INTRODUCTION Contributed by: Simon Bushell and Gareth Keillor, Seladore Legal
Judicial clarification of the approach to crypto fraud and asset tracing Since the crypto-asset provisions of the Money Laundering and Terrorist Financing (Amendment) (No 2) Regulations 2022 came into effect on 1 September 2023, UK crypto-asset businesses have been required to collect, verify, and share information about crypto-asset transfers in line with the “Travel Rule”. This mandates that ser - vice providers should exchange originator and beneficiary identifying information during crypto- asset transfers with a view to increasing trans - parency in relation to crypto. While this framework represents a positive step forward, the ever-evolving nature of money laundering continues to present significant chal - lenges, particularly in the realm of crypto-assets. Clear forensic tracing remains crucial to estab - lishing a direct link between stolen funds and the accused, yet tracking digital assets across commingled funds and multiple complex trans - actions poses a substantial barrier for claimants. At the same time, the court must develop a con - sistent and pragmatic approach that reflects the technical complexity inherent in such cases. A recent case in the English High Court has pro - vided important legal clarity on claims against exchanges. D’Aloia v Persons Unknown [2024] EWHC 2342 (Ch) was a rare full trial of a crypto fraud. Unlike previous judgments, which were largely decisions on interim applications, this case offers a detailed analysis of tracing, follow - ing, and unjust enrichment in crypto disputes. A few key points are summarised below: • Need for Forensic Evidence: Mr D’Aloia alleged that GBP2.5 million in Tether, a sta - blecoin tied to the US dollar (USDT) had been fraudulently stolen from him and had then been transferred to a wallet on the Bitkub
dictions, given the often cross-border nature of fraud. The ratification was accompanied by a dec - laration under Article 25/30, limiting the Con - vention’s application to England and Wales. It remains unclear why Scotland and Northern Ire - land have been excluded at this stage. However, as noted in the declaration – and as permitted under Article 30 – the UK retains the option to extend the Convention’s application to these jurisdictions in the future. Although the Hague 2005 Convention on Choice of Court Agreements (Hague Convention 2005) currently allows for the enforcement of English judgments across the EU and other signatories, it is limited to cases where an exclusive English jurisdiction clause was agreed upon after Hague Convention 2005 took effect for the UK. Beyond Hague Convention 2005, enforcement of English judgments currently depends on: • whether a reciprocal enforcement arrange - ment exists between the UK and the relevant country (such as a bilateral treaty); or • the national enforcement rules of the foreign state in question. In this context, Hague Convention 2019 therefore introduces much-needed clarity and consist - ency in the enforcement of English judgments within EU member states. At present, Ukraine and Uruguay are the only non-EU states (aside from the UK) to have ratified Hague Convention 2019. However, the Convention is expected to gain wider international acceptance in due course, attracting further state signatories and strengthening its role in cross-border judicial co- operation.
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