CAYMAN ISLANDS Trends and Developments Contributed by: Alan Bercow, Jae Shin and Ross McLeod, Appleby
• Market manipulation – this includes pump- and-dump schemes, wash trading, and other market manipulation tactics involving cryp - tocurrencies. The absence of mature market surveillance mechanisms in many jurisdic - tions makes detection challenging. However, in the Cayman Islands, CIMA’s guidelines attempt to address these risks. • Ransomware and proceeds laundering – criminal organisations use corporate struc - tures to receive and layer cryptocurrency obtained through ransomware attacks and other cybercrime. This risk merely reflects the long-standing potential for sophisticated operations to attempt to obscure ownership trails. Cryptocurrency transactions potentially make this easier, owing to their pseudony - mous nature. Again, as a well-regulated juris - diction, the Cayman Islands is a less attrac - tive target than other locations. Detection methods The Cayman Islands has developed several approaches to detect cryptocurrency fraud, as follows. • Suspicious activity reporting – the FRA has extensive suspicious activity reporting requirements. In January 2025, the Cayman Islands revised the Proceeds of Crime Act to introduce a new AML regime. Now, following a suspicious activity report (SAR), prior con - sent from the FRA to deal with the property is required to obtain a statutory defence against committing a money laundering offence. • Blockchain analytics integration – CIMA has integrated commercial blockchain analytics tools to enhance its understanding of VASPs’ risk profiles, monitor transaction history, and stay updated on any current news. This integration is aimed at analysing the activities of VASPs, irrespective of their trade names,
transaction volumes, regulated status, and global operations across several jurisdictions. • Market surveillance requirements – VASP- licensed exchanges must implement market surveillance systems to detect potentially manipulative or deceptive trading practices, with suspicious patterns reported to CIMA under its market integrity rules. • International intelligence sharing – the Cay - man Islands authorities participate in virtual asset-focused information sharing through the Egmont Group of Financial Intelligence Units and the International Organisation of Securities Commissions (IOSCO), enabling early warning of emerging fraud typologies affecting multiple jurisdictions. Recovery remedies in the Cayman Islands courts Asset recovery in cryptocurrency fraud cases presents the usual challenges. However, the Cayman Islands courts are well-equipped to handle these, as follows. Freezing injunctions The extreme price volatility of cryptocurrencies introduces urgency in freezing assets before value diminishes, requiring courts to process emergency applications expeditiously. The Cayman Islands Grand Court has considerable experience with granting freezing orders on an ex parte basis (ie, without notice to the alleged wrongdoer). Recovery against unidentified wrongdoers The pseudonymous nature of transactions involving cryptocurrencies means that in cases of cryptocurrency fraud, relief must often be sought against perpetrators whose identities are unknown at the commencement of a claim. The Cayman Islands courts (like their English coun - terparts) allow for claims to be brought against
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