Background
The Property (Digital Assets etc.) Act 2025 (the Act) formally defined digital assets as a third category of property distinct from things in possession (tangible things) and rights relating to things (choses) in action (legal rights or claims enforceable by action).
Under English law, the torts of conversion and trespass to goods are traditionally often used in the context of stolen or appropriated goods. The tort of conversion is a strict liability which relates to one person interfering with the personal property of another so as to exclude them from use and possession, either by taking it or withholding it without lawful justification. The tort of trespass to goods relates to direct physical interference with tangible property in one person’s possession at the time of the trespass, including by damaging the goods.
However, these torts may be limited in their applicability to intangible assets. In the 2008 case of OBG Ltd v. Allan [2008] 1 AC 1, the House of Lords ruled that, as contractual rights are intangible property which cannot be possessed, an action in conversion could not lie in respect of them. The Law Commission has recognised this issue as it potentially relates to crypto assets in its 2023 report “Digital assets”, but argued that there are good policy reasons to extend the tort to third category things such as digital assets, noting that the law as it stands is incapable of extending to digital assets and any development would most likely need to be by way of statute. Successful crypto-conversion claims have been advanced in other jurisdictions.
Facts
In Yuen v. Li [2026] EWHC 532 (KB), Mr Justice Cotter in the High Court considered applications concerning the alleged theft of 2,323.28423347 Bitcoin valued at between £160 million and £180 million (the Bitcoin), for which claims had been advanced under the torts of conversion and trespass to goods.
The claimant, Mr Ping Fai Yuen, was the lawful owner of the Bitcoin. His private key was contained in a “cold wallet” on a physical device sold by the Trezor wallet provider, protected by a six-digit PIN (judgment at section 2). However, any person with access to the claimant’s “seed phrase” or “recovery seed” – a randomly generated set of 24 words – could recreate the wallet on a separate device.
On 2 August 2023, the Bitcoin was transferred without the claimant’s knowledge or consent and, following several transactions, came to rest at 71 separate addresses not held at third-party exchanges. The claimant’s case was that, at a time when divorce was contemplated, his estranged wife (the First defendant) obtained his seed phrase and transferred the Bitcoin, either acting alone or in concert with her sister (the second defendant). It was alleged that the first defendant achieved this by covertly recording the claimant to obtain the seed phrase (judgment at section 7).
Audio recordings obtained by the claimant allegedly captured the first defendant discussing CCTV being set up in their house, the location of the password, and the transfer of the Bitcoin. The transcripts included exchanges such as “The Bitcoin has transferred to me but can it be seen that you have taken it?” and discussions about the difficulties of realising the value of the cryptocurrency, including concerns around money laundering (judgment at section 9).
The claimant reported the alleged theft to the police, leading to the first defendant’s arrest on 23 December 2023. During the search of her property, the police seized 10 cold wallets (including a Trezor of the same make as used by the claimant) and five recovery seeds (judgment at section 12).
On 21 November 2025, the claimant made a without notice application against the first and second defendants for a proprietary asset preservation injunction and a disclosure order. In support of the injunction application, an unsealed claim form and particulars of claim were exhibited pleading the torts of conversion and trespass to goods as causes of action (judgment at section 16).
The court’s decision
The substance of the hearing dealt with the application by the first defendant to strike out the claims in conversion and trespass to goods on the basis that these torts cannot apply to intangibles such as the Bitcoin.
Strike-out application: Conversion
Dealing with the tort of conversion, the court agreed that the cause of action could not extend as far as the Bitcoin and struck out the claim.
In reaching his decision, Mr Justice Cotter conducted a comprehensive analysis of the law of conversion. Commenting on the OBG decision, the court endorsed Lord Hoffmann’s view that the notion of strict liability for the common law tort of conversion in respect of intangible property was “foreign to English law” (judgment at section 70).
The court acknowledged the claimant’s submissions regarding developments in other common law jurisdictions, including decisions in the United States, Canada, and New Zealand that have already extended conversion to digital assets and intangible property. In light of these authorities, the Claimant argued that digital assets were property that was vulnerable to misappropriation by persons other than the owner (judgment at section 63). However, Mr Justice Cotter concluded that the reasoning in OBG constituted a clear block to the extension of the law of conversion for this purpose.
The court observed that, whilst the Act had removed uncertainty as to the existence of a third category of property, it had not reversed OBG or recommended extending the law of conversion. The Law Commission, in its comprehensive analysis preceding the Act, had conceded that third category things are “currently incapable of being converted under the existing law” (judgment at section 52).
Strike-out application: Trespass to goods
On trespass to goods, the court again found that direct physical interference with tangible property was required and expressed doubt as to whether such a cause of action could succeed on the facts as alleged, given that (on the claimant’s case) the first defendant did not need to physically touch the wallet but rather accessed it and copied its data to gain the ability to change the data on the blockchain.
However, rather than striking out this claim immediately, the court allowed the claimant seven days to consider whether to apply to amend the particulars of claim to expand upon the basis of the claim for trespass to goods; failing such application, the claim would be automatically struck out.
This was because in oral submissions counsel for the claimant, Jim Sturman KC, referred to the possibility that, to transfer the Bitcoin, the first defendant had “touched” the wallet and/or used or altered the property or associated data, in contrast to the pleaded position (judgment at section 83). Mr Justice Cotter accepted, as a result, that the application of the tort was difficult and uncertain on the facts as pleaded and, despite some hesitancy, allowed the opportunity to plead the cause of action further.
Amendment application
Although the claimant’s conversion and trespass to goods claims were struck out, the claimant was permitted to amend his claim form and particulars of claim to include additional causes of action. The court permitted the amendments, which introduced causes of action covering unjust enrichment, breach of confidence, misuse of private information, causing loss by unlawful means, proprietary restitution, and constructive trust. These claims will now proceed to be heard. The court also refused the first defendant’s application for security for costs.
Commentary
The decision further clarifies that digital assets, while property capable of attracting personal property rights, cannot be protected by the “strict liability” torts of conversion and trespass to goods.
Alleged victims of crypto asset theft will continue to have recourse to claims in proprietary restitution, unjust enrichment, breach of confidence, constructive trust, and deceit. These have been successfully deployed in other crypto asset cases, a point Mr Justice Cotter dealt with in some detail.
Notably, the court left open the possibility of future development. There was scope for the courts to develop “specific and discrete principles of tortious liability by analogy with, or which draw on some elements of, the tort of conversion” to address wrongful interference with digital assets. This suggests that, although the existing tort of conversion cannot be extended by judicial development in light of OBG, an analogous cause of action tailored to the unique characteristics of digital assets may yet emerge through the common law.
This is an area of law which should be followed by businesses issuing, transacting in, or holding digital tokens.
Client Alert 2026-71