English High Court grants asset preservation order over stolen cryptocurrency

Background

The victim received a fraudulent email which led them to transfer 100 bitcoin to the sender. Later, 80 bitcoin were transferred into a wallet on a bitcoin exchange platform.

Bitcoin is a cryptocurrency – a sequence of code which holds value. The value depends solely on what future buyers of the cryptocurrency are willing to pay for it. Sales and purchases of cryptocurrencies are recorded on an electronic ledger, the blockchain, which is sent to every seller and buyer on an exchange platform.

The victim applied to the English High Court for an asset preservation order and argued that bitcoin were personal property which could be the subject of a trust. They also argued that the first defendant had no rights in the bitcoin because of the fraud.

The decision

The Judge granted the asset preservation order freezing the 80 bitcoin held in the wallet on the bitcoin exchange platform, on the grounds that there was a serious matter to be decided.

Takeaway points

Cryptocurrencies can be the subject of a freezing order by the High Court if stolen. The Court has extended the debate of defining cryptocurrencies as personal property despite not being physical assets, nor giving the holder a right against another entity.

The blockchain allowed the victim to accurately follow each transfer of the bitcoin made and is a further demonstration of how useful blockchain technology can be.

Liam David Robertson v Persons Unknown, unreported, CL-2019-000444