UK: Crypto Assets – No Longer A Safe Haven For Fraudsters

In the case of Ion Science and Another -v- Persons Unknown and Others (28 January 2021, unreported) the High Court granted the first Third Party Debt Order in relation to crypto currency. 

The claimant was a victim of cyber fraud and after making a number of successful applications, including a Bankers Trust order to disclose the identity of the fraudsters and a freezing injunction, secured a money judgment in the sum of almost £2.95 million. The claimant sought to enforce the judgment by way of a third party debt order against Payward Ventures Ltd ("Payward"), a subsidiary of Kraken Exchange, a US based cryptocurrency exchange bank, after it disclosed that there was cash and cryptocurrency in the frozen account used to perpetrate the fraud.

An interim order was made by Master Davidson on 5 October 2021. Last month Master Cooke granted the final Third Party Debt Order against Payward on the basis that the debt was outstanding to the claimant, there was a debt payable from Payward to the defendant fraudsters and that in those circumstances the claimant was entitled to have the interim award made final.

This is an interesting development in the law and follows a number of recent cases involving issues relating to crypto currency (see for example). It has not only widened the scope and application of Third Party Debt Orders, to include crypto assets, but also shows the Court's obvious willingness to treat very novel asset classes like crypto currency as amenable to long established enforcement procedures. It will be interesting to see how developments in the law progress further as we can foresee similar action being taken in relation to other crypto assets such as non-fungible tokens.

Whilst crypto assets may have largely been considered the preserve of those seeking to retain anonymity, this case shows that the English legal system is well equipped to deal with crypto related fraud.

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