Information is key in the battle against cryptocurrency fraud.
We previously explored common law remedies available in Hong Kong, Singapore and the UK to compel entities to disclose critical information through court-mandated disclosure orders in our client alert.
While common law disclosures have aided fraud investigation for many decades, the law is still constrained by a number of legal requirements and restrictions. In this alert, we explore the nuclear option: the section 1782 discovery application in aid of foreign proceedings, available only in the United States.
Common law requirements and restrictions
Before getting into the requirements and potential rewards available from a discovery application under 28 U.S. Code section 1782, it is important to first understand the limitations of common law remedies, not all of which are present in a section 1782 discovery application:
Among the various common law requirements set out in our client alert the idea of necessity is key in both a Bankers Trust Order and Norwich Pharmacal Order. A claimant needs to demonstrate that they must obtain certain information to advance their case, and that the order for disclosure is no wider than absolutely necessary.
Balance of convenience
Courts in common law jurisdictions are required to take into account the burden of disclosure placed upon the party ordered to give disclosure. While the balance heavily favours victims of fraud, if the ambit of disclosure is too wide and burdensome, a common law court might limit disclosure.
To tip the scale, victims often have to show they have sufficient assets to meet any expenses incurred (including legal fees) by a third party ordered to give disclosure.