D’Aloia v Persons Unknown & Others: A welcome decision against crypto-asset fraud?
Authored by Foot Anstey, read the full article on Foot Anstey’s website.
As news breaks of the collapse of a cryptocurrency exchange due to something as old fashioned as a bank run (aka a liquidity crisis), can we learn from the trajectory of modern banking as to what may be yet to come?
As international regulators are expected to step up their scrutiny, will the Courts permit the law to be applied to exchange houses in the same deregulated way?
It certainly seems that the English Courts are willing to apply the flexibility of the common law to grip issues arising from the often-frenetic sector and its technologies – such as service requirements, asset tracing and freezing proceeds of fraud. But what about the finding of a constructive trust where the exchange house is regarded as a trustee for the defrauded victim’s funds?
This recent case suggests exchange houses will have to engage with Courts in the same way that the old-fashioned institutions have – to ensure they are afforded the same application of the common law which has, largely, allowed traditional finance institutions to prosper over the last century.
Key developments
- The potential finding of a constructive trust liability against crypto exchanges in relation to misappropriated crypto assets.
- Permission to serve proceedings by Non-Fungible Token (NFT).
