The legal grey zones in cryptocurrencies have been an underlying concern for investors and the public. The struggle to regulate cryptocurrencies exposes crypto owners to risk of theft by cybercriminals, with a record of approximately
With over 2 million people in the
IF YOU CAN TRACE BACK YOUR CRYPTO YOU CAN KEEP IT
In Jones v Persons Unknown [2022] EWHC 2543 (Comm), the Claimant had been fraudulently convinced to transfer 89.61616088 in Bitcoins to a fake crypto-investment platform. His Bitcoins were traced to a wallet associated with the company
Due to the complexity of the Defendants in this case, it is helpful to set out who they are individually:
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First Defendant (Persons Unknown)- the people or companies who fraudulently obtained access to the Claimant's bitcoin accounts between
- Second Defendant (Persons Unknown) - The people or companies who own or control the accounts into which the Bitcoin was transferred for less than full value.
- Third Defendant (Persons Unknown) - The people or companies who are innocent receivers who have no reasonable grounds for thinking that what has appeared in their account belonged to the Claimant)
- Fourth Defendant -
Huobi Global Limited - An order for delivery-up of Bitcoin from the Fourth Defendant.
- Maintenance of the interim proprietary and non-proprietary injunctions, and a final proprietary injunction preventing the disposal of the Claimant's Bitcoin.
- The service of an out-of-jurisdiction order on the First, Second, and Fourth Defendants.
- Permission for service to the First, Second, and Fourth Defendants by an air-drop of a non-fungible token into the Fourth Defendant's wallet.
- Norwich Pharmacal Co v Comrs of Customs and Excise [1974] AC 133
- Bankers Trust Co v Shapira [1980] 1 WLR 1274.
The Court was asked to decide on the following:
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An application for a summary judgement against the First, Second, and Fourth Defendants.
HOW DISCLOSURE APPLICATION CAN HELP IDENTIFY CRYPTO THIEVES
In LMN v
In order to further trace the misappropriated cryptocurrency, the Claimant required 'Know Your Client' and other anti-money laundering information from the various exchanges and third parties.
The Court granted the information orders sought by the Claimant, relying on two strands of case law authority, namely;
The latter's jurisdiction arises when there is robust evidence that the Claimant's property has been misappropriated. Norwich Pharmacal "allowed a claimant to seek disclosure from an "involved" third party who had information enabling the claimant to identify a wrongdoer so as to be in a position to bring an action against the wrongdoer where otherwise he would not be able to do so" [para 18].
In addition,
WHAT THESE DECISIONS MEAN FOR CRYPTOCURRENCY LITIGANTS
Both these decisions are incredibly important in the Wild West environment of cryptocurrency. One of the advantages of trading in cryptocurrency is the elevated level of anonymity it provides. The other side of this is that fraudsters, money launderers, and other shady characters are drawn to cryptocurrency like moths to a flame. These decisions highlight that English Courts are not only willing to treat cryptocurrency as a form of property and to make orders aimed at assisting the recovery of stolen cryptocurrency, but they are also alive to the fact that the law must move quickly to protect Claimants' rights, especially when
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
Quastels
W1U 7BU
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