English Court of Appeal sets aside crypto fraud summary judgment

Background

In an earlier High Court decision report, Jones v. Persons Unknown [2025] EWHC 1823 (Comm), HHJ Pearce refused an application by Kyrrex Ltd, a crypto exchange, to set aside a summary judgment obtained by a fraud victim, Mr. Jones, against persons unknown and the exchange Huobi Global Ltd.

The judge held that Kyrrex was only “indirectly” affected by the order, that it had delayed in making its application, and that its underlying case was problematic. Consequently, Kyrrex had no standing under Civil Procedure Rules (CPR) r. 40.9, permitting non-parties to set aside summary judgments where those non-parties were “directly affected'.

More recently, on 28 September 2026, the Court of Appeal allowed Kyrrex’s appeal in Jones v. Kyrrex Ltd [2026] EWCA Civ 1212, with the leading judgment given by Nugee LJ.

The decision provides detailed guidance on who is “directly affected” by a judgment under CPR r. 40.9, which provides that a person who is not a party but who is directly affected by a judgment or order may apply to have it set aside or varied. It has obvious significance for exchanges that hold assets through, or for, other platforms.

Facts

Mr. Jones transferred assets to a sham trading platform between January 2019 and January 2020. In total, he lost 89.6 Bitcoin. He sued three classes of persons unknown and Huobi, alleging that Huobi held his Bitcoin as constructive trustee. In doing so, he relied on reports from a cyber investigation consultancy according to which his assets had been traced to a Huobi-controlled deposit wallet referred to as “tHEL”. The judge was told the Bitcoin in the tHEL wallet could only be Bitcoin transferred by individuals connected with the fraud.

On 5 September 2022, Mr. Nigel Cooper KC granted summary judgment, unopposed. His order required the defendants, including Huobi, to deliver up 89.6 Bitcoin from the tHEL wallet and to discharge a £148,000 costs order by transferring a further 8.6 Bitcoin from the same wallet (the Order).

Huobi complied. On 9 September 2022 it “locked” 98.2 Bitcoin in Kyrrex’s account (the BTC). When Kyrrex protested, Huobi told it that these were matters for Kyrrex to take up with the claimant and the English court. On 27 September 2022, Huobi transferred 98.2 Bitcoin to Mr. Jones from a different wallet (RwrmV) and then appears to have reimbursed itself by debiting Kyrrex’s account. Huobi’s own correspondence stated that the tHEL wallet was “associated exclusively” with Kyrrex’s Bitcoin account.

Kyrrex’s expert later concluded that none of Mr. Jones’s Bitcoin reached the tHEL wallet. On the Court of Appeal’s calculation, over 97.5% of the Bitcoin transferred into it came, directly or indirectly, from Kyrrex itself, as opposed to the fraudster. Only a small fraction (about 1,109 Bitcoin) came from fraudulent sources, none linked to Mr. Jones.

Mr. Jones’s new expert did not engage with that analysis, and it was accepted that the Order had been made on a flawed basis.

The Court of Appeal’s decision

The Court of Appeal considered the following grounds:

• Ground 1: Was the judge wrong to find that Kyrrex was not “directly affected” by the Order, and so lacked standing under CPR r. 40.9?
• Ground 2: Was the judge wrong to hold that, even if Kyrrex had standing, its application would have failed because of its delay
• Ground 3: Was the judge wrong to find that Kyrrex’s underlying case lacked merit?

Ground 1: “Directly affected” under CPR r. 40.9

Nugee LJ distilled six principles from the authorities:

• The rule, which is in entirely general terms, can apply in a very wide range of cases.
• There is a minimum requirement that the applicant’s interests are affected, meaning some interest “capable of recognition at law”. A merely colloquial or practical interest is not enough.
• There is no narrow or limited class of qualifying legal interests.
• The applicant need not show that it has lost a right. It is sufficient that the judgment “materially prejudiced the assertion of that right”.
• The applicant’s rights must be directly affected.
• The applicant need only show that the order “would prima facie be capable of materially and adversely affecting his legal interests”. It is not necessary to show that it would in fact do so.

The Court of Appeal accepted that Kyrrex had not shown any proprietary (as opposed to contractual) interest in the BTC. However, contractual rights “are often among the most valuable rights that a person has”,  and Kyrrex was still prejudicially affected by the judgment, as it could no longer simply withdraw assets when it wanted to.

The lower court judge had found the effect on Kyrrex was only “indirect” because Huobi could have satisfied the Order from the BTC in the tHEL wallet that Kyrrex did not claim. The Court of Appeal disagreed. It did not matter that Huobi paid Mr. Jones from another wallet and then reimbursed itself from the tHEL wallet. The evidence showed that the tHEL wallet was “very much Kyrrex’s wallet”. It was therefore “at least foreseeable, if not probable, that Huobi would charge the cost to Kyrrex”, which “was not just one person out of many interested in the wallet that was chosen at random, but was on the evidence the primary account holder”.

Alternatively, the court accepted Kyrrex’s argument that the Order was bound to result in a loss to someone interested in the BTC in the wallet. Whichever member of that class of persons bore the cost could claim to be directly affected. Ground 1 therefore succeeded.

Ground 2: Delay and prejudice

The relevant period of delay ran at most from September 2022, when Kyrrex learned of the Order, to its application in November 2024. The Court of Appeal held that Kyrrex “seems to have adopted a quite leisurely approach to the application without any real appreciation of the need to act with reasonable promptness”.

Mr. Jones relied on three factual points: Huobi being struck off in October 2023, the increased difficulty of pursuing anyone else, and a change in his financial position. However, the court found Kyrrex’s arguments on prejudice “rather better”. Mr. Jones might be unable to sue Huobi, but “all the material before the Court suggests that it is unlikely that he had any real claim against Huobi anyway”. It was also doubtful that he would have been better placed if Kyrrex had applied within a few months of disclosure.

Because the lower court judge’s exercise of discretion was flawed by his approach to the merits, the Court of Appeal weighed delay and prejudice afresh against the strength of Kyrrex’s case. Nugee LJ held that “it would take something very persuasive to outweigh the plain injustice of Mr. Jones being able to hang onto a judgment that now appears quite insupportable”. Kyrrex’s delay, and any prejudice it caused, fell “a long way short” of this standard. Ground 2 therefore succeeded.

Ground 3: Merits and the exercise of discretion

Nugee LJ accepted the lower court’s starting point that the applicant must ordinarily show a real prospect of establishing a defence to the claim, reflecting the test in CPR r. 13.3.

The lower court judge had examined whether Kyrrex had a good claim to recover the BTC from Mr. Jones. He doubted that it did, because Kyrrex had not shown a proprietary interest. Nugee LJ held that this led the judge to “address the wrong question”. The relevant question was whether Kyrrex had an arguable claim that the Order was made on a false basis and should never have been made.

On that question, Kyrrex’s case was very strong. Once Kyrrex had shown that it was directly affected and that the Order should not have been made, it would be prima facie grossly unjust to Kyrrex, which had suffered a large loss as a result of a quite unjustified order, to decline to set it aside. Reaching that conclusion did not require the Court of Appeal to take any view on whether Kyrrex could recover the BTC from Mr. Jones in unjust enrichment. The Court of Appeal held that the judge’s exercise of discretion was flawed, so the Court of Appeal had to exercise it again.

Respondent’s notice and remaining grounds

Mr. Jones argued that the application should fail because Kyrrex had known since September 2022 that it had a remedy against Huobi. The Court of Appeal rejected this. It did not know whether Kyrrex had such a claim, which might depend on Huobi’s user agreement. Huobi had been struck off as a BVI entity, and there was no evidence that HTX, which now held the tHEL wallet, would have any liability to Kyrrex. In any event, even assuming a claim existed, it did not affect the fundamental merits of the set aside application, because there was a very strong case that Mr. Jones was never entitled to the BTC.

Having allowed the appeal on Grounds 1 to 3, the court did not decide Kyrrex’s remaining grounds. Those grounds alleged that obtaining the Order without notice to Kyrrex breached natural justice and Article 6 of the European Convention on Human Rights.

Outcome and remedies

The Court of Appeal set aside the relevant paragraphs of the summary judgment Order under CPR r. 40.9. It accepted that a court setting aside an order can in principle make consequential orders reversing transfers made under it. But it declined to order the BTC to be returned either to the tHEL wallet or directly to Kyrrex, because Huobi no longer existed and its relationship with HTX had not been evidenced. Setting aside the Order did not prevent Mr. Jones from seeking to establish that he does have a claim to the BTC. Nor had Kyrrex yet shown a claim to the BTC itself, which may depend on whether it has a proprietary interest in those Bitcoins.

Comments

The decision is good for third parties whose assets or accounts are frozen or delivered up by a custodian or platform pursuant to a wrongly targeted summary judgment obtained by a victim of fraud. Such third parties are less likely to find themselves denied standing to challenge the order giving rise to their loss, on the basis that they had not been “directly affected” by it.

However, speed still matters. Kyrrex took over two years from learning of the Order to apply to have it set aside. The Court of Appeal described Kyrrex’s approach as leisurely and stressed that challenges to judgments obtained by others call for reasonable promptness. This was not fatal to Kyrrex’s case given its otherwise overwhelming strength. However, parties should take note that delay might stymie otherwise meritorious cases.

Finally, the decision demonstrates once again the danger of relying on faulty or incomplete blockchain forensic evidence. Victims of fraud should take note that attempts to rely on such evidence to support a claim against a custodian or platform can result in orders that are overturned and in further costs arising from adverse costs orders.

Client Alert 2026-205