UK High Court ruling over $1 million hack implies Bitcoin is "property"
As the British High Court grapple with whether Bitcoin counts as legal property, a court has treated it as such in a million-dollar court case.
In a first, the British High Court recognizes Bitcoin as “property,” for now, in an interim judgement on a
cryptocurrency hacking case. The decision, though subject to ratification, sets for now a legal precedent in the 800-year-old system, making it easier for victims of hacking to claim cryptocurrencies locked away in exchanges.
The judgment concerns Liam Robertson, CEO of Alphabit, a crypto-fund that manages $195 million, who claimed he was conned out of $1 million worth of Bitcoin last month. London’s Commercial Court issued an Asset Preservation Order that ordered the
exchange CoinBase to temporarily freeze stolen funds—meaning that the Court, for the first time, recognized Bitcoin as legal property.
Thus far, British law says that Bitcoin is “data,” not property, meaning that you can’t claim it back if someone’s stolen it. But Robertson’s lawyers, Marc Jones of Stewarts and David Heaton of Brick Court Chambers, argued that Bitcoin is, in fact, his property. Since the theft of his Bitcoin didn’t entail a transfer of the property title, Robertson still “owned” the stolen bitcoins, they asserted.
Though the Court’s decision to freeze the assets is only an interim judgement, Robertson’s lawyer, Marc Jones, told Decrypt that it sets a legal precedent. “If someone finds themselves in a similar position, they’ll be able to refer to this case and say; ‘Judge, we’re not asking you to do something that’s never been done before—see the decision in Robertson v Persons Unknown.’”
The incident began in early July when Robertson was on the phone with an executive of an algorithmic
trading fund, and, impressed with the product, agreed to fork over 100 bitcoins, Robertson told Decrypt in an interview.
Robertson claimed that the phone line was bugged. After hearing that Robertson planned to send his bitcoins to the fund’s chief investment officer, he used complex spyware to clone the CIO’s email address. Then, posing as the CIO, he sent an email to Robertson requesting that the funds be sent to the hacker’s Bitcoin wallet address.
Thinking he was sending money to the company’s CIO, Robertson took the bait.
The algorithmic trading fund worked out that it’d been hacked and called Robertson up the next day, July 6th, to warn him about the scam. Too late—80 bitcoins had already gone to crypto exchange Coinbase, 15 to LocalBitcoins.com, and another 5 to a cold wallet.
Robertson told Decrypt he got the funds back from Coinbase on Tuesday. His lawyers hounded the hacker, who returned the funds in a panic.
Robertson said his lawyers plan to use similar courses of actions to get the remaining 15 bitcoins back from LocalBitcoins.com and 5 bitcoins held in the cold wallet. But Jones said that things become more difficult when the stolen funds sit in a wallet that’s not held in an exchange.
If Robertson’s lawyers can’t spook the remaining bitcoins out of the hacker, they’ll first have to identify the owner of the wallet and force them to transfer the funds by way of a court order—a lengthy and, for Robertson at least, costly process.
Yet the ongoing legal battle—now for the final 20 bitcoins—has already shown that the centuries-old legal system can keep up with the times, and British law must continue to fight strong international competition to keep business running through its courts. Robertson’s lawyer, Jones told Decrypt that the judgment showed “that the English courts have shown they’re willing to grapple with these new issues.”
“It sent the right message: that if you’ve got these kinds of disputes, then the judges in the High Court are really well equipped to deal with it,” said Jones.
Now, the Court’s waiting on the consultation of the UK Jurisdiction Taskforce, a working group that’s led by industry and supported by the U.K. government that’s working out whether to ratify whether Bitcoin is indeed a property or not. They expect to publish their report sometime later this summer.