay community. So for Senator Grubio to

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Speaker 1: say that this is a stupid issue merely speaks to

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Speaker 1: his privilege that this issue doesn't touch him. His marriage

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Speaker 1: is not on the chopping block, but many other people maybe,

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Speaker 1: And it's a kind of crude sense of insensitivity I

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Speaker 1: would say to how frightened so many people are by

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Speaker 1: how radical the Supreme Court is right now, and really

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Speaker 1: how hateful they are. So this defensive marriage acts before

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Speaker 1: the Senate now, it's important to understand that it will

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Speaker 1: not force all states to recognize same sex marriages like

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Speaker 1: the o burgh Felt decision does. What it will do

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Speaker 1: is force states to recognize marriages from other states and

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Speaker 1: to not discriminate against people in those marriages on the

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Speaker 1: basis of their sex, race, national origin, or ethnicity. So

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Speaker 1: states like Texas or Florida or others could still after

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Speaker 1: o bergh Felt might be reversed. They could still refuse

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Speaker 1: to marry same sex couples or for that matter, interracial couples,

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Speaker 1: but they would have to recognize valid marriages from other states.

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Speaker 1: So this bill doesn't completely turn o Berga the ol

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Speaker 1: bergh Felt decision into fat a law and insulated from

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Speaker 1: the Supreme Court, but it goes quite a way towards

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Speaker 1: um defending some of the rights secured. No Burgol, this

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Speaker 1: is such a difficult time for the LGBTQ community. You

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Speaker 1: mentioned Florida. You know they have that. Don't say gay

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Speaker 1: law Texas is targeting gender affirming care for transgender adolescents.

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Speaker 1: Why do you think this targeting of LGBTQ people when

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Speaker 1: it seems as if you know that group has come

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Speaker 1: to be accepted in this country. Well, I would say

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Speaker 1: that lesbian and gay people, and some lesbian and gay

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Speaker 1: people have become accepted in this country. Trans people and

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Speaker 1: other non binary or gender nonconforming people not so much,

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Speaker 1: And so that work still remains is to humanize and

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Speaker 1: give dignity to the full range of people in each

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Speaker 1: of those letters of l g P, P and Q.

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Speaker 1: But I think what we're really seeing, and this has

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Speaker 1: been going on for a number of years, is an

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Speaker 1: effort to motivate the most radical right wing members of

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Speaker 1: the Republican Party's base. This issue seems to get people

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Speaker 1: to the polls, whether it's targeting trans kids, which I

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Speaker 1: just think is appalling, and these are these are children,

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Speaker 1: and the idea that you might fear that you'd be

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Speaker 1: taken away from your parents because their understanding about your

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Speaker 1: gender identity is just shocking. But it does motivate some

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Speaker 1: of the more extreme members of the Republican Party to

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Speaker 1: vote UM. And we've seen this year after year, whether

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Speaker 1: it's bathroom bills or bills having to do with trans girls,

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Speaker 1: um competing in sports, and now it just seems to

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Speaker 1: be open season for all members of the LGBTQ community.

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Speaker 1: And we'll see in the fall where there pays off.

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Speaker 1: But it's it's a go to strategy for an increasingly

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Speaker 1: radical right wing Republican Party is to go after the

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Speaker 1: most vulnerable people in society, and that consistently is LGBTQ people,

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Speaker 1: but particularly trans and gender nonconforming people of color. The

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Speaker 1: House also passed a bill to protect the right to

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Speaker 1: access contraception. People think that that's going to have a

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Speaker 1: harder time getting through the Senate than the gay marriage bill. Well,

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Speaker 1: I think anything that looks like it's in the family

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Speaker 1: of rights associated with abortion is going to be a

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Speaker 1: more difficult lift in the Senate. But something that has

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Speaker 1: at some distance from abortion and the rights of the

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Speaker 1: LGBTQ community of course overlapped to some degree with the

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Speaker 1: abortion right, but not entirely in the public mind. I

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Speaker 1: think people see them as distinct issues, and so I

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Speaker 1: would be surprised if we could find sixty votes in

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Speaker 1: the Senate at this point for any bill that looks

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Speaker 1: like it's kind of related to the abortion issue, notwithstanding

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Speaker 1: the fact that access to abortion is something an overwhelming

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Speaker 1: majority of people in this country's support. So polling is

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Speaker 1: only part of what's driving those decisions. I also think

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Speaker 1: it's the optics of a runaway train of the anti

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Speaker 1: abortion movement capitalizing on their victory in the job's decision,

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Speaker 1: and they will give no quarter to any other issue

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Speaker 1: that might be seen as related to the abortion issue,

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Speaker 1: and their agenda of controlling the reproductive lives of Americans.

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Speaker 1: So do you think that their next target is contraception?

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Speaker 1: Not all of them, but certainly some of them. Then

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Speaker 1: they've said it quite openly, UM, with the bills that

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Speaker 1: are being proposed in state legislatures across the country, that

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Speaker 1: there are a range of uh, what we kind of

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Speaker 1: take for granted as forms of reproductive healthcare UM that

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Speaker 1: they want to ban or make very very difficult to access. UM.

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Speaker 1: There are people who are engaging in in vitro fertilization

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Speaker 1: or the reproductive assisted um technologies who are moving embryos

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Speaker 1: out of their states because they're afraid if their state

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Speaker 1: legislature defines a fertilized egg as a human being, they

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Speaker 1: will no longer have customed your control over those fertilized embryos.

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Speaker 1: Their pharmacists and other providers who were no longer prescribing

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Speaker 1: or filling the prescriptions of certain forms of contraception that

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Speaker 1: are not abortive basins. They're not in any way forms

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Speaker 1: of abortion, but healthcare providers are so afraid now of

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Speaker 1: being prosecuted by overly zealous district attorneys and even state

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Speaker 1: prosecutors that they're actually chilled from providing what is still

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Speaker 1: legal but contested forms of reproductive healthcare. And this is

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Speaker 1: exactly the goal I think of this very aggressive what

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Speaker 1: I call forced birth movements. I'm not even going to

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Speaker 1: use the term anti abortion anymore because I think it's

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Speaker 1: become much more radical, is to both enact these laws

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Speaker 1: limiting access to reproductive healthcare, but also scare people enough

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Speaker 1: into not providing it or seeking access to it that

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Speaker 1: they don't even need to pass the laws. And that's

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Speaker 1: that's happening in many states across the country as we speak,

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Speaker 1: and I think doctors are finding themselves in a very

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Speaker 1: difficult position on the one hand of knowing that their

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Speaker 1: oath to provide care and the best care to their

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Speaker 1: patients puts them at risk of possible prosecution and prison,

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Speaker 1: and as a result, the healthcare system is failing people

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Speaker 1: who have very serious medical conditions and are risk of death.

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Speaker 1: They're women with ectopic pregnancies, so they're per mutations to

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Speaker 1: this which are wide sweeping and undermine what we understand

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Speaker 1: to be basic responsible healthcare. Thanks Catherine. That's Professor Catherine

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Speaker 1: Frankie of Columbia Law School. Cryptocurrency lenders. Celsius Network, one

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Speaker 1: of the largest cryptocurrency lenders, has filed for Chapter eleven bankruptcy,

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Speaker 1: the latest casualty of a two trillion dollar crash that's

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Speaker 1: wiped out some of the industry's biggest names and exposed

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Speaker 1: hundreds of thousands of individual investors to steep losses. My

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Speaker 1: guest is Sad Wilson, a partner at King and Spaulding,

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Speaker 1: So tell us about Celsius and what happened to make

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Speaker 1: it file for bankruptcy. There are a number of factors

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Speaker 1: in terms of why Celsius filed for bankruptcy, in part

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Speaker 1: due to the substantial decrease in the value of crypto

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Speaker 1: assets over the course of the last thirty to sixty days.

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Speaker 1: That's been the biggest driving factor. But there are a

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Speaker 1: number of other factors specifically with respect to Celsius and

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Speaker 1: are unique to its business, and a lot of those

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Speaker 1: are are laid out in the first day presentation that

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Speaker 1: the debtors have posted to their claims website, and that's

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Speaker 1: highly unusual under the circumstances for for a debtor to

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Speaker 1: provide that type of a background for creditors and for

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Speaker 1: the court in advance of the first day hearing. Why

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Speaker 1: do you think it's doing that well. I think there's

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Speaker 1: a lot of mystery around cryptocurrency in general, for the

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Speaker 1: public as well as for individuals who might be using

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Speaker 1: the Celsius platform or any other crypto platform, and they

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Speaker 1: might not understand the intricacies of how the cryptocurrency world operates.

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Speaker 1: So I think from a background perspective, and since Celsius

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Speaker 1: is one of the first cryptocurrency bankruptcy is to be

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Speaker 1: filed in the United States, I think it was important

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Speaker 1: for the lawyers for Celsius to try to educate the court.

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Speaker 1: Here you have Judged Wiles in the Southern District of

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Speaker 1: New York, who is handling the Celsius bankruptcy case, and

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Speaker 1: they're trying to educate investors and users of their platform

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Speaker 1: as well, because there are a number of issues of

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Speaker 1: first impression that may not be obvious to the general

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Speaker 1: public or two users of the Celsius platform, or to

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Speaker 1: the court. A regular company in bankruptcy, is it clear

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Speaker 1: what order the debtors are paid off in? Yes, so

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Speaker 1: in a normal bankruptcy case, the absolute priority rule is

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Speaker 1: a fixed long time policy. That's an enscon than the

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Speaker 1: bankruptcy code, and so that absolute priority rule sets forth

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Speaker 1: the payment of priorities first to you know, secured lenders

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Speaker 1: than to unsecured lenders, than to equity. In a normal

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Speaker 1: bankruptcy case, everybody kind of understands how that world works.

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Speaker 1: There obviously some variations on the theme depending on the

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Speaker 1: nature of the company, but under the circumstances, most folks

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Speaker 1: understand how the game is played. In the context of

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Speaker 1: a typical Chapter eleven company, say, for example, a manufacturer,

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Speaker 1: the creditors know who gets paid in what order, and

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Speaker 1: the professionals who are advising the company understand how those

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Speaker 1: payments will be paid out over time to the various

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Speaker 1: classes of creditors and equity holders if there's some residual

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Speaker 1: value that flows to equity. Celsius has unwound nearly all

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Speaker 1: of its loans at decentralized finance platforms. In the past month,

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Speaker 1: it paid back more than nine million of its debt.

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Speaker 1: Is that copasetic? I mean, were they allowed to do that? Yeah,

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Speaker 1: So that's a really great question, June. So the answer is,

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Speaker 1: I think there are a lot of issues in the

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Speaker 1: cryptocurrency space that are being raised by the Celsius bankruptcy case.

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Speaker 1: And the lead up to that bankruptcy case. There are

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Speaker 1: issues of first impression and that will be substantially litigated

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Speaker 1: as part of the Celsius and other cryptocurrency bankruptcies. So

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Speaker 1: whether or not it's copathetic or otherwise permissible to make

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Speaker 1: those payments to various parties in the lead up to

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Speaker 1: a bankruptcy case will be I'm sure heavily litigated in

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Speaker 1: the course of these bankruptcy cases. But I would note

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Speaker 1: that in a typical bankruptcy case, a debtor can repay

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Speaker 1: whomever at once according to whatever priorities it sets from

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Speaker 1: a bankruptcy planning perspective, and so it's not unusual that

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Speaker 1: certain vendors would get paid ahead of other vendors, particularly

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Speaker 1: if those vendors are critical to the company's success or

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Speaker 1: to the to the success of a potential bank cruptcy filing.

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Speaker 1: So it's not unusual to have a preference of payments

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Speaker 1: to certain constituencies. But those may create additional issues inside

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Speaker 1: of the bankruptcy For example, when we're talking about preferential payments,

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Speaker 1: and there are some unique aspects too smart contracts and

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Speaker 1: to cryptocurrency in general that make that type of preference

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Speaker 1: analysis a little bit trickier than it would be if

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Speaker 1: you were in the course of a of a manufacturing bankruptcy,

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Speaker 1: for example. Might Celsius have paid those off because those

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Speaker 1: platforms are often, you know what you have to be

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Speaker 1: over collateralized, and maybe they'll get some money back from that,

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Speaker 1: you know. I think that's certainly a possibility, June. I

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Speaker 1: am not as familiar with all of the details on

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Speaker 1: Celsius and why it made the decisions it made, but

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Speaker 1: certainly there's an intricacy of of the contracts that are

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Speaker 1: at issue, particularly in the crypto currency world and then

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Speaker 1: defy decentralized finance, that there's a significant interplay between certain

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Speaker 1: contracts freeing up liquidity in terms of loans that were overcollateralized,

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Speaker 1: and so getting the value of some of that over

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Speaker 1: collateralization back. There are a number of other contract structures

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Speaker 1: that are in place in these decentralized finance platforms that

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Speaker 1: otherwise may have caused Celsius to pay those down prior

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Speaker 1: to other creditors or other constituencies. But I'm not familiar

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Speaker 1: with any of the details of those particular contracts. You

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Speaker 1: mentioned the term smart contract, explain what that is. Yes, so,

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Speaker 1: a smart contract is a is a contract that is

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Speaker 1: on the blockchain UH. And a smart contract basically has

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Speaker 1: a number of provisions in it. They're they're typically like

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Speaker 1: if we're talking about decentralized finance, those types of contracts

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Speaker 1: are are in Layman's simple loan contracts UM, and they

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Speaker 1: typically have uh, you know, features that are similar to

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Speaker 1: to loans in the sense that they have default provisions.

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Speaker 1: They set interest rates, they set the amount that's borrowed,

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Speaker 1: they said, the collateral if there is any collateral, things

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Speaker 1: of that nature. But they're self executing. So in other words,

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Speaker 1: if if the contract is a smart contract, then if

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Speaker 1: there's a default and a default is called under the

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Speaker 1: under the contract, it's automatically executing UH. And the collateral

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Speaker 1: that's pledged for the loan is seized at that point

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Speaker 1: in time making that UH and then and then those

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Speaker 1: funds are on the blockchain. So it takes out a

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Speaker 1: lot of the the work of bankers, lawyers, etcetera. In

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Speaker 1: you know, when making the calls. So it essentially takes

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Speaker 1: out some of the administrative costs to associated with a

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Speaker 1: with a typical uh, you know, loan transaction that you

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Speaker 1: might otherwise see you know, the users, the average people

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Speaker 1: in case of insolvency, what are the terms? Is there

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Speaker 1: any guarantee that or promise that they'll get their money back?

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Speaker 1: I think that's a great question, June. I think that, UM.

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Speaker 1: You know, I haven't studied any of the customer contracts

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Speaker 1: in the Celsius UH case, UM, and so I don't

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Speaker 1: know exactly, you know, what users might expect in terms

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Speaker 1: of a return, UM. But I think this is an

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Speaker 1: issue that's going to be significant. Again, it's going to

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Speaker 1: engender a significant amount of litigation, I suspect because it's

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Speaker 1: an issue of first impression. In the Celsius case, there

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Speaker 1: are a number of issues that it implicates, UM, including

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Speaker 1: whether these are you know, assets that are being held

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Speaker 1: in trust for for the customers the users of self

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Speaker 1: see us, or whether or not Celsius had the right

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Speaker 1: to use them uh for other purposes UM, much like

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Speaker 1: a bank does when they you know, when you take

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Speaker 1: out a loan from a lending institution, the lender then

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Speaker 1: can use those deposits and loan on those deposits. So

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Speaker 1: I think there's a lot of questions around these issues, UM,

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Speaker 1: that are going to get litigated in the course of

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Speaker 1: of the Celsius bankruptcy case and probably others that are

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Speaker 1: likely to follow on and to layer some complexity onto that.

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Speaker 1: There are there are other issues that are that are implicated. Right,

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Speaker 1: So a lot of the cryptocurrency firms that are that

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Speaker 1: are out there have taken a position that the cryptocurrency

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Speaker 1: is not a security. So are these accounts like brokerage

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Speaker 1: accounts that you would have at securities intermediary or a

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Speaker 1: brokerage house. Um. You know, I think the there's a

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Speaker 1: significant debate, particularly in academic circles, but also on the

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Speaker 1: regulatory side as to how how these types of assets

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Speaker 1: can and should be managed. And that implicates a number

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Speaker 1: of issues inside of a bankruptcy case. Uh, in in

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Speaker 1: particular around you know, who has the right to what

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Speaker 1: pool of funds? Because if if amounts are held in

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Speaker 1: trust for a customer will expected that those amounts will

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Speaker 1: be available uh and and be returned to the customer

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Speaker 1: at the end of the day. Is this the first

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Speaker 1: such bankruptcy to my knowledge, it's the first bankruptcy of

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Speaker 1: a crypto lender. You have Three Arrows Capital, which is

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Speaker 1: another another firm that that is I believe in administration

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Speaker 1: or liquidation. In the Cayman Islands, you also have Voyager,

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Speaker 1: and Voyager I believe is in its own kind of

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Speaker 1: restructuring situation, but I'm not as familiar with the details

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Speaker 1: on that one. So this is going to be a

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Speaker 1: first in any respects. Does that mean that this bankruptcy

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Speaker 1: will take longer than a bankruptcy of a regular company. Yeah,

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Speaker 1: so a couple of observations on that front June. So

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Speaker 1: in general, I would expect some of these issues to

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Speaker 1: uh certainly be litigated significantly. The Bankruptcy Code provides a

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Speaker 1: process through which appeals of decisions at the bankruptcy court

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Speaker 1: level can get certified directly to the Court of Appeals UM,

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Speaker 1: which would by bypass the initial step of going to

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Speaker 1: the district court for rulings on appeal. Because of the

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Speaker 1: nature of these questions that are going to be raised

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Speaker 1: in in the context of of the Celsius bankruptcy case

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Speaker 1: and the Voyager bankruptcy case which is also pending, I

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Speaker 1: believe in the Southern District of New York those and

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Speaker 1: and Voyagers is a brokerage UM as opposed to a lender.

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Speaker 1: I think what we're going to see between those two bankruptcies,

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Speaker 1: is a number of attempts to go on a direct

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Speaker 1: appeal to the second Circuit to try to get a

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Speaker 1: number of these issues resolved and resolved more quickly. Whether

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Speaker 1: or not the litigants are are ultimately successful UH in

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Speaker 1: going directly to the Court of Appeals the second Circuit

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Speaker 1: in this case, UH, it remains to be seen. But

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Speaker 1: I would expect these UH bankruptcy cases and the litigation

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Speaker 1: that's going to arise from these bankruptcy cases to take

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Speaker 1: some time before the issues are resolved. But one observation

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Speaker 1: just generally, when you have a complicated set of facts

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Speaker 1: and circumstances like you do uh in in the Celsius

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Speaker 1: bankruptcy case, a lot of times those issues will get

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Speaker 1: will get worked out in terms of the way that

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Speaker 1: there's compromises at at different levels with different constituents. But again,

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Speaker 1: because these are issues of first impression, I would expect

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Speaker 1: that a number of these issues will get taken up

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Speaker 1: on appeal UH certainly to the district court and maybe

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Speaker 1: to the Second Circuit Court of Appeals and potentially to

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Speaker 1: the Supreme Court. Ultimately, we covered some of the issues

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Speaker 1: of first impression, Are there any other issues of first

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Speaker 1: impression that you want to discuss. Yeah, so I think

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Speaker 1: that they're you know, in the context of cryptocurrency, there

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Speaker 1: are a number of issues. So number one, you've got

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Speaker 1: perfection issues in terms of how does how does a

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Speaker 1: lender perfect on account of cryptocurrency. There the Uniform Commercial

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Speaker 1: Code UH is currently in the process of going through

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Speaker 1: some amendments to address the issue, but those amendments haven't

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Speaker 1: been adopted yet by the Uniform UH UH, the Commission

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Speaker 1: on Uniform Laws, or by any states yet. And so

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Speaker 1: the perfection issues, I think are are ones that all

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Speaker 1: parties to UM cryptocurrency bankruptcies need to be attuned to,

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Speaker 1: because just because somebody believes that they're perfected in the

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Speaker 1: cryptocurrency doesn't mean they'll necessarily be perfected in the cryptocurrency.

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Speaker 1: So I think we're going to see some perfection fights

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Speaker 1: UH in in connection with UH you know, the Celsius

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Speaker 1: bankruptcy case, but also other cryptocurrency bankruptcy cases. I think

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Speaker 1: that there's a significant extra territoriality issue of UH first impression.

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Speaker 1: So a lot of the parties to the defy contracts

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Speaker 1: are not parties UH that are necessarily in the United States.

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Speaker 1: Keep in mind, a lot of these transactions occur on

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Speaker 1: the blockchain, and because of that, um a number of

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Speaker 1: these companies are are in far flung jurisdictions. You know,

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Speaker 1: some of the biggest traders and parties in the cryptocurrency

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Speaker 1: space or not located in the United States. They're in Singapore,

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Speaker 1: they're in London, there in South America. UH. Some are

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Speaker 1: in you know, islands in the Mediterranean. Uh. And so

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Speaker 1: there's there's an issue about how you can try to

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Speaker 1: recover you know, assets that might be uh, you know,

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Speaker 1: sitting in accounts that are held overseas or where there's

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Speaker 1: a contract counterparty that's overseas um and what is that

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Speaker 1: entail in terms of ultimate recovery for creditors and and

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Speaker 1: other constituents in a in a bankruptcy case, uh like Celsius,

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Speaker 1: like a voyager and others. So I think that the

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Speaker 1: extra territoriality issue is one that I think is going

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Speaker 1: to be litigated it and will take some time to

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Speaker 1: sort through. And in part because that's kind of a

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Speaker 1: hotbed issue in terms of fraudulent transfer law in the

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Speaker 1: in the US, and there's a disagreement among judges in

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Speaker 1: terms of the long arm reach of US bankruptcy law

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Speaker 1: and being able to clawback money that might have gone

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Speaker 1: to parties outside the United States. But I think that

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Speaker 1: will be certainly an issue that's litigated, uh in in

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Speaker 1: these bankruptcy cases. Because again, if you look at the

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Speaker 1: presentation that that Celsius has provided for purposes of of

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Speaker 1: its first day hearing, which is I believe going on

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Speaker 1: right now, there's only I think a couple of of

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Speaker 1: US entities. Are a handful of US entities that have

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Speaker 1: actually filed for bankruptcy. There's a number of entities that

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Speaker 1: are in you know, among other countries, Serbia, Lithuania, Israel, Cyprus, Gibraltar.

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Speaker 1: Those are those are non debtor entities in the context

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Speaker 1: of Celsius, but their contract counterparties for a number of

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Speaker 1: the entities are probably you know, uh parties that are

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Speaker 1: based outside the United States. So I think extra territoriality

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Speaker 1: is a significant issue in these cryptocurrency bankruptcies. Thanks so

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Speaker 1: much that that's that Wilson a partner in financial restructuring

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Speaker 1: at King and Spaulding. And that's it for this edition

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Speaker 1: of the Bloomberg Law Show. Remember you can always get

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Speaker 1: the latest legal news on our Bloomberg Law Podcast. You

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00:30:25,880 --> 00:30:29,840
Speaker 1: can find them on Apple Podcasts, Spotify, and at www

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00:30:30,120 --> 00:30:34,360
Speaker 1: dot bloomberg dot com slash podcast, slash Law, and remember

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00:30:34,400 --> 00:30:37,080
Speaker 1: to tune into The Bloomberg Law Show every week night

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00:30:37,200 --> 00:30:40,600
Speaker 1: at ten BM Wall Street Time. I'm June Grosso and

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Speaker 1: you're listening to Bloomberg