Bankruptcy Remoteness

Bankruptcy remoteness is the question of whether the assets a platform holds for you would be treated as yours or as the failed firm's property if it collapsed, and it is a different question from whether they were segregated. Segregation is an operational arrangement; remoteness is a legal characterisation that turns on how the relationship was documented. Assets held in custody, as bailment or on trust are generally intended to remain the customer's and to be returned rather than shared among creditors. Assets that the terms described as lent to the platform, transferred by title, or placed in a yield or earn programme may instead make the customer an unsecured creditor with a claim in the queue. The words in the agreement therefore decide the outcome more than the balance on the screen does, which is why insolvencies in this sector have turned on product-level distinctions that customers never read. Characterisation, the effect of insolvency law and the treatment of any pooled holding all differ by jurisdiction.