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29 Nov 2021

Cryptocurrency fraud – Remedies – Cryptocurrency as property


In a series of recent cases, Courts in multiple jurisdictions have step by step moved towards the recognition of cryptocurrency as "property".

This is significant both internally (i.e. amongst the users of the system) and externally (i.e. to third parties dealing with the system). If not recognised as "property", a cryptocurrency cannot be reliably form the subject matter of a trust, a proprietary right, or part of an estate, for example.

We consider these decisions in time sequence.

Timeline of cryptocurrency cases

Singapore – Quoine Pte Ltd v B2C2 Ltd [2019] SGHC(I) 03 (14 March 2019); Quoine Pte Ltd v B2C2 Ltd [2020] SGCA(I) 02 (24 February 2020)

This was one of the earlier cases to consider this question. Quoine operated a cryptocurrency-exchange platform, and B2C2 was a platform user trading with its own trading algorithms. A bug arose which allowed B2C2 to trade Ethereum for Bitcoin at a rate 250 times below market rates then, to B2C2's benefit. Shortly after, Quoine noticed the abnormal trades, and unilaterally reversed them. B2C2 sued Quoine on grounds, amongst others, that the reversal of the executed trades amounted to a breach of trust.

At first instance, a trust was found to exist. (A trust requires three "certainties" – (i) intent to create a trust, (ii) subject matter, and (iii) objects, i.e. beneficiaries.) The "property question" arose in (ii). Quoine was prepared to assume that cryptocurrencies may be treated as property that may form the subject matter of a trust, and the Court agreed.

There was therefore limited analysis on the issue, but the Court did refer to the traditional definition of property in National Provincial Bank v Ainsworth [1965] 1 AC 1175 ("Ainsworth") that "[property] must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability". The Court commented that while cryptocurrencies are not legal tender in the sense of a regulated currency, they nevertheless have the fundamental characteristic of intangible property as being an identifiable thing of value.

On appeal, the Court of Appeal rejected the trust claim. This was primarily because the way in which Quoine internally structured and held cryptocurrencies from its exchange platform did not show (i) intent to create a trust. The Court of Appeal specifically declined to reach a final position on the question of whether cryptocurrencies should be a species of property, but commented "there may be much to commend the view that cryptocurrencies should be capable of assimilation into the general concepts of property".

United Kingdom – Aa v Persons Unknown [2019] EWHC 3556 (Comm) (17 January 2020)

Hackers attacked the computer systems of a Canadian company, and held them hostage. US$1.2 million ransom was demanded. A reduction was negotiated, and paid in Bitcoin by the company's British insurer.

The insurer then traced some of the ransom payment to a digital wallet linked to Bitfinex, a cryptocurrency exchange. Among other relief, it sought a proprietary injunction over the traced ransom payment.

The Court therefore needed to decide whether cryptocurrency is property. It referred to the first instance decision in Quoine, and the UK Jurisdictional Task Force Legal Statement. It noted that while "property" is typically classified as either "tangible" (physical object) or "chose in action" (bundle of rights), that something cannot be so classified is not necessarily a bar to it being "property".

However, the application was unopposed as the hackers did not appear. There was also limited analysis on whether cryptocurrencies could meet the Ainsworth definition.

New Zealand – David Ian Ruscoe and Malcolm Russell Moore v Cryptopia Limited (In Liquidation) [2020] NZHC 728 (8 April 2020)

Cryptopia was a New Zealand cryptocurrency exchange. It was hacked and tokens of value NZ$30 million were stolen. Cryptopia was placed in liquidation. It faced claims from its user account holders, as well as unsecured creditors. The user account holders claimed that tokens in user accounts were held on trust by Cryptopia for its users.

If this was correct, the tokens in user accounts would not form part of Cryptopia's assets and not be available for distribution to the general pool of creditors. Instead, these tokens would be returned to the specific individual users. Apart from these tokens, Cryptopia had only NZ$5.4 million in assets (instead of about NZ$212 million total if the tokens in user accounts were included), so this application had a significant impact on general creditors and was fully argued.

To be the subject of a trust, the tokens had to be "property". The Court noted the authorities above, analysed each of the Ainsworth criteria, and found the tokens were indeed "property":

  1. Identifiable Subject Matter – Computer-readable strings of characters recorded on networks of computers are sufficiently distinct. Allocation to account holders is made by a public key. Data allocated to one public key would not be confused with another. Historical data on the blockchain cannot be altered.
  2. Identifiable by Third Parties – This refers to control and ability to exclude. The degree of control necessary for ownership is present in the cryptocurrency context because the private key is available only to the holder of the account, and both the public key and private key are required to record a transfer of cryptocurrency. The private key acts similarly to a PIN in the traditional banking context. This helps inhibit the possibility of involuntary transfers (i.e. excluding third parties from access), and the creation of a new private key after each transfer inhibits a holder from transferring the same cryptocurrency twice.
  3. Capable of Assumption by Third Parties – This refers to third parties respecting the rights of the owner in that property as well as there being a market for the particular asset. There Court noted there is no doubt that cryptocurrencies can be, and are the subject of active trading markets.
  4. Degree of Permanence or Stability – The Court found that this criteria did not add much to the other three criteria. For example, a cinema ticket would have a very short life (i.e. lack of permanence) but it is unquestionably regarded as property. In any event, the entire life history of a cryptocurrency is typically available from the blockchain.

The Court further considered if the use of cryptocurrency in activities linked to crime provided public policy reason not to recognise cryptocurrency as property. It considered that not recognising cryptocurrency as property would have little effect in reducing potential criminal activity, and that the traditional banking system was also subject to exploitation by the criminal fraternity. It also considered that legitimate commercial developments may be hindered if the law did not recognise cryptocurrency.

The Court then considered the way in which Cryptopia's accounts and wallets were structured. It concluded that trusts existed for the benefit of the specific individual users whose accounts particular tokens were in.

British Virgin Islands – Joint Liquidators of Torque Group Holdings Limited (In Liquidation) v Torque Group Holdings Limited (In Liquidation) BVIHC (COM) 0031 of 2021 (2 July 2021)

This is the most recent case we are aware of.

Torque operated as an online cryptocurrency trading platform. It went into liquidation. Its liquidators sought orders from the BVI Court to assist in the identification and distribution of Torque's cryptocurrency assets.

Cryptocurrency assets were identified in various wallets including "User Trading Wallets" and "User Personal Wallets". The liquidators asked the Court to determine whether the contents of these wallets fell within Torque's assets, or were the assets of individual users.

Before considering this, the Court had to determine whether the cryptocurrency assets were "property" or not for the purposes of liquidation under the BVI Insolvency Act 2003. It referred to the UK Jurisdictional Task Force Legal Statement and Aa v Persons Unknown, and found that the answer is "yes".

The Court examined the characteristics of both types of wallets:

  • "User Trading Wallets" – Contents co-mingled across wallets, Torque held private key =  contents likely to be assets of Torque, i.e. available for distribution in liquidation.
  • "User Personal Wallets" – Users held their own private keys, wallets merely hosted by Torque = contents likely to be assets of the individual wallet holders.


The increasing recognition of cryptocurrency as "property" is welcome given the interest and amounts invested in cryptocurrencies. Among other things, recognition assists the grant of legal relief (e.g. trusts, proprietary injunctions) and the orderly management of estate and insolvency situations.

If you face issues or disputes related to cryptocurrency, or wish to explore preventive action, please contact the team.



Lauren Tang

Lauren Tang
Managing partner at Virtus Law

T:  +65 6835 8664 M:  Email Lauren | Vcard Office:  Singapore

Yi Lei Tan

Yi Lei Tan
Associate at Virtus Law

T:  +65 6661 6527 M:  +65 9800 6288 Email Yi Lei | Vcard Office:  Singapore