Persons Unknown

It should not come as a surprise that the Fetch.ai case is against “Persons Unknown”. It has long been the practice of UK courts² to allow claims to be brought against categories of “Persons Unknown” as victims will rarely know the exact identity of the perpetrators.

Hong Kong has also readily adopted the same practice³ to enable orders against anonymous persons interfering with a victim’s rights. Although there has been no case in Singapore applying the same practice, the Singapore courts likely have the power to allow such claims.

So why bring a case against “Persons Unknown”? This is because the victims also seek remedies (i.e., information) against other respondents – in this case, Binance Holdings Limited and Binance Markets Limited as second and third respondents, respectively.

Critical information sought

Quite appropriately, the victims wanted to obtain a lot of critical information from Binance, including customer personal data relating to the accounts which received the benefit of the undervalued trades. IP addresses would also be obtainable if the fraudsters had been careless about accessing the victims’ trading accounts. All of this could lead to the location and preservation of the misappropriated cryptocurrencies.

In granting a Bankers Trust order against the Binance respondents, the UK court in Fetch.ai considered the following:

1. There were good grounds to conclude that the cryptocurrencies originally belonged to the victims. This is usually not hard to prove as a claimant.
2. Is there a real prospect that the information would lead to the location or preservation of the misappropriated cryptocurrencies? The UK court ruled in the affirmative as a strong inference could be drawn that the Binance respondents had such information (i.e., the personal data of their own customers) and that this information could be used to locate and preserve assets.
3. The order sought is not wider than necessary. This is generally a legal drafting point and can be crafted to suit the circumstances. The key point is to not overreach in your request for information.
4. What is the balance of convenience? The fact that a fraud has occurred weighs the balance heavily in favour of the victims. The UK court also considered Binance’s terms of use, which did not preclude its disclosure of customer information if compelled to do so by a court of competent jurisdiction.
5. The victims demonstrated they still had assets of more than £150 million, which meant that they could meet their undertaking as to damages and also any expenses incurred by the Binance respondents in giving disclosure. This was an important factor for the UK court as it meant that even in the worst case scenario that the victims were wrong to pursue their claim, the respondents would be able to pursue the claimant for damages suffered.

The UK court in Fetch.ai also considered granting a Norwich Pharmacal order, which would have resulted in compelling the Binance respondents to disclose the same information. Although the considerations were slightly different, the UK court came to the same conclusion to grant the disclosure order:

• There was a wrong carried out by an ultimate wrongdoer.
• The disclosure order would enable action to be brought against the ultimate wrongdoer.
• The Binance respondents, while not being parties to the wrongdoing, were “mixed up” in it and likely to have information necessary to enable the ultimate wrongdoer to be identified.
• The disclosure order was a necessary and proportionate response to the circumstances.

Position in Hong Kong and Singapore

In Hong Kong, the considerations for a Bankers Trust order⁴ and Norwich Pharmacal order⁵ are very similar to the UK position as set out above. The weight given to any one consideration may vary but the relevant factors for consideration are the same.

In Singapore,⁶ the requirements for the granting of a Bankers Trust order or Norwich Pharmacal order are less stringent than the test in Fetch.ai. The following three main criteria must be satisfied:

• The person possessing the information sought must have been involved in the wrongdoing.
• There must be a real interest and need for an order to enable action to be brought against the ultimate wrongdoer.
• It is necessary, just and convenient to order the disclosure of the relevant documents.

Final remarks

In the battle against cryptocurrency fraud, information is key. Do not underestimate the type of information you can obtain from a court disclosure order. The information might not lead you directly to the stolen assets or the fraudsters, but it may have the potential to point you down the right path.

Reed Smith LLP is licensed to operate as a foreign law practice in Singapore under the name and style, Reed Smith Pte Ltd (hereafter collectively, "Reed Smith"). Where advice on Singapore law is required, we will refer the matter to and work with Reed Smith's Formal Law Alliance partner in Singapore, Resource Law LLC, where necessary.

1. [2021] EWHC 2254 (Comm).
2. Bloomsbury Publishing Group PLC & Anor v. News Group Newspapers Ltd & Ors [2003] EWHC 1205 (Ch).
3. Billion Star Development Limited v. Wong Tak Cheung [2012] 2 HKLRD 85.
4. Pacific King Shipping Holdings Pte Ltd v. Huang Ziqiang [2015] 1 HKLRD 830.
5. A1 & Anor v. R1 & Ors [2021] HKCFI 650.
6. La Dolce Vita Fine Dining Co Ltd and another v. Deutsche Bank AG [2016] SGHCR 3.

Client Alert 2021-223