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Cryptocurrency – Is It Property? (Part II)

In our previous article on whether cryptocurrency could be classified as property, we suggested that it was only a matter of time before this question came before the English judiciary. In an important recent interim decision in Robertson v Persons Unknown [2019], the High Court has now acknowledged, for the first time, that there is a serious issue to be tried in relation to this point. It did so whilst granting an Asset Preservation Order (APO) over Bitcoins fraudulently obtained in a “spear phishing” attack.

Facts

The claimant, Liam Robertson, is the CEO of Alphabit, a crypto fund. He was deceived into transferring 100 Bitcoins (worth approximately £1.2 million) to a fraudster after a “spear-phishing attack”, which involved the use of complex spyware to clone the intended recipient’s email address. 80 of those Bitcoins were then sent to another individual, who held them in a Coinbase account, a UK domiciled crypto exchange. The 80 Bitcoins could be identified because the series of transactions had been recorded in a blockchain.

Robertson sought an APO over the 80 Bitcoins from the Commercial Court, primarily on the basis that they were his personal property and were subject to a trust. This argument was derived, in part, from the judgement of the Singapore International Commercial Court in B2C2 v Quoine Pte Ltd [2019] SGHC(I) 03, which we explored in greater detail in the previous article.

Judgement

At the without notice hearing, Mrs Justice Moulder found that there was a serious issue to be tried as to whether the 80 Bitcoins were Robertson’s personal property, such that he was entitled to claim and retain title in them. In light of this, she made an APO which prevented any dealings with the Bitcoins, as well as a Bankers Trust order requiring Coinbase to disclose information in relation to its account-holder. The APO was maintained at the return date by Mr Justice Jacobs. By that point, Robertson had discovered that the Coinbase account holder was an individual based in Nigeria and, as such, was also given permission to serve a claim out of the jurisdiction.

Comment

This is a highly significant judgement which demonstrates the willingness of the English courts to tackle the growing problem of cyber fraud and the question of whether cryptocurrency is property. Whilst only an interim decision, it may encourage other victims to seek recovery of their stolen cryptocurrency through the courts.

It is also notable that the judgement comes shortly before a Legal Statement on the status of cryptoassets is expected to be published in late summer 2019, following a consultation by the UK Jurisdiction Taskforce. This will hopefully contribute further to the development of the law in this area.

Related Lawyers: Duran Ross
Related Practice Areas: Commercial Disputes

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