Shorter Reads

Interim injunction against Bitcoin discharged and damages considered an adequate remedy

1 minute read

Published 7 September 2020

Share

Key information

In a recent High Court decision, Toma v Murray, Robin Vos sitting as Deputy High Court Judge, declined to continue a without-notice interim injunction which restrained the Defendant from dealing with Bitcoin held in a coin deposit account.  Vos held that damages would be an adequate remedy in this instance.

The Claimants sold Bitcoin through an account on the Finnish platform LocalBitcoins.com. However, the payment they received was reversed, leaving the Claimants without the Bitcoin or their payment. The Defendant controlled the LocalBitcoins.com accounts used to make and withdraw the payments, and which continued to hold the Bitcoin. The Defendant did not go as far as to admit that there was a fraud, though he allowed the Court to proceed on the basis that a fraud had taken place, and asserted that the account had been hacked.

The Claimants initially obtained a without notice interim injunction. LocalBitcoins also froze the account, though they said that in absence of a court order they would release the Bitcoins to the Defendant.

On reviewing the injunction and deciding whether it should be upheld, Vos decided that although the Claimants’  made a proprietary tracing claim, they were ultimately seeking the value of the Bitcoin held in the deposit account and therefore the claim could be satisfied in monetary terms.

He held that the injunction should not be upheld and the case is set to continue to determine whether or not there was any fraud on the part of the Defendant, a matter which could not be dealt with at an interim hearing.

This is an interesting decision as it considers Bitcoin in relation to its value in monetary terms over its proprietary value. The Court distinguished it from AA v Persons Unknown [2019], the precedent for Bitcoin interim claims, as the Defendant was identified and had shown he held a significant unencumbered asset and there was no reason to believe he would not be able to meet any award against him. This was balanced against the fact that the Claimants admitted that they would have difficult in satisfying across undertaking of damages. On balance the Court considered that this decision left the Claimants with a remedy and did not place an disproportionate risk of loss on the Defendant.

Some consideration was given to the volatility of the price of Bitcoin and the impact this may have on both parties. Though the Court focused on the fact that a price and value was given to the Bitcoin at the time of sale and the claim therefore was considered to be for the price paid. A condition was included in the Order to allow the Defendant to sell the Bitcoin only with the consent of the Claimant as a means of neutralising this risk. It shows once again that the court’s are having to approach digital asset cases innovatively. It will be interesting to see if any concession is given to the change in value of Bitcoin in the time before final judgment.

Toma and another v Murray [2020] EWHC 2295 (Ch) (29 July 2020) (Robin Vos, sitting as Deputy High Court Judge).

https://uk.westlaw.com/Document/I882CE010E63C11EAB4AEF3E33E0FF9B6/View/FullText.html?originationContext=document&transitionType=DocumentItem&contextData=(sc.Default)&comp=wluk&firstPage=true

Related latest updates
PREV NEXT

Arrow Back to Insights

Shorter Reads

Interim injunction against Bitcoin discharged and damages considered an adequate remedy

Published 7 September 2020

Associated sectors / services

  • Banking Litigation
  • Dispute Resolution

In a recent High Court decision, Toma v Murray, Robin Vos sitting as Deputy High Court Judge, declined to continue a without-notice interim injunction which restrained the Defendant from dealing with Bitcoin held in a coin deposit account.  Vos held that damages would be an adequate remedy in this instance.

The Claimants sold Bitcoin through an account on the Finnish platform LocalBitcoins.com. However, the payment they received was reversed, leaving the Claimants without the Bitcoin or their payment. The Defendant controlled the LocalBitcoins.com accounts used to make and withdraw the payments, and which continued to hold the Bitcoin. The Defendant did not go as far as to admit that there was a fraud, though he allowed the Court to proceed on the basis that a fraud had taken place, and asserted that the account had been hacked.

The Claimants initially obtained a without notice interim injunction. LocalBitcoins also froze the account, though they said that in absence of a court order they would release the Bitcoins to the Defendant.

On reviewing the injunction and deciding whether it should be upheld, Vos decided that although the Claimants’  made a proprietary tracing claim, they were ultimately seeking the value of the Bitcoin held in the deposit account and therefore the claim could be satisfied in monetary terms.

He held that the injunction should not be upheld and the case is set to continue to determine whether or not there was any fraud on the part of the Defendant, a matter which could not be dealt with at an interim hearing.

This is an interesting decision as it considers Bitcoin in relation to its value in monetary terms over its proprietary value. The Court distinguished it from AA v Persons Unknown [2019], the precedent for Bitcoin interim claims, as the Defendant was identified and had shown he held a significant unencumbered asset and there was no reason to believe he would not be able to meet any award against him. This was balanced against the fact that the Claimants admitted that they would have difficult in satisfying across undertaking of damages. On balance the Court considered that this decision left the Claimants with a remedy and did not place an disproportionate risk of loss on the Defendant.

Some consideration was given to the volatility of the price of Bitcoin and the impact this may have on both parties. Though the Court focused on the fact that a price and value was given to the Bitcoin at the time of sale and the claim therefore was considered to be for the price paid. A condition was included in the Order to allow the Defendant to sell the Bitcoin only with the consent of the Claimant as a means of neutralising this risk. It shows once again that the court’s are having to approach digital asset cases innovatively. It will be interesting to see if any concession is given to the change in value of Bitcoin in the time before final judgment.

Toma and another v Murray [2020] EWHC 2295 (Ch) (29 July 2020) (Robin Vos, sitting as Deputy High Court Judge).

https://uk.westlaw.com/Document/I882CE010E63C11EAB4AEF3E33E0FF9B6/View/FullText.html?originationContext=document&transitionType=DocumentItem&contextData=(sc.Default)&comp=wluk&firstPage=true

Associated sectors / services

  • Banking Litigation
  • Dispute Resolution

Need some more information? Make an enquiry below.

    Subscribe

    Please add your details and your areas of interest below

    Specialist sectors:

    Legal services:

    Other information:

    Jurisdictions of interest to you (other than UK):



    Enjoy reading our articles? why not subscribe to notifications so you’ll never miss one?

    Subscribe to our articles

    Message us on WhatsApp (calling not available)

    Please note that Collyer Bristow provides this service during office hours for general information and enquiries only and that no legal or other professional advice will be provided over the WhatsApp platform. Please also note that if you choose to use this platform your personal data is likely to be processed outside the UK and EEA, including in the US. Appropriate legal or other professional opinion should be taken before taking or omitting to take any action in respect of any specific problem. Collyer Bristow LLP accepts no liability for any loss or damage which may arise from reliance on information provided. All information will be deleted immediately upon completion of a conversation.

    I accept Close

    Close
    Scroll up

    Find out about Business

    Find out about Dispute Resolution

    Find out about Individuals & Families

    Find out about Real Estate

    We are Collyer Bristow - The law firm for those that
    value individuality, creativity and collaboration.

    Legal & Pricing info Regulatory InformationAccessibilitySitemapPricing and service information

    Listen to our latest podcast: Budget Miniseries: Impacts on Families with US Connections (Part 1)

    Listen to our latest podcast: Cracking the Code on Directors’ Service Agreements

    Read our latest article: Economist, or just economical with the truth? How can employers respond to ‘fake claims’ on a CV?

    Listen to our latest podcast: Autumn Budget 2024 Special (Part 2)

    Read our latest article: ‘Promoting the integrity of the register’: The new Companies House approach to non-compliance

    ExpandNeed some help?Toggle

    < Back to menu

    I have an issue and need your help

    Scroll to see our A-Z list of expertise

    Get in touch

    Get in touch using our form below.



      Business Close
      Private Wealth Close
      Hot Topics Close