Crypto asset protection: legal insights

Full transcript

0:11 Hi, I’m Max Dilendorf. I’m a New York-based attorney, and since 2017, I’ve focused my practice on crypto and digital asset law. Over the years, my firm has represented more than a hundred clients in crypto custody arbitration and litigation disputes—cases where exchanges or other parties were responsible for losses or theft of client’s digital assets.

0:39 After seeing firsthand how devastating these incidents could be, I know how critical solid asset protection strategies are for anyone with significant crypto holdings.

0:53 One thing I can say for certain: keeping large amounts of crypto on exchanges is not safe.

1:01 Every U.S. crypto exchange states in their terms and conditions that the risk of loss is entirely on the customer. If your account gets hacked, they’re not liable.

1:13 So, how do you protect your crypto from hacks, creditors, divorce, or litigation?

1:20 Here’s the thing—there’s no one-size-fits-all solution. Asset protection needs to be tailored to your individual situation, goals, and risk profile.

1:31 And before we even begin designing a crypto asset protection plan, we need to know the basics about you. What’s your age? Your family situation—do you have kids or not? What are your future plans look like?

1:46 For example, we’re seeing more and more tech founders and crypto holders setting up second residencies outside the U.S.—sometimes off-radar locations for additional privacy or diversification. These factors are absolutely key when creating a strategy that truly fits your goals and lifestyle.

2:07 For some clients, we may recommend setting up a domestic Family Limited Partnership, or FLP, with U.S.-based custody. These structures can be powerful in protecting assets during litigation or a divorce proceeding.

2:25 Partnership law in the U.S. goes back over a century, starting with the Uniform Partnership Act of 1914. When an FLP is properly structured, it’s one of the most effective tools for both asset protection and estate planning.

2:42 Then there are offshore options—many tech founders prefer Cayman Islands trusts and appointing a professional trustee company out of Switzerland or Liechtenstein to manage these structures.

2:57 The Cayman Islands are well-known for their STAR law provisions, which can offer robust protection against creditor claims, including divorces—provided these structures are set up proactively, before any litigation and dispute begins.

3:16 Other clients prefer domestic trust structures, which can hold crypto through Swiss custodians.

3:24 These structures combine the advantages of U.S. trust law with the security and advanced custody technology offered by top-tier Swiss or Liechtenstein banks.

3:36 Then there are hybrid structures—where we set up U.S. trusts that start as domestic vehicle but include provisions allowing them to migrate to standby offshore jurisdictions in case of a triggering event. For example, if the client decides to relocate himself and his family outside of the U.S. These strategies can provide flexibility and enhanced protection. For other clients, a straightforward LLC structure combined with an account at a Swiss or Liechtenstein bank may be just enough.

4:12 So, as you can see, every client’s situation is unique.

4:16 But the key takeaway is simple: with the right planning, crypto asset protection can be achieved here in the U.S., and you don’t always need complex offshore structures and setups.

4:27 If you have any questions about your specific case—or if you’re wondering how to structure your crypto holdings for enhanced security—please don’t hesitate to reach out.

4:38 I’m here to help you navigate the complexities of crypto asset protection. Thank you for watching. I’m Max Dilendorf—see you in the next episode.

A transcript of the recording, so it reads as speech rather than as prose. It explains the law in general terms and is not advice on your own situation, which turns on facts this video cannot know.