Can Cryptocurrency Be Garnished?

Cryptocurrency held on a U.S. exchange can be garnished much like a bank account. Bitcoin, Ethereum, and stablecoins on Coinbase or Kraken are exposed. A judgment creditor moves for a writ of garnishment under Chapter 77 of the Florida Statutes. The clerk issues the writ, the creditor serves it on the exchange, and the exchange must hold the account and answer. Turnover comes after a final judgment of garnishment.

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. Collection is harder and more expensive for the creditor.

Can a Creditor Garnish Crypto on an Exchange?

A judgment creditor can garnish cryptocurrency held on a centralized exchange. Coinbase, Kraken, and similar platforms hold a customer’s digital assets and will move or sell them on the customer’s instruction. Chapter 77 reaches that arrangement. The writ covers any intangible personal property of the debtor held in a third party’s possession or control, and a custodial exchange account is exactly that. No Florida appellate court has applied the statute to an exchange yet, but nothing in its text leaves cryptocurrency out.

A creditor garnishing an exchange follows the same steps as bank account garnishment. Service of the writ creates a lien on the account and fixes the exchange’s liability. Conversion to dollars and payment to the creditor come after the court enters a final judgment of garnishment. Chapter 77 sets no valuation date for an asset whose price moves between service and judgment. The judgment against the exchange is entered for whatever its answer disclosed.

Exchanges do not resist these orders. Coinbase’s July 2026 user agreement commits the company not to move a customer’s digital assets except as the law requires, and it names garnishment, levy, and lien orders among those it will honor. Civil process is served on the company’s registered agent.

Stablecoins like USDC and USDT simplify the process. They track the dollar, so the price movement between the freeze date and the turnover date is much smaller than it is with Bitcoin. The peg is not a guarantee. USDC traded near 87 cents for two days in March 2023, when a bank holding billions of its reserves failed. Even so, a stablecoin balance still converts to close to its face amount.

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

A Florida court can garnish only property it has jurisdiction over. It needs personal jurisdiction over the garnishee, which here is the exchange, and it needs jurisdiction over the property itself. Jurisdiction over the property decides these cases, and it cannot be waived.

Serving the exchange is rarely the problem. Coinbase has had no headquarters since 2020, when it became a remote-first company, and it has no branch offices in Florida. Its operating company is registered to do business here and has a Florida registered agent. The harder question is where the property sits, since a digital asset has no branch and no vault. No Florida appellate decision has said where a coin on an exchange is.

Federal courts applying Florida law have dissolved writs aimed at accounts located in other states, holding that a Florida court has no jurisdiction over property outside Florida. A creditor cannot reach a bank account in another state through a Florida court. A Florida creditor may need to domesticate the judgment in the state where the exchange operates before garnishing the account, adding time and expense.

An exchange operating entirely outside the United States is harder still. A U.S. judgment carries no automatic force abroad. The creditor must ask that country’s courts to recognize and enforce it under their own law. Against an overseas crypto platform, that effort rarely makes financial sense.

The jurisdictional limit applies to the writ itself. The creditor has a second route that does not depend on where the exchange sits. Florida’s proceedings supplementary statute, § 56.29, lets the court order the debtor personally to bring assets in and apply them to the judgment.

In Shim v. Buechel, the Florida Supreme Court held in 2022 that this power reaches property outside Florida. The debtor there kept roughly $4 million in a safe in South Korea, and the court could order him to produce it. A writ that cannot reach an out-of-state exchange is therefore not the end of it. The court can order the debtor to withdraw the coins and hand them over. Distance raises the creditor’s cost without putting the coins out of reach.

What Happens with Self-Custody Wallets?

Crypto in a self-custody wallet is still exposed, though the creditor has to pursue the debtor personally to get it. The wallet stores private keys on a hardware device or in a software application, both under the debtor’s direct control, and no custodian holds the assets or owes the debtor anything. A hardware wallet in the debtor’s Florida house sits squarely inside the reach of a Florida court.

Courts still treat the cryptocurrency as property. The enforcement mechanism shifts to turnover orders, which direct the debtor to transfer specific assets to satisfy a judgment. For cryptocurrency, the order directs the debtor to send the digital assets to a wallet controlled by the creditor or a court-appointed receiver.

If the debtor refuses, section 56.29(7) lets the court hold him in contempt, and the sanctions run from fines to jail until he complies. The court must find that the debtor can actually comply, though a debtor who put the coins beyond his own reach cannot claim impossibility.

Courts can also order the debtor to identify wallet addresses and to move the coins. Ordering a debtor to recite a seed phrase is harder ground. The Eleventh Circuit has held that compelled decryption can be protected by the Fifth Amendment. Florida’s appellate courts are split on compelled passcodes. The order a creditor actually asks for is a transfer of the coins.

Decentralized exchanges like Uniswap and SushiSwap work differently. The companies behind them can be served, and the CFTC brought and settled a case against Uniswap Labs in 2024, but those companies hold nothing. A garnishment works only against someone who holds the debtor’s property or owes the debtor a debt. Serving the developer accomplishes nothing, which leaves the creditor with an order directed at the debtor.

Post-Judgment Discovery and Cryptocurrency

A judgment debtor must disclose all assets after judgment, cryptocurrency included: holdings, transaction history, wallet addresses, exchange accounts, and where the private keys are. The usual first step is the fact information sheet, which the court orders the debtor to complete under oath within 45 days. A creditor who wants more can take a deposition in aid of execution.

Lying about cryptocurrency holdings during post-judgment discovery is perjury. Moving cryptocurrency to a new wallet once a judgment exists risks a fraudulent transfer claim. The blockchain’s public ledger keeps every transfer traceable, though linking a wallet address to a person takes forensic analysis.

Creditors with large claims 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. Federal law requires exchanges to collect know-your-customer (KYC) information, so every exchange account leaves an identity trail a 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.

No Florida exemption is written for cryptocurrency. The general personal property exemptions still apply: $1,000 under the Florida Constitution, and $4,000 under § 222.25(4) for a debtor who claims no homestead. Those figures are too small to help against a large judgment. Protection has to come from where the crypto is held and how it is titled.

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. No Florida court has tested entireties ownership of digital assets. Tenancy by the entireties is a form of title, not a statutory exemption, and Florida’s entireties presumption has never been applied to an exchange account.

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 suit cryptocurrency because the coins can go into custody a U.S. court cannot unwind: held by the foreign trustee directly, or in a multi-signature wallet where no single keyholder, including the settlor, can move the assets alone. Setup runs about $21,000 trust-only, with annual trustee fees of about $5,000. Adding the offshore LLC most structures use brings those figures to about $26,000 and about $6,000.

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.

Florida’s fraudulent conversion statute, § 222.30, turns on the debtor’s intent. It reaches a conversion made before a claim arises as readily as one made after, if the purpose was to hinder or delay a creditor. The creditor has four years from the conversion to challenge it. A conversion made as part of ordinary retirement or estate planning, with no creditor in view, is the defensible case.

IRS and Federal Agency Collection

The IRS has treated cryptocurrency as property since 2014. Its criminal investigators have taken billions of dollars of it in forfeitures, but civil collection is a separate power. A federal tax levy reaches property held anywhere in the United States, so the state-line problem that stops a private creditor does not apply. The levy is served on whoever holds the asset, so a U.S. exchange can be levied directly and an exchange with no U.S. presence cannot.

A John Doe summons lets the IRS demand customer records from an exchange without naming the taxpayers first. A court narrowed the IRS’s Coinbase summons in 2017 to about 14,000 account holders. Cryptocurrency on a U.S. exchange is exposed to the IRS just as it is to a judgment creditor. Self-custodied coins are harder to seize but still reachable through turnover orders and contempt.

Responding to a Cryptocurrency Garnishment

A debtor whose exchange account is frozen by a writ has 20 days to file a sworn Claim of Exemption and request a hearing. If the creditor does not answer that claim within 8 business days of hand delivery, or 14 business days of mailing, the clerk must dissolve the writ. An exemption is worth claiming when the frozen account also holds retirement funds or other exempt property on the same platform.

The debtor should also check whether the creditor followed Florida’s garnishment procedure. A writ can be challenged and dissolved if it fails the statutory notice requirements, or if it was served on an exchange the court has no jurisdiction over. Florida courts construe the garnishment statutes strictly, and a creditor who skips a step can lose the writ over it.

Cryptocurrency in a personal exchange account or self-custody wallet has no exemption written for it under Florida law. Planning is cheaper and stronger before a claim arises, but it is not foreclosed afterward. Liquid assets are the best case for planning done after a lawsuit is filed, because coins can be moved into a structure a U.S. court cannot reach, while real estate stays where the court can find it.