Corporate distress has returned to levels not seen since the global financial crisis. In New Zealand, company liquidations have hit a 15-year high, the largest number of company removals in nearly a decade. New Zealand’s Centrix January 2026 Credit Indicator Report revealed company failures were at their highest level since 2010, with hospitality, retail trade, transport and construction seeing significant increases.

ASIC reported that in the 2024-2025 financial year, by 31 May 2025 Australian corporate insolvencies had surged 34.2% year-on-year. With 31% of Australian adults now owning or having owned cryptocurrency and New Zealand adoption sitting at 14%, these cases are increasingly likely to involve digital assets. For liquidators, the traditional toolkit of padlocks and auctions is no longer relevant.

“The biggest risk is simply failing to identify the asset exists,” says Lee Pascoe, commercial dispute resolution and restructuring/insolvency special counsel at law firm, Norton Rose Fulbright Australia. “I’ve had practitioners come to me 18 months after an appointment saying, ‘I think my guy had cryptocurrency.’ At that point, it’s long gone.”

The fiat shadow

Pascoe advises practitioners to start by assessing the asset base before even stepping on site.

“If there are significant cash assets or unexplained transactions, you should also be looking for crypto assets,” she says. “If you see other red flags, such as an unusual number of bank accounts, look very closely for digital assets in that particular job.”

“Undisclosed digital assets are most often identified through bank statement reviews, looking for payments to known crypto exchanges, brokers or unexplained cash movements,” says Tom Aspin CA, Grant Thornton New Zealand’s insolvency specialist and digital assets lead.

Silence is also a signal. If bank records or emails suggest crypto usage, Aspin suggests targeted outreach to virtual asset service providers (VASPs). “Asking VASPs for confirmation of accounts and withdrawals can quickly convert a suspicion into evidence.”

The race for the cold wallet

Once suspicions are confirmed, the instinct is often to seize the hardware. But finding a physical crypto wallet, or a director’s laptop holding a hot wallet, is often a red herring.

“The immediate first step is not grab the device,” says Aspin. “Physical seizure of hardware can be part of evidence preservation, but it’s rarely sufficient. Digital assets can be moved remotely by anyone who already has the seed phrase or private key – for example, an aggrieved employee who has just found out they are losing their job.”

Aspin argues the priority is moving assets into practitioner-controlled custody immediately, ideally using an insured, reputable third-party custodian.

But the rush to secure assets can backfire if practitioners underestimate the risks involved in private‑key handling. Pascoe recalls a case when a firm attempted to secure assets by transferring them to a cold wallet, only to realise they had sent them to a wallet for which they did not hold the private key. The assets were irremediably lost.

The valuation minefield

Before a liquidator can worry about realising value, they need to solve the ‘property vs data’ conundrum. The argument that digital assets are merely information recently failed in Australia in November 2025, with the Victorian Court of Appeal Yeates v R decision citing a trans-Tasman precedent.

“Ruscoe v Cryptopia gives New Zealand a clear High Court basis that cryptocurrency is ‘property’,” Aspin says, allowing practitioners to “get past the classification debate and treat crypto as an asset you can identify and secure”.

But having the legal right to sell cryptocurrency solves only half the problem. In a market where prices swing double digits daily, when do you pull the trigger?

“There is no guidance in Australia or New Zealand on the timing of sale,” Pascoe notes. She points out that selling in large tranches during market dips – as seen in the Mt Gox bankruptcy – can draw intense criticism from creditors. “It is not a one-size-fits-all answer. Often, it requires expert advice to substantiate your methodology.”

The end of offshore invisibility

The forensic challenge is often compounded by poor hygiene at the source. Pascoe warns a major headache is the intermingling of assets, where directors fail to distinguish between personal holdings and company property.

“It often starts without ill intention,” she explains. “But the distinction blurs easily and becomes a critical issue when the company collapses.”

Aspin argues the goal is to catch this ambiguity long before the liquidators arrive. He invites CAs to ask every client one simple question: ‘Can you provide a complete inventory of every digital asset you own or control?’

This question is becoming mandatory. With the Organisation for Economic Co-operation and Development (OECD) Crypto Asset Reporting Framework (CARF) set to automate information sharing between global tax authorities, the window for secrecy is shutting. “The idea of crypto having ‘offshore invisibility’ is disappearing fast,” Aspin warns.

Clear tax frameworks, surging market caps and courts now formally recognising crypto as a legitimate asset class are a few of the signs of an industry maturing rapidly.

The ecosystem is already replicating the traditional financial sector through crypto lenders, margin lending and smart contracts. “People will wake up one day with a mirror financial system running on blockchains,” Pascoe says.

“Sooner or later, you’re going to deal with crypto assets, which means you need to upskill on the basics or surround yourself with people who know what they are doing.”

The red-flag checklist

If you suspect undisclosed digital assets, look for the fiat trails they leave behind.

• Bank statements: look for transfers to known exchanges (e.g. Binance, Swyftx, Coinbase) or payment processors (e.g. MoonPay, Banxa).
• Lifestyle indicators: if there is a lot of unexplained cash movement, look for crypto.
• Email inbox: search for keywords such as ‘transaction hash’, ‘TXID’, staking rewards or AirDrop.
• Expense ledger: review subscriptions to trading bots, VPNs or crypto-tax software.
• Hardware: check physical devices, including Ledger or Trezor USB sticks, or metal ‘seed phase plates’ used to store backup codes.