Can Cryptocurrency Be Garnished?

Cryptocurrency held on a U.S. exchange can be garnished the same way a bank account can. A judgment creditor files a writ of garnishment under Chapter 77 of the Florida Statutes, serves it on the exchange, and the exchange freezes and liquidates the account. Bitcoin, Ethereum, stablecoins, and every other token held on a platform like Coinbase or Kraken are exposed to this process.

Crypto held in a self-custody wallet is a different situation. There is no third party to serve, so the traditional writ is useless. Courts treat all cryptocurrency as property regardless of how it is stored, but the enforcement tools shift from garnishment to turnover orders and contempt proceedings. The practical difficulty of seizing self-custodied crypto does not make it legally protected—it makes collection harder and more expensive for the creditor.

Can a Creditor Garnish Crypto on an Exchange?

Coinbase, Kraken, and other centralized exchanges hold a customer’s digital assets and will liquidate or transfer them on request. That relationship mirrors a bank’s relationship with a depositor, and courts have treated exchanges as functional equivalents of banks for garnishment purposes.

The process follows the same steps as bank account garnishment. The creditor files a motion under Chapter 77, the clerk issues the writ, and the creditor serves it on the exchange. The exchange freezes the debtor’s accounts, converts the cryptocurrency to U.S. dollars, and turns over the proceeds after the court enters a final judgment of garnishment.

An Ohio law firm publicly documented a successful garnishment of over $12,000 in cryptocurrency from an exchange. The creditor identified the debtor’s exchange account through bank statements obtained by subpoena. The debtor had years of debits flowing to the exchange but had never disclosed the crypto holdings in prior proceedings. The exchange complied fully, converted the cryptocurrency, and issued a check. Limited published case law addresses crypto exchange garnishment directly, but the Ohio result reflects how exchanges handle these orders in practice: they comply.

Stablecoins like USDC and USDT make the process even simpler. Because stablecoins maintain a fixed dollar value, the exchange does not need to time a market conversion or deal with price volatility between the freeze date and the turnover date. The creditor gets dollar-for-dollar what the debtor held.

Can a Florida Creditor Garnish an Out-of-State Exchange?

Florida courts require both personal jurisdiction over the debtor and in-rem jurisdiction over the property to execute a garnishment. Coinbase is headquartered in California with no physical branch offices in Florida. It maintains a registered agent here, but whether that agent’s presence gives a Florida court jurisdiction over accounts maintained at Coinbase’s facilities in another state is an open question.

Florida courts have held that bank deposits are located at the branch where the account was opened. A creditor cannot garnish a bank account in another state through a Florida court. The same reasoning likely applies to cryptocurrency exchanges. A Florida creditor may need to domesticate the judgment in the state where the exchange operates before garnishing the account, adding time and expense.

Foreign exchanges operated entirely outside the United States present an even steeper barrier. Domesticating the judgment in the exchange’s home country and pursuing collection there is expensive enough with banks. With overseas crypto platforms, the effort almost never makes financial sense.

What Happens with Self-Custody Wallets?

A self-custody wallet stores private keys on a hardware device or software application that the debtor controls directly. No third-party custodian exists, and no intermediary owes anything to the account holder. Without a garnishee to serve, the writ of garnishment does not apply.

Courts still treat the cryptocurrency as property. The enforcement mechanism shifts to turnover orders—court directives requiring the debtor to transfer specific assets to satisfy a judgment. In the crypto context, that means the court orders the debtor to send digital assets to a wallet controlled by the creditor or a court-appointed receiver.

If the debtor refuses, the court can impose civil contempt sanctions, which may include fines or incarceration until the debtor complies. Courts can also order the debtor to disclose all private keys, seed phrases, and wallet addresses. Courts have compelled disclosure of passwords and digital credentials in other contexts, and the same principle applies to cryptocurrency credentials.

Decentralized exchanges like Uniswap and SushiSwap add another layer. These platforms run on smart contracts with no corporate entity operating them. A creditor cannot serve a writ on a smart contract. If a debtor holds tokens in a decentralized protocol or liquidity pool, the creditor’s only path is a turnover order directed at the debtor personally. Enforcing that order still depends on the debtor’s cooperation or the court’s willingness to impose contempt sanctions.

Post-Judgment Discovery and Cryptocurrency

A judgment debtor must disclose all assets during post-judgment discovery, including cryptocurrency holdings, transaction history, wallet addresses, exchange accounts, and the location of private keys. This testimony typically occurs during a debtor’s examination under oath.

Lying about cryptocurrency holdings during post-judgment discovery is perjury. Transferring cryptocurrency to a new wallet after a judgment is entered risks a fraudulent transfer claim. The blockchain’s public ledger makes transfers traceable, even if connecting a wallet address to a specific individual requires forensic analysis.

Creditors with large claims increasingly retain blockchain forensic firms to trace transactions and identify wallet addresses. These firms follow the flow of funds from known exchange accounts to self-custody wallets and other destinations. Cryptocurrency is pseudonymous, not anonymous—with enough effort and data, transactions can be linked to individuals. Exchanges themselves are required to collect KYC (know your customer) information, which means any exchange account creates an identity trail the creditor can subpoena.

Cryptocurrency in Bankruptcy

Bankruptcy requires full disclosure of all cryptocurrency holdings on the debtor’s schedules. The bankruptcy trustee can liquidate non-exempt crypto to pay creditors. The IRS has classified cryptocurrency as property since 2014, and bankruptcy courts follow that classification.

Florida law does not exempt cryptocurrency from creditor claims. Unlike retirement accounts protected under § 222.21 or annuities protected under § 222.14, no Florida statute shields digital assets. Cryptocurrency in a standard wallet or exchange account is a non-exempt asset, fully exposed to collection.

Tenants by the entireties ownership may offer some protection for married couples. If spouses jointly own cryptocurrency through a shared exchange account titled as tenants by the entireties, the assets may be protected from a judgment against only one spouse. Most cryptocurrency exchanges do not offer joint accounts in the traditional sense, and no Florida court has tested entireties ownership of digital assets. The theory is sound under Florida exemption law, but the practical application remains untested.

How to Protect Cryptocurrency from Creditors

An offshore trust funded with cryptocurrency provides the strongest available protection. A Cook Islands trust places digital assets under the control of a foreign trustee outside the jurisdiction of U.S. courts. A creditor would need to re-litigate the underlying claim in the Cook Islands under Cook Islands law, which heavily favors the trust’s integrity. Cook Islands trusts are particularly well-suited for cryptocurrency because the assets can be held in offshore exchange accounts or multi-signature wallets controlled by the foreign trustee. Setup runs between $20,000 and $25,000, with annual maintenance of $5,000 to $8,000.

A self-directed IRA that holds cryptocurrency is protected under Florida Statute § 222.21, provided the account complies with the statute’s requirements. Several custodial platforms allow IRA holders to invest in Bitcoin and other digital assets within a tax-advantaged retirement account. The assets inside the IRA receive the same exemption as any other IRA investment.

Converting cryptocurrency to an exempt asset class is another approach. Florida’s annuity exemption under § 222.14 protects annuity contracts and their proceeds from creditor claims. Liquidating cryptocurrency and purchasing a Florida annuity converts a non-exempt asset into an exempt one. The timing of conversion matters—a conversion made before any claim exists is generally defensible, while a conversion after a lawsuit or judgment may be challenged as a fraudulent conversion.

IRS and Federal Agency Collection

The IRS treats cryptocurrency as property and has seized billions of dollars in digital assets through its Criminal Investigation division. Federal agencies are not subject to the state jurisdictional limitations that restrict private creditors. The IRS can levy cryptocurrency on any exchange, domestic or foreign, without domesticating a judgment in another state.

The IRS has used John Doe summonses to compel exchanges like Coinbase to produce customer records, identifying taxpayers who failed to report cryptocurrency transactions. For anyone facing federal tax obligations, cryptocurrency held on any U.S. exchange is fully exposed. Self-custodied cryptocurrency is harder to seize directly, but the IRS can obtain turnover orders and use civil contempt to compel disclosure.

Responding to a Cryptocurrency Garnishment

A debtor who receives notice that a creditor has served a writ on a cryptocurrency exchange should respond immediately. If the frozen account also holds exempt assets—retirement holdings on the same platform, for example—the debtor should file a Claim of Exemption under Chapter 77.

The debtor should also examine whether the creditor followed the procedural requirements of Chapter 77. Writs that fail to comply with statutory notice requirements or that are served on an exchange without proper jurisdiction can be challenged and dissolved. Florida courts construe garnishment statutes strictly against creditors, and procedural defects are a real basis for relief.

The strongest defense is having the right structure in place before any claim arises. Cryptocurrency sitting in a personal exchange account or self-custody wallet has no statutory protection under Florida law. Planning must happen before the creditor appears.