Essential Legal Cases Concerning Cryptocurrencies

United Kingdom

Brief Facts:

In the case of AA v Persons Unknown [2019] EWHC 3556 (Comm), the Commercial Court in the UK granted an interim proprietary injunction on Bitcoin. It was later confirmed that Bitcoin, a form of cryptocurrency is considered as property.

In October 2019, cyber-attackers hacked a computer system of a Canadian insurance company, installed malware which encrypted those system and prevented anyone else, but the hackers themselves to access.

The hackers later offered a decryption software to the insurance company, in exchange for a ransom of USD$950,000 but paid through Bitcoin. The insurance company then paid the ransom with an intermediary.

They were able to trace the Bitcoins using a specialist software. Some Bitcoins were exchanged into fiat currency, while the other was transferred to a cryptocurrency exchange account, linked to one of the defendants.

The applicant in this case was an English insurance company, that insured the said Canadian insurance company. The applicant applied for an interim proprietary injunction on the Bitcoins which were kept in the relevant cryptocurrency exchange account.

Court’s Decision:

Court held that, in order to apply for interim proprietary injunction, only property can be applied. Bryan J was tasked to determine as whether Bitcoin constitutes a form of property. Traditionally, property can be divided into two types;

  1. Firstly, a thing in possession, such as anything tangible that can be possessed and;
  2. Secondly, a thing in action, which is a right that can be legally enforced, such as a debt.

The problem that persists is that, Bitcoin is neither tangible, neither its ownership creates legally enforceable rights. As the court conclude, Bryan J accepted the analysis by the UK Jurisdictional Taskforce on the Legal Statement on Cryptoassets and Smart Contracts.

The findings were that Bitcoin is considered as property because it has an owner, it has definition and the owners can be identified, it is permanent similar to that of financial assets and exists until cancelled, redeemed, repaid or exercised.

It also has stability, as ordinary assets are subjected to deterioration, corruption, and loss. Bitcoin also has distinctive features, as they are intangible, it has cryptographic authentication, require the use of a distributed ledger, decentralised, ruled by consensus and more.

Potential Consequences:

In the United Kingdom, there is a willingness to provide legal remedies in the cryptocurrency space for victims of theft and scams by allowing injunctions against unknown persons, which signifies a high degree of protection. As technology develops and strives for new discoveries, people are gradually resorting to digital means and consider cryptocurrency as ‘something’ with value or viewed as property.


United States

Brief Facts:

In the case of Ephram Atwal, M.D., v NortonLifeLock, Inc., 20-CV-449S in the United States District Court, Western District of New York, the plaintiff maintained a private EOS cryptocurrency account, that operates on blockchain technology and is accessible through private key credentials as of 26th June, 2017.

However, in August or September of 2018, a third-party misappropriated the plaintiffs’ key credentials and stole all of their EOS funds in his cryptocurrency account which was 2.09 million EOS funds, equivalent to USD$12 million before the misappropriation. Plaintiff attempted to recover the funds from where the third-party transferred his funds but was unsuccessful.

The defendant issued the plaintiff a LifeLock Ultimate Plus policy for one-year period which in this policy, the defendant agrees to pay up to USD$1 million coverage for remediation, stolen funds reimbursement, personal expenses, and coverage for lawyers and experts for a ‘Stolen Identity Event’

It is where a theft of personal information without insured’s express authorisation to establish or use a deposit, credit, or other account. However, the defendant refused to give reimbursement as the plaintiff’s ESO under ‘Account’ was not defined under the Policy. The Account must be U.S regulated which are domiciled checking, savings, money market, brokerage or credit card accounts. However, not cryptocurrencies or EOS for that matter.

Court’s Decision:

Before arriving at the decision, the defendant argued that cryptocurrency is not part of the account. The court alluded to the following cases before arriving to a decision.

In Tucker v. Chase Bank USA case, “cash-like transaction was fiat currency and legal tender” but not EOS or Bitcoin. In essence, cryptocurrency is supposed to be unregulated by sovereign power. It is a type of computer file that is generated through a ledger system on blockchain technology and to avoid governmental detection.

There is a ray of hope as in Wisconsin Central Ltd. V. United States there was a dissenting by Breyer, J. where he states that as money changed over time, one day employees would be paid in Bitcoin or some other type of cryptocurrency.

However, it was also argued that it may be traded as securities or commodities instead. In CFTC v. McDonell, Judge Weinstein held that;

“Virtual currencies can be regulated by CFTC as a commodity. Virtual currencies are ‘goods’ exchanged in a market for a uniform quality and value. They fall well-within the common definition of ‘commodity’ as well as the Commodity Exchange Act’s definition of ‘commodities’ as ‘all other goods and articles.”

After considering all these authorities, Court found that despite the plaintiff’s argument that EOS is a private asset and should be part of the Account, the EOS or cryptocurrency is not fiat money and that the term ‘Account’ is based on the parties’ agreed definition.

Therefore, the definition of Account is limited and covers domestic regulated accounts only that Dr. Atwal had originally agreed. Thus, cryptocurrency does not fall under the coverage of the policy.

Potential Consequences:

Since this case resembles an insurance policy or contract, it is dependent on the parties as to meet the terms and conditions. Within a policy or contract, parties are bound by the definitions and other stipulations within the contract and are not to stretch its language. Every policy and contract is unique.

Speaking of unique, the case did hint that one day, cryptocurrency would be regulated and can form part of insurance coverage. An insurance company may before entering into a policy may draft the language of coverage to include cryptocurrencies.

It is up to the future insured to study the policy as to his rights and liabilities. As of now, many insured may not be indemnified or reimbursed if they were to experience hardship or risks, especially when their cryptocurrencies are being stolen or misappropriated.



Brief Facts:

In Singapore, one of the leading cases was in CLM v CLN [2022] SGHC 46, whereby the facts dictate that the plaintiff, initiated action to trace and recover back 109.83 Bitcoin and 1497.54 Ethereum which were allegedly misappropriated from him by unidentified persons. A portion of the cryptocurrencies were traced to digital wallets, controlled by the cryptocurrency exchanges that operated in Singapore.

Court’s Decision:

The Court held that cryptocurrency can be categorised as property, which may be protected under proprietary injunctions.

Additionally, it was the first time in history that the Court granted a freezing injunction against anonymous people in Singapore that amounted to SGD$9.6 million of cryptocurrency assets stolen from the plaintiff.

This was because, the transfer of cryptocurrency was ‘susceptible to transfer from a click of a button, through digital wallets, that may be completely anonymous and untraceable to the owner, resulting in dissipation within the cyberspace.’

The reasoning of the court to allow proprietary injunction is that generally, there are three (3) elements that must be satisfied for cryptocurrency to be a property;

Firstly, the identity of the first defendants, even if were unknown at the time of filing and hearing the injunction application, the description of anonymous persons had to be sufficiently certain. This element was fulfilled in the case. The court described the first defendants as “Any person or entity who carried out, participated in or assisted in the theft of the Plaintiff’s Cryptocurrency Assets…”

Secondly, cryptocurrencies satisfied the definition of a property right in the definition as provided in the case of National Provincial Bank Ltd v Ainsworth [1965] AC 1175 which gave rise to proprietary rights and proprietary injunction.

The court further furnished this with the New Zealand case of Ruscoe v Cryptopia Ltd (in liq) [2020] 2 NZLR, whereby the court examined four elements to define property as what was established in Ainsworth;

  • It was definable: capable of being isolated from other assets, either the same type or of other types, hence identified;
  • Identifiable by third parties: The asset needs to have an owner, which can be recognised by third parties;
  • Capable of assumption by third parties: The third parties shall respect the owners of the asset and that asset must be potentially desirable.
  • Degree of permanence or stability: cryptocurrency employs a stable system unless it is spent through the use of the private key, which is impossible.

Thirdly the property had to be ‘clearly lay in favour of granting the injunction as there was a real risk of dissipation of the stolen cryptocurrency.

Potential Consequences:

Similar to the position in the United Kingdom, by affirming cryptocurrencies’ existence in the legal domain, more parties are protected from events of transferring their properties under vitiating situations, such as mistakes, scams, theft, coercion and fraud.

This was proven through proprietary and worldwide freezing injunctions. Without these remedies, then the property of the victim would dissipate away, and he may not have any legal avenues to restore or reclaim what he had lost.

Potential Impacts of Legal Decision on the Crypto Community

By regulating cryptocurrency, crimes of laundering hundreds of millions of monies from illegal transactions, ranging from dark markets, theft and tax evasion could be curtailed. If cryptocurrency and Bitcoin are further regulated, it would improve the market efficiency of delivering goods and services and influences the innovation process. Simultaneously, it would protect the environment, health, and safety of the society.

Overall, the laws on digital currency in the Malaysian industry would flourish as there is more legal certainty, given that it has now become a security and a commodity. Despite not being recognized as legal tender, cryptocurrency laws in Malaysia are still maturing.