Crypto and digital assets: milestones in the English jurisdiction

D'Aloia v. Persons Unknown and others 

The High Court dismissed constructive trust and unjust enrichment claims brought by a fraud victim against the Thai-based exchange Bitkub, which was alleged to have received part of the allegedly stolen funds. This was in part due to critical deficiencies in the claimant's blockchain tracing analysis and the evidence presented. The claimant's expert provided inconsistent and poorly explained methodologies, undermining the credibility of the tracing evidence. Additionally, the funds in question had already been transferred away from Bitkub, leaving no asset over which a constructive trust could be established.

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Tai Mo Shan Ltd v Persons Unknown

The High Court allowed the enforcement of a New York judgment in a case involving stolen cryptoassets. The relevant cryptoassets were, following an ethical hack previously ordered by the English Court, held in a wallet managed by the claimant's solicitors. 

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Crypto Open Patent Alliance (COPA) V Dr Craig Wright

The High Court ruled that Dr Craig Wright is not Satoshi Nakamoto, the pseudonymous creator of Bitcoin, and not the author of the Bitcoin White Paper. It found Dr Wright's claims to be fraudulent and concluded that Dr Wright had engaged in the deliberate production of false documents to support his claims and used the courts as a vehicle for fraud. 

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Mooij v Persons Unknown

The High Court allowed the enforcement of a New York judgment in a case involving stolen cryptoassets. The relevant cryptoassets were, following an ethical hack previously ordered by the English Court, held in a wallet managed by the claimant's solicitors.

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Southgate v Graham

The High Court considered an appeal from the County Court regarding the valuation date for damages in a cryptocurrency loan dispute. The County Court initially based damages on the date the underlying loan agreement was breached. The claimant appealed, seeking valuation at the judgment date, which would be higher given the rise in the value of the relevant cryptoassets since the breach date. The High Court allowed this appeal, directing a further hearing to determine the appropriate valuation date. 

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📝 RPC article

Mannarino v Persons Unknown

Default judgment granted against persons unknown, including the unidentified fraudsters. A finding consistent with Mooij. 

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BSV Claims Ltd v Bittylicious Ltd

BSV Claims Ltd v Bittylicious Ltd is a collective action lawsuit brought before the Competition Appeal Tribunal (CAT) by BSV Claims Limited on behalf of UK-based holders of the cryptocurrency Bitcoin Satoshi Vision (BSV). The lawsuit alleges that several cryptocurrency exchanges colluded to delist BSV from their platforms between April and June 2019. In this judgment, the CAT rejected an application by Binance to strike out or summarily dismiss parts of the claim, finding that the claims had a realistic, albeit minimal, prospect of success.  The CAT therefore allowed the case to proceed to trial.

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D'Aloia v Persons Unknown

The first instance of service by NFT where the court permitted alternative service by 'airdropping' NFTs into the two crypto wallets known to be used by the defendants.

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Piroozzadeh V Persons Unknown

The first recorded case to date where an crypto exchange / platform (Binance) has sought to resist an information request. Argument that Binance held misappropriated cryptoassets on constructive trust doubted.

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Joseph Keen Shing Law V Persons Unknown

The court ordered the Huobi cryptocurrency exchange (located outside the jurisdiction) to transfer into the jurisdiction an alleged fraudster's cryptocurrency holdings at the exchange.  The relevant order provided that the holdings be converted into fiat currency and transferred to the court funds office. 

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Boonyaem V Persons Unknown

Summary judgment granted against the controllers of the wallets to which misappropriated Tether tokens had been traced but not against the unidentified and unidentifiable fraudsters. See Mooij, which did permit summary judgment against unidentifiable fraudsters.  

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Tai Mo Shan Limited v Oazo Apps Limited

The High Court ordered the operator of a crypto platform to carry out an 'ethical hack' to recover stolen crypto assets deposited on the platform and transfer them to a wallet controlled by the claimant's solicitors.

📝 Read CFAAR article

Tulip Trading

Case considering whether the developers maintaining the bitcoin networks owe either a fiduciary or tortious duty to take positive steps to allow the claimant to regain control over a sum of bitcoin despite no longer holding the relevant private keys.

• Fiduciary duties:

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• Crypto as security for costs

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Osbourne v Persons Unknown

Injunction granted over stolen NFTs bringing them in line with existing authorities in relation to cryptocurrencies.

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Jones v Persons Unknown

Arguable case found that misappropriated bitcoin traced to the  cryptocurrency exchange Huobi was held on constructive trust by the exchange and an order for delivery up made.

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Soleymani v Nifty Gateway

The claimant argued that section 89 of the Arbitration Act 1996 (dealing with unfairness in arbitration agreements) applied regardless of the applicable law of the underlying arbitration agreement (in this case requiring arbitration in New York under the JAMS rules). The Court of Appeal overturned a first instance decision staying the proceedings holding that the fairness determination should be made by the English Court.

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Chechetkin v Payward Ltd

The court refused to refused to enforce a California-seated arbitration award in a consumer dispute with Kraken and determined that had jurisdiction notwithstanding the arbitration clause in the relevant agreement on the grounds of public policy.

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New jurisdictional gateway (Gateway 25) added to the CPR

A new jurisdictional gateway is added to Practice Direction 6B of the Civil Procedure Rules, largely as a result of cryptocurrency litigation, to make it easier for claimants to seek disclosure orders against third parties, such as crypto exchanges outside the English jurisdiction.

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LMN v Bitflyer Holdings Inc

One of the first cases in which the court has granted permission to serve proceedings out of the jurisdiction under the new gateway for information orders.

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Danisz v Persons Unknown and Huobi Global

The High Court granted the claimant, whose cryptoassets had been misappropriated by unknown fraudsters, an interim proprietary injunction and a worldwide freezing order against the unknown fraudsters, and a banker’s trust order against cryptocurrency exchange Huobi to which the cryptoassets had been traced. The case merited "exceptional urgency" as only a small proportion of the claimant’s bitcoin was likely still under Huobi’s control and could be dissipated "at the click of a mouse".

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Ion Science v Persons Unknown (Enforcement decision)

First third-party debt order made in relation to cryptocurrency. The claimant traced misappropriated cryptocurrency to the cryptocurrency exchange Kraken. It transpired that Kraken was indebted to the accountholder of the sums and the court ordered that the claimant could be compensated by Kraken using the sums it owed to the accountholder.

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Reyes v Persons Unknown

The claimant was a victim of a malware attack that substituted their intended recipient wallet address with a different address controlled by fraudsters. The court granted a worldwide freezing order against the unknown fraudsters and proprietary injunctions to freeze certain assets in wallets linked to the fraud. The court also approved disclosure orders against Tether (the minter of the stolen cryptocurrency) and Binance (the platform through which the fraudulent transaction was made). 

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Fetch.ai v. PU [2021] EWHC 2254 (Comm)

A proprietary injunction and worldwide freezing order were granted against various categories of persons unknown who had misappropriated various cryptoassets from one of the claimant's Binance trading accounts. The court delineated the various categories of defendant persons unknown against whom the freezing order was directed as (i) those involved in the fraud, (ii) those who received assets without having paid a full price for them, and (iii) innocent receivers, with the court mindful that the relevant order should be drafted so as to protect innocent receivers from inadvertently breaching it.

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Ion Science v Persons Unknown

The lex situs (or more simply the 'law of the place where it is located') of a crypto-asset is the place where its owner is domiciled.
(Subsequent case law (see for example Tulip Trading) suggests that residence rather than domicile may be the better analysis)

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AA v Persons Unknown

Crypto-assets found to be arguably property and made the subject of a proprietary injunction, citing the UKJT legal statement.

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CMOC v Persons Unknown

A cyber-fraud case (involving fiat currency rather than cryptocurrency) that extended the Court’s jurisdiction to make worldwide freezing orders against anonymous defendants i.e. 'persons unknown'.

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