Crypto Asset LawEnforcement and Bankruptcy LawInformation Technology LawThe Fate of Customers’ Crypto Assets in the Event of a Platform’s Insolvency

The platform’s insolvency highlights the distinction between the customer’s economic right to a crypto asset and where and how that asset is technically held. Under Turkish law, the fundamental safeguard is that client assets must be kept separate from the crypto-asset service provider’s own assets, and records must be maintained in a manner that reflects this separation. However, this separation, on its own, does not provide the client with an absolute guarantee of payment similar to that offered by deposit insurance.

There is a significant limitation on the sources used in this assessment: the current full text of Circular No. III-35/B.1 is not included in the available legislative dataset. Consequently, it is not possible to provide precise citations regarding the article numbers and full provisions of the circular. The following explanation is based on the provisions of the Capital Markets Act No. 6362, as found in the data set, and the general framework of insolvency law. The current text of Circular No. III-35/B.1 and the platform’s licensing conditions should also be checked.

Legal Framework

Segregation of client assets from the platform’s assets

The provisions of the Capital Markets Law No. 6362 relating to crypto-asset service providers require that clients’ cash and crypto-assets be kept separate from the service provider’s assets. This separation aims to prevent the platform’s own liabilities from becoming commingled with the clients’ assets.

The theoretical safeguard of this provision lies in the separation of the customer’s assets from the platform’s liabilities as distinct legal and accounting categories. Accordingly, the platform’s creditors should, as a rule, not be able to claim against assets belonging to customers on account of the platform’s liabilities.

However, the practical safeguard of this provision is not limited to the text of the law alone. At least four elements are required for effective protection:

• Accurate record-keeping on a customer-by-customer basis,
• The physical segregation of the platform’s own assets from customer assets,
• Proper management of private keys or custodial accounts,
• The preservation of records in an auditable manner in the event of insolvency or cessation of operations.

This is where practical weaknesses come to light. If records are incomplete, if the platform has commingled client assets with its own assets, if the assets of multiple clients are held in the same wallet and the internal accounting is not functioning correctly, or if client balances exceed the actual balance on the blockchain, it becomes difficult to prove compliance with the segregation principle.

General rule regarding the insolvency estate

Article 184 of the Enforcement and Insolvency Act stipulates that, upon the declaration of insolvency, all of the insolvent party’s assets subject to attachment shall constitute the insolvency estate. This general rule applies in respect of the platform’s own assets.

This provision must be considered in conjunction with the segregation of client assets under Law No. 6362. If client assets have been genuinely segregated, recorded and kept separate from the platform’s assets as belonging to the client, they should, as a rule, not form part of the platform’s bankruptcy estate. Conversely, assets owned by the platform itself, the platform’s claims and any debt arising from a shortfall in a customer’s account may be included in the insolvency estate.

The critical distinction here is whether the customer is claiming the ‘return of the exact same crypto asset’ or asserting a right to compensation or a claim arising from the platform. If the asset has been segregated in the customer’s name, a claim for return in kind or withdrawal from the relevant custody account may take precedence. If segregation is not possible, the customer may find themselves in the position of a creditor against the platform and face the risk of being treated on a par with other unsecured creditors in the insolvency proceedings.

Is there any guarantee similar to deposit insurance?

In the current legislative framework, there is no provision indicating that crypto-assets are generally insured in the same way as deposits or unit trusts. The segregation principle set out in Law No. 6362 does not constitute insurance or a public payment guarantee.

Therefore, the two concepts must be distinguished:

• The principle of segregation: Aims to keep the asset separate from the platform’s liabilities.
• Insurance or public guarantee: Ensures that payments are made within certain limits should the asset be lost, prove insufficient or the platform lose its ability to pay.

The principle of segregation does not automatically entail the second outcome. Should the platform hold customer assets in insufficient quantities, lose private keys, record customer accounts incorrectly, or lend the same asset to more than one customer, the statutory segregation provision does not automatically compensate for every loss.

Scenario Analysis

Scenario 1: Assets have been transferred to an authorised custodian

If the platform holds customer assets with a separate custodian, the platform’s insolvency must be kept separate from the custodian’s financial position. The platform’s insolvency does not imply that the custodian is also insolvent.

In this case, three sets of records must be compared:

1. The platform’s customer account records,
2. The custodian’s customer-specific records,
3. The actual balances and transfer history at the relevant blockchain addresses.

If the records are consistent with one another, it becomes more feasible to apply the principle of separation. The customer may argue that their assets are under the control of the custodian, not the platform, and have been allocated to their own account.

However, in a structure where the custodian merely holds a collective wallet and the customer-specific records remain on the platform, the issue of proof persists. The fact that assets have been transferred to the custodian does not mean that customer-specific ownership is automatically and indisputably proven.

If the custodian has segregated customer assets in its own records, a claim for delivery or transfer directly from the custodian may arise, rather than a claim against the platform’s insolvency estate. Conversely, if the custodian does not carry out any transactions without the platform’s instructions, guidance from the insolvency administrator, the court or the competent regulatory authority may be required.

Scenario 2: Assets are held in a commingled manner in the platform’s collective wallet

In the ‘commingled’ custody model used in exchange wallets, the assets of numerous customers may be held at the same blockchain address or under the same key structure. This structure does not, in itself, constitute a breach of the law. Provided that customer-specific internal records are reliable and consistent with the blockchain balance, the pooled wallet model may be regarded as a technical operational choice.

The problem arises when the aggregate wallet balance does not match the total of the customer accounts. For example, if the platform appears to owe customers a total of 1,000 units of crypto assets whilst the wallet contains only 600 units, the question arises as to who will bear the shortfall.

At this stage, the following documents become crucial:

• The customer account balance as at the date of insolvency or cessation of operations,
• The platform’s statement of total liabilities,
• The custodian’s records,
• The balances of blockchain addresses,
• Records of withdrawals and internal transfers made from the platform,
• Whether customer assets were used in the platform’s own transactions,
• Audit reports,
• Authorisation and key records relating to wallet addresses.

The existence of a pooled wallet does not automatically convert a customer’s claim into a simple monetary claim. However, if it renders it impossible for a specific customer to access a specific asset, either in full or proportionally, this raises issues regarding the method of distribution from the perspective of the insolvency administration and the court.

Lessons Learnt from the FTX Bankruptcy

One of the key debates in the FTX case was whether customer assets belonged to the customers or should be treated as part of the assets under the platform’s control. Under Section 541 of the US Bankruptcy Code, the scope of the estate is determined by the assets the debtor owned or had a legal interest in as at the date of insolvency.

This model has highlighted the importance of customer contracts, platform records, how assets are held, and whether the company utilised customer assets in its own transactions. Even if a contract states that customer assets belong to the customer, the actual record-keeping and control arrangements are examined separately.

From a Turkish perspective, the FTX case is not a direct precedent. However, it offers the following comparative lesson: if contractual and statutory provisions regarding the segregation of client assets are not supported by separate record-keeping, a separate wallet policy, key management and auditable accounting, the burden of proof at the time of insolvency becomes significantly greater.

The Difference Between MiCA and Turkey

The European Union’s MiCA regime imposes obligations on crypto-asset service providers to keep client crypto-assets separate from their own accounts and to establish a custody arrangement that safeguards their returnability to clients. It also establishes a more detailed compliance framework that restricts the transfer of client assets to the service provider’s own accounts and their use to the detriment of clients.

In Turkey, Law No. 6362 also explicitly provides for the segregation of client assets from the service provider’s own assets. The difference lies in the extent to which detailed liquidation, restitution, record verification, liability and compensation mechanisms—particularly those to be applied in the event of insolvency—are regulated.

Under the MiCA framework, regulatory obligations are tied to a more detailed European Union framework. In Turkey, however, as of 2026, there is no comprehensive, clear and crypto-asset-specific liquidation procedure setting out the order and method by which customers will receive their assets in the event of a crypto-asset service provider’s insolvency, how the balance of a mixed wallet is to be distributed, and how losses are to be apportioned in the event of a shortfall.

Gaps in Turkish Legislation

The uncertainty in Turkish law stems not so much from whether a crypto asset holds economic value, but rather from the fact that the following questions have not been specifically addressed in the event of a platform’s insolvency:

• By what procedure will customer assets be returned in kind?
• If the records of the platform and the custodian conflict, which will take precedence?
• If there is a shortfall in the collective wallet, how will the loss be apportioned amongst customers?
• If the platform has used customer assets in its own transactions, will restitution or compensation take precedence?
• Who will be liable in the event of the loss of a private key?
• How will the insolvency administrator take over technical control of assets on the blockchain?

Under the current system, general insolvency provisions will be applied in conjunction with the principle of segregation set out in Law No. 6362. However, it cannot be concluded that there is a specific liquidation procedure unique to KVHS insolvency that resolves all these technical issues.

What Investors Need to Do Today

1. Obtain a copy of the platform’s terms and conditions and custody terms. It must be determined whether the assets are held in the platform’s own account or with a separate custodian.

2. Retain KYC and account records. Account opening details, the client agreement, balance screens, transaction statements and deposit and withdrawal records must be kept in a separate file.

3. Document the identity of the custodian. If the platform outsources its custody activities to another organisation, the organisation’s name, scope of authorisation and the register under which customer assets are segregated must be ascertained.

4. Maintain regular account and blockchain records. Regular comparisons must be made between the balance in the platform account and known wallet addresses. These records may serve as evidence should the platform cease operations in the future.

5. Assess the custody option based on the type of asset. Authorised custodial institutions, on-platform custody, personal non-custodial wallets and multi-signature arrangements each carry different risks. Risks such as loss of authorisation, loss of keys, technical errors, inheritance, seizure and insolvency must be assessed collectively.

6. Take immediate action at the first signs of bankruptcy or cessation of operations. Should the platform suspend withdrawals, customer services fail to respond, or a regulatory authority impose operational measures, the determination of balances, the preservation of records, registration with the insolvency estate and, where necessary, the pursuit of interim relief must be assessed immediately.

In the event of the platform’s insolvency, the fate of customers’ crypto assets depends primarily on whether the assets have been segregated from the platform’s assets and whether they have been recorded in a verifiable manner on a customer-by-customer basis. Law No. 6362 provides for the segregation of customer assets from the platform’s assets and stipulates that they shall not be included in the insolvency estate due to the platform’s liabilities. However, this provision does not constitute deposit insurance or a public payment guarantee.

The likelihood of a refund is greater for assets that have been transferred to an authorised custodian and segregated on a customer-by-customer basis. In the case of assets held in a collective wallet in a commingled manner and with incomplete records, however, the customer’s claim will face challenges relating to segregation and proof. The FTX case demonstrates that the contract text alone is not sufficient; record-keeping, key management, wallet architecture and auditable accounting are decisive factors.

The concrete step investors must take today is to create a custody file containing the platform’s terms and conditions, details of the custodian, customer balances, transaction history and known blockchain addresses; and to document in writing how the platform segregates client assets from its own assets and custody records.