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Fraud and asset recovery in the crypto space

A High Court decision in Ion Science Ltd and Duncan Johns v Persons Unknown, Binance Holdings Limited and Payward Limited might assist victims of fraud to recover stolen cryptocurrency and other digital assets

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Published 23 April 2021

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The largely unregulated nature of the cryptocurrency space has, on occasion, made it a target for fraudsters. However, a recent High Court decision might assist victims to recover stolen cryptocurrency and other digital assets.

The Claimants had been induced to transfer large sums of Bitcoin, in the belief that they were making legitimate investments. The Bitcoin was then dissipated by the recipient fraudsters through various cryptocurrency exchanges, including Binance and Kraken.

The Claimants made an ex parte application, seeking:

  • 1. A proprietary injunction, worldwide freezing order and ancillary disclosure order against “Persons Unknown” (i.e. the unknown fraudsters);
  • 2. A disclosure order against the cryptocurrency exchanges to reveal the identity of the fraudsters (under the “Bankers Trust” jurisdiction and/or CPR 25.1(g)); and
  • 3. Orders relating to service of the above outside of the jurisdiction.

The Court granted all orders sought by the Claimants. This is the first time that an English Court has ordered a cryptocurrency exchange outside of the UK to make disclosures of this nature in question. The Court held that, in the eyes of the law, the lex situs (i.e. location) of a cryptoasset is the place where its owner is domiciled. The fraud was therefore deemed to have occurred within the English Court’s jurisdiction.

The case is ongoing.

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Shorter Reads

Fraud and asset recovery in the crypto space

A High Court decision in Ion Science Ltd and Duncan Johns v Persons Unknown, Binance Holdings Limited and Payward Limited might assist victims of fraud to recover stolen cryptocurrency and other digital assets

Published 23 April 2021

Associated sectors / services

Authors

The largely unregulated nature of the cryptocurrency space has, on occasion, made it a target for fraudsters. However, a recent High Court decision might assist victims to recover stolen cryptocurrency and other digital assets.

The Claimants had been induced to transfer large sums of Bitcoin, in the belief that they were making legitimate investments. The Bitcoin was then dissipated by the recipient fraudsters through various cryptocurrency exchanges, including Binance and Kraken.

The Claimants made an ex parte application, seeking:

  • 1. A proprietary injunction, worldwide freezing order and ancillary disclosure order against “Persons Unknown” (i.e. the unknown fraudsters);
  • 2. A disclosure order against the cryptocurrency exchanges to reveal the identity of the fraudsters (under the “Bankers Trust” jurisdiction and/or CPR 25.1(g)); and
  • 3. Orders relating to service of the above outside of the jurisdiction.

The Court granted all orders sought by the Claimants. This is the first time that an English Court has ordered a cryptocurrency exchange outside of the UK to make disclosures of this nature in question. The Court held that, in the eyes of the law, the lex situs (i.e. location) of a cryptoasset is the place where its owner is domiciled. The fraud was therefore deemed to have occurred within the English Court’s jurisdiction.

The case is ongoing.

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