Offshore Litigation Blog

In a recent decision the English High Court discharged a proprietary injunction that enjoined Binance from dealing with the proceeds of a scam. In doing so, the court warned against assuming that cryptocurrency exchanges act as constructive trustees of misappropriated digital assets.

Since December 2022, there have been a number of reported cases of digital assets being mysteriously drained from users' wallets across different blockchains and affecting different platforms. One of the affected platforms, Metamask, has said that data shows 5,000 ETH (worth approximately US$10m) has already been stolen from various addresses across 11 blockchains. However, the root cause of the problem is unknown, with experts unable to identify a specific attack causing the losses.

The digital assets world has seen a number of collapses of some of the market’s key players. In this post, we examine the fallout of three household crypto names and the legal proceedings that have ensued. The domino effect of one collapse leading to another is no coincidence.

In its recent decision in LMN v Bitflyer Holdings Inc & Ors, the English High Court made third-party disclosure orders against six foreign cryptocurrency exchanges registered in various jurisdictions around the world. The order was made to enable the applicant access to information that could be used to identify hackers who had stolen millions of dollars worth of digital assets from the Claimant in 2020 and to trace the stolen cryptocurrency.

In the penultimate episode of Contentious Crypto, Christopher Pease and Megan Elms, along with Kalo guest speaker James Drury, discuss what steps can be taken when the identity of the wrongdoers is unknown, the challenges posed by pursuing persons unknown and how the courts are adapting.

In the third episode of Contentious Crypto, Christopher Pease and Megan Elms, along with Kalo guest speaker James Drury, discuss how digital asset tracing operates in practice and some common obstacles that arise.

In the second episode of Contentious Crypto, Christopher Pease and Megan Elms, along with Kalo guest speaker James Drury, explain what steps they took to secure a successful recovery for their client in the landmark BVI case of ChainSwap v Persons Unknown.

In its recent decision in Tulip Trading Limited v Bitcoin Association for BSV the English High Court refused to accept Bitcoin as security for costs.

In the recent decision in Wang v Darby the English High Court considered whether the defendant held cryptocurrency on trust for the claimant and whether the claimant, therefore, had a proprietary right over the cryptocurrency and could retain a proprietary injunction over it. Ultimately the High Court found that whilst cryptocurrency could form the subject matter of a trust, no trust arose in the circumstances and as such, there was no basis for proprietary claims or a proprietary injunction. But the High Court did continue the worldwide freezing injunction against the defendant to protect the claimant’s personal claims.