USA Trends and Developments Contributed by: John Curley and Milan Sova, Hoguet Newman Regal & Kenney
This article examines trends and developments in judgment enforcement in the United States, which remains an active and popular place to litigate and enforce judgments. It takes a look at two issues: the evolving tools and legal strategies for locating and reaching digital assets, and the use of US courts to enforce arbitral awards against foreign sovereigns. Locating and Securing Digital Assets As cryptocurrency and other blockchain-based finan - cial instruments increase their reach and popularity, it is increasingly common for individuals and entities to store significant value in digital assets. These holdings pose difficult enforcement challenges, and courts and creditors must use the tools available to them – and use them quickly – to preserve assets. The pseudonymous nature of many cryptocurrencies makes it difficult to link a wallet address to a specific individual. Wallets do not require government-issued identification to open or maintain, and transfers occur outside the banking system. Self-custodial wallets fur - ther complicate matters by eliminating intermediaries entirely – if a debtor possesses their private key, they retain sole control over the funds. Without co-opera - tion from the custodian, the contents of such a wallet are nearly impossible to seize or access. Digital assets can also be moved across borders swiftly and easily and with no regulatory oversight. A judgment debtor could, within seconds, move mil - lions of dollars in digital currency to another wallet, exchange it for privacy-enhanced tokens or convert it through a decentralised exchange, making the assets virtually untraceable. This fluidity often undermines traditional post-judgment remedies such as garnish - ment or account levies. Identifying and preserving crypto-assets in litigation New strategies are evolving to meet these challenges, and at the same time, courts and counsel are applying existing legal mechanisms to the crypto environment. A new industry of blockchain analytics firms spe - cialises in analysing blockchain transactions, linking wallet addresses to known exchanges, services or threat actors. These firms use clustering techniques
(grouping blockchain addresses to determine the owner), network analysis (understanding large-scale blockchain dynamics by analysing transaction flow), transactional graph analysis (using visual represen - tations of the flow of transactions on a blockchain to help understand relationships between addresses) and heuristic algorithms (flagging suspicious activities by identifying behaviours that deviate from norms) to assist lawyers in tracing and identifying asset flows. At the same time, practitioners are using existing tools under federal and state law to identify and, in some cases, freeze crypto-assets. Courts have shown a willingness to grant discovery requests early in litigation, particularly when there is credible risk of dissipation. In Jacobo v Doe , a federal court in California authorised expedited subpoenas to major cryptocurrency exchanges to obtain iden - tifying information associated with pseudonymous wallet addresses in order to determine the defend- ant’s legal identity. The plaintiff had used blockchain analytics to follow her stolen digital assets to specific cryptocurrency wallets on various cryptocurrency exchanges, and the court granted discovery inso - far as the requests facilitated the identification of a defendant in order to facilitate service of process. The court, however, did not grant the plaintiff all the relief she wanted; it declined to order expedited discov - ery regarding transactions involving the wallets or the exchanges’ communications with the wallet accoun - tholders. 2022 WL 2079766 (E.D. Cal. June 9, 2022). Similarly, in another recent case, Tyson v Coinbase , the plaintiff moved to request pre-discovery subpoe - nas within days of filing his complaint. The plaintiff alleged the anonymous theft of Bitcoin and sought identifying details from exchanges hosting the wallets in question. The court reviewed similar cases granting expedited discovery, and, finding Jacobo persuasive, limited the discovery to “enough information to iden - tify the Doe Defendants and serve process”, but left any other discovery for later in the case. 2024 WL 69929 (D. N.J. Jan. 4, 2024). And, in ZG Top Technology Co. v John Doe , 2019 WL 917418 (W.D. Wash. Feb. 25, 2019), the court permit - ted early discovery from Bittrex, allowing the plaintiff
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