Cryptocurrency - Definitely, maybe... Legal property?

Published: 11/9/2019

More and more people are using and investing in cryptocurrencies, but experts are also telling us that more and more people are becoming victims of crypto-crime. It is reported that over $1.5 billion worth of cryptocurrency was stolen last year by hackers. Two months ago, Japan-based cryptocurrency exchange Bitpoint lost cryptocurrencies worth approximately 3.5 billion yen (roughly $32 million) in a single hacking incident.

Bringing legal action against those who perpetrate these crimes can be difficult and often fruitless. It can be expensive and time-consuming to track where the crypto-assets have been transferred, and laws are not yet effective in providing relief for such crimes.

This issue is compounded by the fact that there is no clear legal answer to the question: is cryptocurrency legal property, data or something else? This has huge ramifications on a victim's rights of redress.

The recent decision in Liam David Robertson v Persons Unknown & Ors last month (believed to be the first such judgment) has suggested that cryptocurrencies should be considered as legal property. This may assist victims of crypto-crime in recovering their stolen crypto-assets. However, it is crucial to note that this is not the final word on the matter.

Status of Cryptocurrencies

Understanding cryptocurrency is not always easy and can often involve large amounts of technical jargon. Unhelpfully, there is no agreed definition of a crypto-asset and there are around 2,000 crypto-assets currently in existence, with more being developed all the time [1]. For ease, the explanation below focuses on Bitcoin. Bitcoin remains one of the most popular cryptocurrencies and was the currency in issue in the Robertson case.

Crucially, Bitcoin, and indeed all cryptocurrencies, differ from fiat currencies in that they (rather obviously) can never be tangible.

As an over-simplification, the 'coin' we often picture when discussing Bitcoin is actually a digital string of data, which can be transferred from one 'wallet' to another by making entries on an electronic ledger. In itself, Bitcoin has no prescribed value and carries no rights as legal tender, as ordinary fiat currency does. Although comparisons can be made with electronic ledgers to record trades of any modern day commodity or bank transfers, significantly the distinction is that the owner of a Bitcoin cannot demand the 'asset' that sits behind the ledger, in the same way a demand can be made of a bank for the money which sits in an ordinary bank account. Nevertheless, Bitcoin is now routinely traded for significant sums of fiat currency - at its peak in December 2017, one Bitcoin was worth over $19,000.

Hence, it is not immediately clear whether cryptocurrency is a 'thing' you possess, merely data or somewhere in between.

This question is not merely academic. It underpins all legal issues relating to cryptocurrency. At a speech on 2 May 2019 [2], Sir Geoffrey Vos, Chancellor of the High Court, stated that the question of whether cryptocurrency was property was the "single biggest" question that has been raised in this area, and required an answer before any other issues could be determined, such as how it is to be regulated.

Concept of ’property’ in English law

The Law of Property Act 1925 provides a definition of 'property', which includes "any thing in action, and any interest in real or personal property." The nature of property rights was considered by Lord Wilberforce in National Provincial Bank v Ainsworth [1965] 1 AC 1175. He said that a property right was "definable, identifiable by third parties, capable in its nature of assumption by third parties, and [must] have some degree of permanence or stability."

The common law understanding of personal property is that there are two categories: (i) choses in possession and (ii) choses in action. A chose in possession is a tangible object that can be physically possessed. Conversely, a chose in action is a right (such as a debt) that can be enforced by way of legal action and cannot be physically possessed. Cryptocurrency does not fall neatly into either classification.

Academics and commentators prior to the Robertson case drew comparisons between cryptocurrencies and EU Carbon Emissions Allowances (EUAs). EUAs do not exist in a physical form, only as an entry on a register; however, EUAs carry legal consequences which can be enforced (or at least be a defence to a claim to have breached the law), unlike cryptocurrency.

EUAs were considered in the case of Armstrong DLW GmbH v Winnington Networks Ltd [2012] EWHC 10 (Ch), where it was held that EUAs were a form of "intangible" legal property, but not a chose in action in the narrow sense. The Judge nonetheless went on to hold that the Claimant could make a property claim to its EUAs. It therefore seems that it is not essential for personal property to fall neatly into one of the two categories above for the law to recognise it as property.

Some have commented that this case demonstrates that the English court can be flexible in protecting new forms of intangible property.

The background to the Robertson case

The Claimant in Robertson is a prominent crypto-asset investor in the Middle East and was the victim of a “spear-phishing” attack, in which 100 Bitcoin, worth approximately $1.2 million, was stolen. Mr Robertson was able to locate 80 of the 100 stolen Bitcoin in a wallet held by the UK arm of Coinbase (one of the largest cryptocurrency exchanges in the world).

The Claimant made an application, on an ex-parte basis, to the Commercial Court in London seeking to freeze the Bitcoin held by Coinbase and to reveal who was the owner of the wallet holding the stolen Bitcoin. This application was made on the basis that Bitcoin was legal property and that legal title had not transferred to the First Defendant(s) (the alleged fraudster(s)) when the Bitcoin had been stolen. Therefore, legal title equally could not transfer to the Second Defendant, for whom Coinbase held the 80 Bitcoin in its wallet.


At the first hearing, Mrs Justice Moulder granted the Claimant a Bankers Trust order, which required Coinbase to reveal the identity of Coinbase's customer (the Second Defendant).

She expressed reservations about granting a freezing order over the assets of the (unknown) First Defendant(s) generally (up to the amount of the stolen Bitcoin), irrespective of the evidence of fraud. She expressed concerns that, without knowing who the person was, it would not be possible to weigh up the balance of convenience to say that it would be just to grant a freezing order. Mrs Justice Moulder ultimately adjourned that application.

Even so, it was not necessary to determine to identity of the First Defendant for an asset preservation order ('APO') to be granted. To obtain this, the Claimant was merely required to prove that there was a serious issue to be tried that the 80 Bitcoin were its property (that is, it had an arguable proprietary claim to the 80 Bitcoin). In considering the APO, Mrs Justice Moulder was referred to a recent case in the Singapore International Commercial Court, B2C2 Ltd v Quoine Pte Ltd [2019] SGHC(I) 03, in which the Court had ruled that cryptocurrencies were property for the purpose of being held on trust. Significantly in that case, both parties had accepted that cryptocurrency should be considered 'property', although the Judge held that this was correct in law. 

Mrs Justice Moulder also referred to the Financial Markets Law Committee (FMLC) report, Issues of Legal Uncertainty Arising in the Context of Virtual Currencies (July 2016) (available here), which describes cryptocurrency as "a kind of hybrid: ‘virtual choses in possession’. That is, intangible property with the essential characteristics of choses in possession."

Mrs Justice Moulder accepted that there was a serious issue to be tried with respect to the proprietary claim, for which a necessary step in the argument was that Bitcoin constitutes personal property.

At the return date hearing, Mr Justice Jacobs continued the APO and granted the Claimant permission to serve the claim out of the jurisdiction.


This case is interesting as a first indication of how courts, and possibly lawmakers in the UK may ultimately come to define cryptocurrencies in the future. However, the decision in Robertson is not a final decision on the merits. A clear answer to this crucial question is needed urgently to ensure that investors' rights are protected and that there is adequate market confidence in cryptocurrencies.

Sir Geoffrey noted in his speech on 2 May 2019 that clear legal recourse is required to ensure that cryptocurrencies go "mainstream", as "investors are unwilling to part with real money without the assurance that there is a legal foundation for their engagement." The first step to providing these assurances is providing a clear answer to the question of whether cryptocurrencies are legal property. It is hoped that this case is a sign that this answer is now not far off and may well be in the affirmative. Interestingly, the UK Jurisdiction Taskforce of the LawTech Delivery Panel (which brings together the Judiciary, the Law Commission of England and Wales and other technology and legal professions) was due to publish a Legal Statement in the late summer 2019, following a consultation process.

The legal nettle will need to be grasped soon to provide what Sir Geoffrey Vos has described as "much needed predictability" [3] in this area. If cryptocurrencies are ultimately determined to be personal property, this will have major repercussions for crypto-asset companies and investors, not only in respect of legal action following criminal behaviour, but also in regard to tax, inheritance and providing security.

Mrs Justice Moulder’s comments regarding granting a freezing order in such a case also deserve consideration. Her reluctance to grant a freezing order in a case where the defendants are not identifiable, only for that reason, is perhaps surprising. As commentators have noted, this would in reality make it very difficult to successfully apply for a freezing order in circumstances of crypto-crime, given the anonymity afforded by the very nature of cryptocurrency and the covert manner in which hackers and crypto-criminals operate. While covert operation is common to most successful thefts and frauds, due to the public ledger system on which crypto-criminals operate, it will often be possible to locate cryptocurrencies more easily than other stolen assets. Mrs Justice Moulder’s decision suggests it will be difficult to get any immediate freezing relief, even where something of the alleged fraudster is known (e.g. the wallet used and transactions numbers in question, more than would typically be known of a thief of anything else).


[1] Cryptoassets Taskforce Final Report (October 2018) (available here)

[2] Cryptoassets as property: how can English law boost the confidence of would-be parties to smart legal contracts? – Sir Geoffrey Vos, Joint Northern Chancery Bar Association and University of Liverpool Lecture, 2 May 2019 (available here)

[3] Judicial diversity and LawTech: do we need to change the way we litigate Business and Property Disputes? – Sir Geoffrey Vos, Chancellor of the High Court, Speech to Chancery Bar Association Annual Conference, 18 January 2019 (available here)


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