Cryptocurrency – recognised as property under English law

In the recent judgment handed down earlier this month in Fabrizio D’Aloia v Persons Unknown Category A & Ors [2024] EWHC 2342 (CH), the Chancery Division confirmed that cryptocurrency is ‘property’ for the purposes of English law.

The judge’s comments provide helpful guidance for those looking to make a successful application for a proprietary claim for cryptocurrency and will be welcomed by insolvency practitioners and others who are looking to trace and recover such assets.

The claimant brought the claim against seven defendants to trace and recover cryptocurrency.

The claim related to an alleged cryptocurrency scam involving stablecoin by persons unknown, with the stablecoin passing through a number of blockchain wallets before it was withdrawn as fiat currency by the seventh defendants.

The case against two defendants were settled/struck out and the trial primarily concerned a claim for breach of trust against the sixth defendant, a cryptocurrency exchange (“the Exchange”), with whom the seventh defendants are said to have held their cryptocurrency accounts.

Although the claimant failed in his application to persuade the court that the Exchange held the claimant’s stablecoin on a constructive trust, and was therefore liable to the claimant as constructive trustee, the judgment provides useful commentary.

Whilst confirming that cryptocurrency can be traced and held on constructive trust, the judge highlighted that the cryptocurrency must be traceable, with evidence of ownership identifiable throughout the transfer