To overcome these difficulties, victims may need to bring claims against “persons unknown”  for the purpose of recovering the assets (or equivalent monetary value). In doing so, it may be necessary or helpful to take steps to reveal the identity of some or all of the above categories of people. As His Honour Judge Pelling KC put it (speaking extra-judicially):

“In a crypto fraud claim it is likely that crypto assets will have been moved multiple times ultimately to an exchange after removal from the claimant’s wallet. This is usually for the purpose of enabling assets to be “cross chained” so as to render tracing more difficult or practically impossible or to facilitate the conversion of the defalcated crypto currency and its transfer in a way that makes tracing impossible or practically so. It may be necessary therefore to bring proceedings against different classes of persons unknown in order to cater for these possibilities.”[1]

This article considers the BVI and Cayman Islands courts’ jurisdiction to order service against persons unknown in further detail.

The persons unknown jurisdiction: Cameron[2]revisited

The jurisdiction to sue persons unknown, by reference to a description that “is sufficiently certain as to identify both those who are included and those who are not,”  has been invoked by the English courts on numerous occasions, particularly within the context of abuses of the internet, trespassing and other torts committed by protesters, demonstrators and paparazzi; and, more recently, within the context of crypto fraud.

In Cameron, the UK Supreme Court distinguished between two kinds of cases in which defendants cannot be named and in respect of which different considerations apply:

• The first category comprises anonymous defendants whose names are unknown but who are otherwise identifiable (for example, squatters, who are identifiable by their location at the relevant property).
• The second category comprises anonymous defendants whose names are unknown and who cannot be identified either (for example, hit and run drivers, who have fled the scene and in respect of which there is no CCTV or other evidence available with which to identify them).

The distinction is that in the first category, the defendant is described in a way that it makes it possible in principle to locate or communicate with him or her and to know, without further enquiry, whether he or she is the same person described in the claim form; whereas, in the second category, that is not possible.

The appeal in Cameron  was primarily concerned with the issue or amendment  of the claim form on persons unknown, rather than the issue as to how a claim form may actually be served on them. However, the Supreme Court held in that case that the “legitimacy of issuing or amending a claim form so as to sue an unnamed defendant can properly be tested by asking whether it is conceptually (not just practically) possible to serve it. The court generally acts in personam. Although an action is completely constituted on the issue of the claim form, for example for the purpose of stopping the running of the limitation period, the general rule is that “service of the originating process is the act by which the defendant is subjected to the court’s jurisdiction.”[3]

The court then went on to hold that an identifiable but anonymous defendant (i.e. the first category of defendant set out above) could be served, if necessary by alternative service, on the basis that it is possible to locate or communicate with him. For example, in proceedings against anonymous trespassers, the Court held that service is to be effected under English procedural rules by attaching copies of the documents to the main door or placing them in some other prominent place at the property in question.

That is not, however the case with unidentifiable defendants (i.e. the second category of defendant set out above):

“One does not, however, identify an unknown person simply by referring to something that he has done in the past. “The person unknown driving vehicle registration number Y598 SPS who collided with vehicle registration number KG03 ZJZ on 26 May 2013”, does not identify anyone. It does not enable one to know whether any particular person is the one referred to. Nor is there any specific interim relief such as an injunction which can be enforced in a way that will bring the proceedings to his attention. The impossibility of service in such a case is due not just to the fact that the defendant cannot be found but to the fact that it is not known who the defendant is. The problem is conceptual, and not just practical. It is true that the publicity attending the proceedings may sometimes make it possible to speculate that the wrongdoer knows about them. But service is an act of the court, or of the claimant acting under rules of court. It cannot be enough that the wrongdoer himself knows who he is.

This is, in my view, a more serious problem than the courts, in their more recent decisions, have recognised. Justice in legal proceedings must be available to both sides. It is a fundamental principle of justice that a person cannot be made subject to the jurisdiction of the court without having such notice of the proceedings as will enable him to be heard. The principle is perhaps self-evident.”

Accordingly, the Court held that (subject to any statutory provision to the contrary) it is an essential requirement for any form of alternative service that the mode of service should be such as can reasonably be expected to bring the proceedings to the attention of the defendant.

More fundamentally, a person who is not just anonymous but (also) cannot be identified, cannot be sued under a pseudonym or description unless the circumstances are such that that the service of the claim form can be effected (or in an appropriate case, properly dispensed with).[4]

The crypto context

As the most widely-used blockchains have publicly disseminated ledgers and therefore a permanent log of the address(es) that received the proceeds of any wrongdoing, most crypto recovery cases involve the first category of defendants referred to in Cameron.[5] This is because the names of the wrongdoers are not known, but the pseudonymous nature of crypto ownership is such that the recipient will be identifiable by reference to the public address(es) they have used to take possession and/or control of the crypto assets that are the subject of the claim.

The Cayman Islands and BVI courts both have jurisdiction to grant relief against “persons unknown”  in circumstances where the identity of the defendants is not currently known. The underlying principle justifying the existence of the jurisdiction is that, where there is a right, there is a remedy:

“… in circumstances where it is plain that persons are infringing proprietary interests which the law recognises, or deceiving the public by way of trade in a manner which may indirectly affect the commercial interests of others, the law should, if it reasonably can, provide a remedy.”[6]

Categorising persons unknown

In Fetch.AI Limited[7], wide ranging relief, including a worldwide freezing order, was initially sought against two categories of persons unknown, being: (i) individuals who first accessed the claimant’s accounts and who were responsible for the transfer out of those accounts of various crypto assets; and (ii) those individuals who “own or control the accounts into which [the crypto assets or the traceable proceeds thereof] are to be found.”

The Judge in that case found that this definition was too wide-ranging having regard to the fact that the relief sought included a worldwide freezing orders against persons who, at least potentially, were innocent in the sense of not having reason to believe that assets belonging to the claimant had been credited to their account. This factor was something which led him to require, in that case, that the persons unknown be broken down into three categories, as follows:

1. First,  those who are were involved in the fraud, against whom it may be appropriate to seek relief in the form of both a proprietary injunction in respect of the misappropriated crypto currency (or the traceable proceeds thereof), and also a worldwide freezing order.

2. Secondly, a class of persons unknown designed to capture those who have received assets without having paid a full price for them, against whom it may also, again, be appropriate to seek both a proprietary injunction and worldwide freezing order.

3. Thirdly, those who fall within the category of “innocent receivers”. The purpose of the introduction of this third class was stated to be to enable those who have received the claimant’s assets without knowing or believing the assets belonged to the claimant, to be excluded from the scope of freezing orders (whilst, at the same time, recognising that claims against such defendants might be made for the recovery of such assets, though subject to defences such as bona fide purchaser for value)[8].

In the Chainswap  decision in the BVI, Justice Jack held that it would be inappropriate (relying on the Cameron v Liverpool Victoria Insurance Co Ltd  decision, to simply sue “persons unknown” but directed that the defendants should be identified by reference to their ownership of digital wallets that were alleged to have been used to receive and dissipate stolen crypto tokens.

In Lavinia Deborah Osborne v Persons Unknown,[9] the defendants were categorised as follows: (i) the persons who had unlawfully gained access to and removed from the claimant’s wallet, certain NFTs; and (ii) the persons in possession and/or control of those NFTs.

In Tippawan Boonyaem v Persons Unknown[10], two categories of persons unknown were identified, being: (i) persons connected to the INGFX group and/or associated with the INGFX website and/or particular phone numbers and/or giving themselves a particular name on Facebook for the purposes of a fraudulent scheme; and (ii) persons operating or owning particular crypto wallets on various exchanges. An order for disclosure had been made[11], but had produced no results or assisted in terms of identifying the perpetrator of the fraud. That being the case, on the claimant’s application for summary judgment, the Judge was not “presently” prepared to give final judgment against the first category of persons unknown (on the practical and conceptual basis that there was no identifiable person against whom judgment could be given).

As can be seen from these decisions, care must be taken in any given crypto recovery case to appropriately categorising the persons unknown defendants in order that any relief awarded by the Court is appropriately targeted. In particular, the decisions to date have noted the core distinction between the ‘primary’ wrongdoer(s) and the recipient(s) of the misappropriated crypto (which may form part of the same network, but which should be distinguished for legal purposes).

In any given case, the key to successfully recovering crypto is to focus on the recipients (at least initially) because that will potentially lead to further information about not only the identity of the recipients but also, information as to how they came to receive the assets pursuant to the wrongful transactions.

Service by alternative means

D’Aloia v Persons Unknown and others[12]  was the first reported decision in which the English High Court granted leave to serve out of the jurisdiction by email and by service of an airdropped NFT, following a submission to the effect that doing so would embed service of the documents into the blockchain. The Judge in that case remarked that he “may not have expressed that [concept] very happily”  but that “there can be no objection to it: rather it is likely to lead to a greater prospect of those who are behind the tda-finan website being put on notice of the making of this order and the commencement of these proceedings.”

More recently, in the Osborne  decision, the High Court allowed service by way of NFT airdrop as the only method of service on certain defendants, there being no other available method of service available. The Judge in that decision noted that a similar order had been granted in Jones v Persons Unknown [2022] EWHC 2543 (Comm) and that there may well now be other decisions to like effect.

In the BVI, Justice Mangatal sitting in the Eastern Caribbean Supreme Court granted leave to effect service by way of NFT airdrop: AQF v Xio and ors[13].

Given these decisions, there appears to be no principled basis upon which the Cayman Islands court would not also be prepared to make a similar order in circumstances where it is impracticable to serve by alternative means. To the contrary: the Cayman Islands Grand Court Rules confer a wide discretion on the Court to order substituted service where appropriate (in circumstances where personal service is required) or in such manner as the Court may direct (in circumstances where personal service is not required)[14].

These developments are extremely helpful. The nature of crypto recovery claims is such that there will invariably be category of defendants that are identifiable by reference to public addresses. In turn, this means that there should always be at least one practical mode of service (NFT airdrop) available.

Concluding remarks

The well-established jurisdiction of the courts to grant relief against persons unknown is crucially important within the crypto context, in which the pseudonymous nature of crypto is such that most defendants (including the wrongdoer(s) and any recipients of the misappropriated assets) are likely to fall within the first category of defendant identified in Cameron  (ie anonymous, but identifiable). So too, is the jurisdiction of the courts to order service by alternative means in an appropriate case.

[1] At a seminar given at the DIFC on 13 November 2023.

[2]Cameron v Liverpool Victoria Insurance Co Ltd [2019] UKSC 6

[3] Citing Barton v Wright Hassall LLP [2018] 1 WLR 1119

[4]Cameron v Liverpool Victoria Insurance Co Ltd [2019] UKSC 6, Judgment of Lord Sumption (Lord Reed, Lord Carnwath, Lord Hodge and Lady Black agreeing) at [8]-[26].

[5] In this article we focus only on recovery actions concerning those blockchains that have public ownership and transaction information available.

[6]Ernst & Young Limited v Ors v Department of Immigration [2015] (1) CILR 151 at [63]-[74]. In the BVI, see for example Chainswap Limited v Persons Unknown BVIHC (COM) 2022/0031, 4 May 2022.

[7] [2021] EWHC 2254 (Comm).

[8] As explained, for example, by His Honour Judge Pelling KC speaking extra-judicially, at a DIFC seminar given on 13 November 2023. See: Speech by HHJ Pelling KC: Issues in Crypto Currency Fraud Claims – an update - Courts and Tribunals Judiciary.

[9] [2023] EWHC 39 (KB).

[10] [2023] EWHC 3180 (Comm).

[11] For more on this, see our article: Identifying wrongdoers in the crypto space: the Norwich Pharmacal and Bankers Trust jurisdictions | Offshore Litigation Blog | Harneys[1472981006].

[12] [2022] EWHC 1723 (Ch).

[13] BVIHCCOM 2023/0239.

[14] GCR O.65, r.4 and r.5.