How Courts are Dealing with Crypto Disputes – Recent Developments in Crypto Asset Litigation across Jurisdictions

The crypto market has been through a tumultuous year, leading to an uptick in crypto litigation. Here, we explore the notable crypto litigation developments in the past year.

Jurisdictional gateways

Victims seeking their local courts' assistance must first demonstrate a good arguable case for invoking the court's jurisdiction over foreign parties.

1. In the UK, the recent decision of Osbourne v Persons Unknown [2023] EWHC 39 ("Osbourne") has cast doubt on the previously accepted position that jurisdiction follows the location of intangible crypto asset.
2. The Singapore courts have typically assumed jurisdiction on other bases, such as the defendants carrying on business or having assets in Singapore (CLM v CLN [2022] SGHC 46, Janesh s/o Rajkumar v Unknown Person [2022] SGHC 264).

Service of court documents

In court proceedings to recover 'stolen' crypto assets, courts have recently adopted an innovative solution to address this problem – Service of court documents via non-fungible token (NFT) airdrop:

1. LCX AG v John Doe Nos. 1-25 (Docket No. 154644/2022)
2. D'Aloia v Persons Unknown [2022] EWHC 1723
3. Jones v Persons Unknown [2022] EWCH 2543
4. Benjamin Arthur Bowen v Xingzhao Li (Case No. 23-cv-20399)

Fiduciary and tortious duties

In the preliminary decision of the English Court of Appeal in Tulip Trading Ltd v Van der Laan [2023] EWCA Civ 83, it was held there was a "realistic argument" that network developers are fiduciaries and owed fiduciary duties to cryptocurrency owners, including a duty of single-minded loyalty to the users of the Bitcoin software.

Crypto exchange found to be constructive trustee of stolen crypto assets

In Jones v Persons Unknown [2022] EWHC 2543, the English Court imposed a constructive trust on a third party to the fraud (in this case, a crypto exchange) and ordering the third party to deliver up the stolen crypto assets to the victim.

Doctrine of illegality

The case of Rio Christofle v Malcolm Tan Chun Chuen [2023] SGHC 66 is the first reported decision in Singapore where crypto actors have sought to have a sale and purchase agreement for crypto assets voided for illegality and made unenforceable by claiming the agreement breaches legislation.

For more information, click here to read our Legal Update.