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Obtaining relevant information in a cryptocurrency fraud is one of the most critical elements in tracing and recovering cryptocurrency. While some information can be obtained through the internet and other technical means, often critical pieces of information are privately held by entities such as cryptocurrency exchanges. How do you get access to that information?

In our high-level overview to tracing, freezing and recovering cryptocurrency, we touched upon some common-law remedies which enable critical disclosure of information.

In a deeper dive into common-law remedies, we will look at a very recent UK decision on this issue, where a fraud victim obtained a court order against Binance, currently one of the biggest cryptocurrency exchanges in the world by trading volume. fraud

On 15 July 2021, the UK High Court issued a written judgment in Limited & Anor v. Persons Unknown & Ors.1

The victims discovered that their accounts held with Binance had been compromised. These accounts held various amounts of different cryptocurrencies, including USDT, BNB, BTC and FET. The fraudsters then operated these accounts to trade the cryptocurrencies at a significant undervalue to anonymous third parties over a very short period of time, resulting in a loss of more than US$2.6 million.

Why the UK?

The UK court spent some time considering which law governed the jurisdiction of cryptocurrency. There were no decided cases on this point.

In the end, the choice of law fell upon the fact that Limited was incorporated in the UK.

Interestingly, since the second applicant, Foundation Limited, was incorporated in Singapore, had the victims so chosen, Singapore might well have had jurisdiction. The choice of jurisdiction is often an essential part of legal strategy.