Judgment debtors who once hid money in offshore accounts now hold it in an exchange account, a self-custody wallet, or a balance sitting in a payment app that never appears on a credit report. New York’s enforcement statutes were written long before any of that existed, and they still work, provided you know which device fits which asset. The post-judgment attorneys at Warner & Scheuerman approach digital assets the way they approach any other property: identify who controls it, determine whether a garnishee exists, and select the enforcement tool accordingly.
Can a judgment creditor seize cryptocurrency in New York?
Yes. CPLR 5201(b) makes any property in which the judgment debtor has an interest subject to enforcement, and that language is deliberately broad enough to capture digital assets. New York courts have treated cryptocurrency as intangible personal property, and the New York Department of Financial Services regulates virtual currency businesses operating in the state under its BitLicense framework, which means many major exchanges are licensed entities with a New York presence and a registered agent for service.
The harder question is never whether crypto is reachable. It is whether you can find it and whether anyone other than the debtor holds it.
What is the difference between exchange-held crypto and a self-custody wallet?
Crypto held on an exchange is held by a third party, which makes the exchange a garnishee and opens ordinary levy and restraint procedures. Crypto in a self-custody wallet is controlled only by the debtor’s private key, and no third party exists to serve.
That distinction drives everything.
For exchange-held assets, a restraining notice under CPLR 5222 served on the exchange freezes the account, and a levy by service under CPLR 5232(a) reaches the balance. Coinbase, Kraken, Gemini, and other regulated platforms have compliance departments that process legal process routinely. The same is true of payment platforms. Balances at PayPal, Venmo, Cash App, and similar services are custodial obligations owed to the account holder and can be restrained and levied like any other debt owed to the judgment debtor.
For self-custody, no garnishee exists, so the creditor must compel the debtor to act. A turnover proceeding under CPLR 5225(a) directs the judgment debtor to deliver property in their possession. Applied to crypto, that means an order directing transfer of the coins to a wallet the creditor or a receiver controls, or delivery of the seed phrase. Refusal is punishable as contempt under CPLR 5251, with civil contempt remedies available under Judiciary Law sections 753 and 773, including a fine measured by the creditor’s loss and, where the debtor plainly has the ability to comply, incarceration.
A receiver appointed under CPLR 5228 is often the better vehicle for self-custody assets, because a receiver can be authorized to take control of wallets, liquidate holdings, and account to the court, rather than relying on the debtor to cooperate.
How does a Warner & Scheuerman investigation locate digital assets?
Discovery comes first, and information subpoenas under CPLR 5224 do most of the work. A subpoena to the debtor’s bank frequently reveals ACH transfers to an exchange, which is the single most common way crypto holdings surface. Wire records, credit card statements showing on-ramp purchases, and tax returns reporting digital asset transactions all point the same direction.
Since tax year 2025, brokers including custodial exchanges have been required to report digital asset sales to the IRS on Form 1099-DA, so a debtor’s tax file is now a far more useful discovery target than it was a few years ago. The Form 1040 digital asset question, which every filer must answer, gives you a sworn statement to test at deposition.
A deposition of the judgment debtor under CPLR 5223 should ask directly about exchange accounts, wallet addresses, seed phrase storage, NFTs, staking positions, and stablecoin balances. Once a single wallet address is known, the public blockchain does the rest, because transaction history is visible to anyone and chain analysis can follow transfers to other addresses and to exchange deposit accounts where a garnishee reappears.
What obstacles come up most often
Volatility complicates valuation. A turnover order framed in dollars can be undermined by a price move between order and compliance, so orders are better drafted in units of the asset with a liquidation mechanism attached.
Offshore exchanges without a New York presence raise personal jurisdiction problems over the garnishee, and a restraining notice served on an entity with no New York contacts is unlikely to hold. Custodial platforms also read their terms of service closely and sometimes require a court order rather than a marshal’s levy.
The stablecoin market has grown large enough that debtors increasingly park value in dollar-pegged tokens rather than volatile assets, which removes the volatility problem for the creditor but not the location problem.
Nothing about a blockchain makes a debtor judgment proof. It makes the asset harder to find and easier to move, which raises the value of moving quickly once a wallet or exchange account is identified. Warner & Scheuerman represents judgment creditors in New York enforcement proceedings involving digital assets, from information subpoenas through turnover applications and receiverships. Contact the firm through wslaw.nyc to discuss what your judgment debtor may be holding.
