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With the rise of cryptocurrency, fraud involving cryptocurrency has also grown exponentially. In the first of this series, as a high-level overview, we explore different methodologies and approaches to tracing, freezing and recovering cryptocurrency in Hong Kong, Singapore and other common law jurisdictions.

Common legal remedies

For victims of cryptocurrency fraud, Hong Kong, Singapore and other similar common law jurisdictions each have similar legal tools and remedies in place to trace, freeze and recover stolen assets.

While the laws of Hong Kong and Singapore do not directly address ownership and transfer of cryptocurrency, commercial and cyber fraud involving fiat currency have been swiftly tackled by the courts in both jurisdictions using a combination of different legal tools. A similar set of tools can be applied for cryptocurrency:

Norwich Pharmacal disclosure: This order compels an individual or entity based in Hong Kong or Singapore to provide information they hold which is relevant to a fraud. It is not uncommon for banks in these jurisdictions to provide customer information under such orders.

Bankers Trust disclosure: Going one step further, victims of fraud will often want to know whether their stolen funds still remain in the same bank account after the initial transfer. This order can compel banks (or similar entities, such as cryptocurrency exchanges) to disclose information to trace stolen funds.

Freezing injunction: This is a freezing order (also known as a Mareva injunction) which may be granted in Hong Kong and Singapore where a plaintiff has established fraud. This order will restrain a bank from allowing dissipation of funds.

Proprietary declarations and vesting orders: Once monies are frozen in place, the court can vest monies in, or declare monies to belong to, a particular plaintiff. This avoids arguments when multiple parties seek relief against mixed funds.

Garnishee orders: After obtaining judgment (usually by default against fraudsters), this order is available to order the party holding the funds (e.g., a bank or a cryptocurrency exchange) to make payment to you.