Insights / News
Insights / News
The injunctions are a further example of English courts demonstrating commercial pragmatism and flexibility in this fast-developing area of law. They also represent a welcome departure from the problematic position courts had seemingly adopted on serving Norwich Pharmacal and Banker’s Trust orders out of the jurisdiction.
The Claimants were intending to pay a business contact for services provided in USD Tether (a stablecoin) on the Binance platform. The First Claimant entered the intended wallet address. However, before he clicked to send the transaction a Malware programme on his laptop caused the destination wallet address to change to an unknown fraudster’s wallet address. Before the First Claimant noticed the change he had clicked send and an amount of USDT 109,395 was sent to the fraudster.
An expert asset tracer (Haydn Jones) was able to trace the USDT to two further wallet addresses.
On 26 April 2021, before HHJ Pelling QC (ex parte), the Claimants were granted (i) asset preservation orders against the holders of the two wallet addresses in which the USDT are currently situated (Persons Unknown), (ii) a worldwide freezing injunction against the fraudster responsible for the misappropriation (Persons Unknown), (iii) Norwich Pharmacal and Banker’s Trust orders against Tether (the minter of USDT) and Binance and (iv) permission to serve all of the orders and injunctions out of the jurisdiction.
These ex parte orders were continued by HHJ Johns QC and HHJ Saggerson at subsequent return date hearings (on 14 May and 2 June 2021).
The Claimant is bringing a number of claims against the holders of the 3 wallets including proprietary claims based on constructive trusts, claims for unjust enrichment and conversion. Binance and Tether are named defendants for the purpose of obtaining disclosure orders about those responsible for the misappropriation.
The London Circuit Commercial Court Judgment of HHJ Pelling QC can be read here.
If you have enquiries or questions about cases involving cryptoasset injunctions or misappropriation of cryptoassets, please do not hesitate Chloë’s clerks Sam Carter on +44 (0)203 989 6669 or Colin Bunyan on +44 (0)20 7427 4886.