INTRODUCTION Contributed by: Simon Bushell and Gareth Keillor, Seladore Legal
exchange. However, his claim failed because expert evidence did not sufficiently prove that his specific USDT had reached that particular wallet with Bitkub (Ms Hlangpan’s wallet). • Nature of USDT: The court confirmed that USDT is property, though not a traditional chose in action or chose in possession. Instead, it falls into a distinct category that can be traced and treated as trust property. Whilst this is consistent with earlier authori - ties, D’Aloia is the first case to hold this fol - lowing a full trial. It is therefore an important decision on this point. • Tracing v Following: The court reaffirmed that tracing and following are legally distinct. “Following” refers to tracking the same asset as it changes hands, maintaining its original identity throughout the process. “Tracing”, on the other hand, involves identifying a new asset that has replaced the original, allowing claimants to pursue its value through a series of transactions. Since the court determined that USDT belongs to a distinct category of property, rather than a chose in action, this meant that it could, in principle, be followed even when mixed with other USDT in a wallet. This was because USDT retains a persis - tent identity, allowing it to be theoretically tracked through transactions. However, the evidence before the court on this issue was limited. While Tether’s own paper stated that only Tether can create or destroy USDT, no evidence was provided to confirm whether individual tokens could be uniquely traced. Crucially, Mr D’Aloia’s expert failed to estab - lish that any specific portion of the USDT in Ms Hlangpan’s wallet originated from him. As a result, the following claim was unsuccess - ful. • Unjust Enrichment: Although the court found that Bitkub had been unjustly enriched, the claim failed because Mr D’Aloia could not
establish that Bitkub had been enriched at his expense. The court also emphasised that exchanges must act in good faith when han - dling suspicious transactions. The judgment confirms that though crypto fraud victims have legal remedies, the success of claims depends on strong forensic evidence and may also turn on the precise rights and proper - ties of the specific crypto-asset (which can vary). The also suggests that different cryptocurren - cies may require different tracing approaches, depending on their characteristics. If the court addressed the complexities of cryp - to-asset tracing in D’Aloia, it grappled with the tricky issue of enforcement of foreign judgments in Tai Mo Shan Ltd v Persons Unknown [2024] EWHC 1514 (Comm). The claimant had brought proceedings in England to seek to enforce a declaration it had obtained from the New York courts on cryptocurrency ownership following a major hack. The claimant sought (and obtained) permission from the English court to serve its claim out of the jurisdiction. The ruling offers ear - ly guidance on how English courts may enforce foreign judgments concerning crypto-assets under common law rules, which apply in the absence of an enforcement treaty or convention. A key issue was the legal “location” of digi - tal assets. The court accepted that the stolen cryptocurrency was situated in New York at the time of the hack, based on the claimant’s central management and control being located there, even though it was a Cayman-registered company. It also held that the recovered assets could now be treated as located in England, as they were held in a wallet controlled by English solicitors. These findings supported the court’s conclusion that England was the most appropri - ate forum for enforcement.
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