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English High Court Confirms Status of Cryptoassets as Property

In an important decision of the English High Court in AA v. Persons Unknown and Others, Re Bitcoin [2019] EWHC 3556 (Comm) the English High Court helpfully recognises cryptoassets as property and therefore capable of being the subject of interim propriety injunctions.

Facts

In October 2019, cyber-attackers hacked into the computer system of a Canadian insurance company and installed malware called BitPaymer which encrypted those systems, preventing anyone but the hackers from accessing them. The hackers offered decryption software to the insurance company in exchange for a ransom of US$950,000 (payable via Bitcoin). The insurance company paid the ransom through an intermediary, but after the transaction, it was able to trace the Bitcoins using specialist software. Some Bitcoins had been exchanged into a fiat currency, but others had been transferred to a cryptocurrency exchange account linked to one of the defendants. The Canadian insurance company was itself insured by an English insurance company, (the Applicant). The Applicant applied for an interim proprietary injunction over the Bitcoins that remained in the cryptocurrency exchange account.

For the purpose of the application, Mr. Justice Bryan agreed that the hearing should be heard in private and on an ex parte basis. An anonymity order was granted to protect the names of the insurance company and the Applicant. Noting the well-established principles of open justice, Mr. Justice Bryan deemed the privacy of the proceedings necessary due to the risk of retaliatory attacks in addition to the fact that the publicity could defeat the object of the hearing by tipping off the defendants. The fundamental question for the Court to consider for the purposes of the application was whether or not cryptoassets constituted a form of property capable of being the subject of a proprietary injunction.

 

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English High Court Confirms Status of Cryptoassets as Property

 


Paul Smith
Partner and Commercial Litigation Advocate

Bermuda   +1 345 925 1881


Róisín Liddy-Murphy
Attorney

Cayman Islands   +1 345 814 7371


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