MSTR Cat

Crypto Law/Level IX · Death, divorce and disputes/9.2 Family and money disputes/Lesson 4

Creditors and judgments

How a creditor who wins a money judgment in the US reaches a debtor’s crypto, what turnover orders and voidable-transfer law add, and why self-custody changes the method rather than the outcome.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Debtors: claim every exemption the state allows, since exempt property cannot be taken; moving crypto into exempt form after a claim appears can be undone under California Civil Code §3439.04, generally within four years, never later than seven.
  2. Creditors: start with free post-judgment discovery under Federal Rule of Civil Procedure 69(a)(2), questioning the debtor under oath and subpoenaing exchanges; false answers expose the debtor to sanctions.
  3. Against coins in self-custody, ask for a turnover order: Texas Civil Practice and Remedies Code §31.002(b) lets a court order the debtor to hand over non-exempt property under their control, enforceable by contempt.
  4. A California money judgment lasts 10 years and can be renewed for another 10 by filing forms EJ-190 and EJ-195 with a $45 fee, but only before expiry; a missed deadline cannot be fixed.
  5. Lenders avoid judgment enforcement entirely by taking control of collateral: UCC Article 12 lets a secured party perfect by control, in force in New York since 3 June 2026 and in over 30 states.

MaterialsFederal Rule of Civil Procedure 69 and the enforcement law of the relevant stateTexas Civil Practice and Remedies Code §31.002, the turnover statuteCalifornia Civil Code §3439.04 and §3439.09, on voidable transactions and their deadlines

Wonder

  1. Can someone who wins a lawsuit against me take my crypto?
  2. How does a creditor reach coins in a wallet that only the debtor controls?
  3. What if the debtor moves the coins to a relative before paying?

Explore

  1. A court judgment that someone owes money does not pay itself. The winner, the judgment creditor, must enforce it against the debtor’s assets, and crypto is property that can be reached like other property (lesson 1.2.1). In US federal courts, Rule 69(a)(1) of the Federal Rules of Civil Procedure says a money judgment is enforced by a writ of execution unless the court directs otherwise, with the procedure following the law of the state where the court sits. The same holding may therefore be easy or hard to reach depending on the state, and the exemptions that protect some property from creditors are also largely state law.
  2. The first task is finding assets. Rule 69(a)(2) lets a judgment creditor obtain discovery from any person, including the judgment debtor, under the federal rules or the procedure of the state where the court sits. That can mean questioning the debtor under oath, demanding documents and subpoenaing banks and exchanges. Exchange records show balances, deposit addresses and withdrawals to outside wallets, and on-chain analysis can then follow those addresses (lesson 9.3.4). The paper and blockchain trails described in lesson 9.2.2 work the same way here, and false answers in post-judgment discovery expose a debtor to sanctions.
  3. Where the crypto sits decides the method. A balance at a custodial exchange is in effect a claim against the platform (lesson 4.1.1), so a creditor typically serves a levy or garnishment on the exchange; whether that works depends on where the exchange is, its terms and the state’s rules. Coins in self-custody are different: no third party can hand them over, because only someone with the private key can move them. The court therefore acts on the debtor personally, ordering a transfer and punishing refusal. Self-custody changes the route, not the debt.
  4. Turnover statutes are built for such cases. Texas Civil Practice and Remedies Code §31.002 entitles a judgment creditor to a court’s aid, through injunction or other means, to reach non-exempt property, including present or future rights to property. Under §31.002(b), the court may order the debtor to turn over non-exempt property in the debtor’s possession or subject to the debtor’s control, with related documents and records, to a sheriff or constable, or may appoint a receiver to take possession of it, sell it and pay the creditor. Under §31.002(c), the order can be enforced by contempt proceedings. Other states have their own versions.
  5. Moving coins away to defeat a creditor can be undone. Under California Civil Code §3439.04, California’s version of the Uniform Voidable Transactions Act, a transfer made with actual intent to hinder, delay or defraud any creditor is voidable. The listed signs of intent include a transfer to an insider, keeping control after the transfer, concealment, a transfer made after the debtor was sued or threatened with suit, and removal or concealment of assets. Under §3439.09, an actual-intent claim must generally be brought within four years after the transfer, or within one year after it could reasonably have been discovered if that is later, and any claim ends after seven years.
  6. A creditor that lends against crypto stands in a stronger position than one holding only a judgment. The 2022 amendments to the Uniform Commercial Code add Article 12 on ‘controllable electronic records’ and let a lender perfect a security interest by taking control of the asset; New York’s version took effect on 3 June 2026, joining more than 30 states. In England and Wales, the Property (Digital Assets etc) Act 2025, enacted on 2 December 2025, confirms that a thing is not prevented from being property merely because it is digital or electronic. A practical check: for any claim by or against you, note where each holding sits, because that decides the enforcement route.

Key facts

  • Federal Rule of Civil Procedure 69(a)(1) provides that a money judgment is enforced by a writ of execution, following the procedure of the state where the court sits.
  • Federal Rule of Civil Procedure 69(a)(2) lets a judgment creditor obtain discovery from any person, including the judgment debtor.
  • Texas Civil Practice and Remedies Code §31.002(b)(1) lets a court order a judgment debtor to turn over non-exempt property in the debtor’s possession or subject to the debtor’s control.
  • Under Texas Civil Practice and Remedies Code §31.002(c), a turnover order may be enforced by contempt proceedings.
  • California Civil Code §3439.04 makes a transfer voidable if made with actual intent to hinder, delay or defraud any creditor.
  • The UK Property (Digital Assets etc) Act 2025 received Royal Assent on 2 December 2025.

Exercise nine, six, three, one

9CollectList up to 9 debts or claims you know of, owed by you or to you or in a case you have followed, where crypto might be used to pay or might be targeted.
6ClusterSort them into 6 groups by where the crypto sits: US exchange, foreign exchange, regulated custodian, self-custody, held by a relative or company, and unknown.
3DistillReduce the 6 to 3 by keeping the groups where enforcement would be hardest or slowest.
1CrystallizeWrite 1 sentence naming the legal tool a creditor would most likely use for each of those 3 groups.

Fact check

Dates, figures and claims checked against the published sources listed below.

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