High Court grants proprietary injunction against Bitcoin exchange holding proceeds of ransomware attack

The High Court has held that cryptoassets (in this case Bitcoin) can be treated as property under English law. As such, the owner of a cryptoasset can, in appropriate circumstances, avail itself of the various proprietary remedies that a court is able to grant.

The practical significance here was that an insurer that had paid a Bitcoin ransom on behalf of its insured was entitled to take action to recover the sum from Bitfinex (the cryptocurrency exchange holding the funds), compel Bitfinex to provide information identifying the individuals who had received the Bitcoin and for the funds to be held on a constructive trust: AA v Persons Unknown who demanded Bitcoin on 10^th and 11^th October 2019 and others [2019] EWHC 3556 (Comm).

This is not the first case in which the English court has taken the view that cryptoassets are (or are likely to be) property under English law, a conclusion which also has wider significance for cryptoasset owners and investors more generally. However, the decision is noteworthy for the considerable weight the court appeared to give the recent UK Jurisdictional Task Force (“UKJT”) Legal Statement on Cryptoassets and Smart Contracts (on which we previously commented here).

Also of interest in the case was the court’s willingness to hear the matter in private due in part to the court’s view that, in the circumstances, publicity would defeat the purpose of the hearing (because it would increase the risk that the Bitcoin would be moved on before any relief could be enforced).

Andrew Moir, Rachel Lidgate, Charlie Morgan and Martin Hevey consider the decision here.