The rise of digital assets and the FinTech team keeping it in check

With digital assets and technology constantly evolving, Outer Temple Chambers’ Fintech team take a look at their progress over the last year and the reasons they have been nominated by Legal 500 Bar Awards for best Team, best Silk and best Junior in this area.

Worldwide appetite for digital assets and cryptocurrencies has exploded in recent years, with new cryptocurrencies and blockchain-based platforms continuing to develop at lightning speed. However, with new developments come new threats and the law is continuously evolving in response. Outer Temple Chambers has been at the forefront of these legal developments, in both an advisory capacity and in handling precedent setting disputes. The Fintech team takes a look at the past 12 months and the reasons why they have been nominated for a cluster of awards in this area by industry experts.

Outer Temple Chambers is one of the leading chambers in Fintech, particularly the law relating to blockchain and other distributed ledger technologies, crypto assets, smart contracts and open banking. However, the law relating to cryptocurrency is still in its infancy. In recent years, our barristers have developed specialisms in these areas in the anticipation that these assets and contracts would play an important role in modern commercial transactions and legal systems. Members have lectured and written on a wide range of topics relating to cryptocurrencies and have been doing some fascinating and novel work.

Shaping the law around digital assets

Andrew Spink KC has been at the forefront of the growth of the team in the UK and the Middle East, leading a team alongside David Russell KC and Justina Stewart on an important law reform project by the DIFC legislative authority to advise on how DIFC laws can be updated to facilitate legal certainty in relationships involving cryptocurrencies and smart contracts, as part of the DIFC’s major “Future of Finance” fintech and banking initiative. Other team members included Anson Cheung, Joshua Cainer and Henry Reid.

Both Justina Stewart and Helen Pugh have used their significant insolvency and wider commercial chancery expertise to develop this area of work. Helen is advising liquidators of a digital assets business and the valuation of cryptocurrency debts. Meanwhile, Justina is closely involved in law reform (both in England and Wales and abroad) concerning insolvency law and the law of security and financial collateral in the context of digital assets.

Ground breaking cases

In 2021, Justina Stewart represented Huobi in a significant 8-day trial against Tabarak Investment Capital in the Dubai International Financial Centre (“DIFC”). The Chief Justice of the DIFC Courts has referred to this as “one of the first cryptocurrency litigation disputes in the region and one of the few reported cases anywhere in the world which addresses issues such as the safe transfer of cryptocurrency … and the obligations owed by a custodian of cryptocurrency …”. The case was listed in the DIFC Court’s own Annual Report for 2022 as one of three “Notable Cases”. The matter is now proceeding to the DIFC Court of Appeal, permission to appeal having been granted by the trial judge. Andrew and Justina have been instructed at the permission to appeal stage and for the Court of Appeal hearing, which is listed for hearing in January 2023. This is the first cryptocurrency appeal against a final trial judgment to reach Court of Appeal level in the DIFC Courts (something that has not yet happened in the courts of England and Wales).

The FinTech team has been involved in pivotal applications for injunctions in the context of cryptoasset fraud. For example, Andrew Spink KC and Helen Pugh acted as lead counsel for one defendant and sole junior counsel for another defendant in the Commercial Court case Ellis v Babushkin, Stylianou, Sheadi and Plustech. This was a multi-million-pound cryptocurrency fraud claim against foreign-domiciled parties identified as potential recipients of the misappropriated bitcoin followed a disputed tracing exercise by blockchain analysis experts. Andrew and Helen each succeeded in obtaining by consent the discharge of the ex parte freezing orders previously made against their clients and the dismissal of all claims against them.

Henry Reid has acted at all stages of a claim against US and UK entities associated with the prominent cryptocurrency exchange ‘Kraken’. The claim was brought under s.26 FSMA 2000 for potential breaches of statutory duty in respect of the sale of alleged Specified Investments. In July 2023, he successfully resisted the enforcement of an arbitral award in the English Commercial Court on grounds of public policy. This case is one of the leading regulatory claims in respect of the sale of cryptoassets in the English courts to date, and is likely to have wider implications for investors trading on other crypto-exchanges.

Regulatory

Andrew Spink KC and Henry Reid been involved in a crypto asset related challenge against the FCA. Anson Cheung was seconded to the FCA to assist on regulatory projects associated with the anti-money laundering registration of cryptocurrency exchanges and the regulation of stablecoins.

Cross border litigation

Justina Stewart has a particularly impressive cross-border crypto-fraud caseload, having been instructed in relation to no less than seven very significant cases over the past twelve months.

Thought leaders

The FinTech team continue to be contributors to high profile crypto-related conferences and events both in the UK and around the world.

Andrew Spink KC was invited by the FSLA to join a panel discussion with Taylor Wessing on recent developments and future trends in the regulation of cryptoassets.

In early 2023, Andrew chaired both the Chancery Bar Association’s Winter Conference Digital Asset Panel with eminent academics and law reformers, Professors Louise Gullifer and Sarah Green and also the Commercial Bar Association’s Digital Asset Panel at its inaugural Gulf Event in Dubai.

Justina Stewart was invited to speak on cross-border crypto fraud issues at Offshore Alert’s flagship event in Miami in April, on an anatomy of a crypto insolvency at R3’s Annual Conference in Venice in May and at the C5 inaugural crypto event in June. She also spoke, with Helen Pugh, on conflict of laws issues in the crypto context at London International Disputes Week. Helen was also invited to speak on misselling of cryptoassets with CFAAR (alongside Henry Reid), as well as on the topic of cryptocurrency and other tech frauds by the Female Fraud Forum (of which Helen is a committee member).

Helen has been published in the Journal of International Banking and Finance Law on the topic of digital assets, an article which was cited by the Law Commission in their report of Digital Assets.

Outer Temple has long been involved with Tech Disputes Network, contributing podcasts through various members of the team on a number of digital asset-related legal issues such as the potential application of trust law and jurisdiction and conflict of laws in cases involving digital assets. Outer Temple has also hosted the TDN debate on “Open Source Software”, at which David Grant KC and Helen were speakers.

Wider tech expertise

Just one example of the team’s wider ground breaking work in the tech space is our legal and regulatory reform work on Open Banking/Finance (Andrew Spink KC, David Russell KC and Justina Stewart). Like much of our tech-related work, this involves knotty issues concerning data protection. Helen Pugh has also been invited by the Society of Computer Law in Autumn 2023 to speak on artificial intelligence in legal disputes.

Legal 500 Awards

Legal 500 UK have recently recognised the sterling work by the entire team with a nomination for ‘Technology, Data and Crypto Set of the Year 2023’.

In addition to the team award, nominations were also given for the other two awards in this category. Andrew Spink KC has been shortlisted for Technology, Data and Crypto Silk of the Year and Justina has been shortlisted for Technology, Data and Crypto Junior of the Year. Both have played an integral part in building the FinTech team, and a full house of nominations in this category is testament to all of the hard work over the last 12 months.

Find out more

To find out more, visit our FinTech page or contact Sam Carter on +44 (0)203 989 6669.

News 13 Jul, 2023

Legal Blogs 17 Jul, 2023