Cryptocurrency disputes

Our Banking and Financial Disputes team has specialist experience and familiarity in the emerging area of blockchain and cryptocurrency. To date, the largely unregulated nature of this sector has made it frequently prone to fraud and the risk of money laundering. Potential areas of dispute risk for those involved in cryptocurrency transactions also include:

  • Commercial disputes over transfers of cryptocurrency or the operation of smart contracts;
  • The potential use of cryptocurrencies to violate sanctions regimes and money laundering laws;
  • Disputes arising out of the hacking of cryptocurrency wallets;
  • Claims brought by investors who have had their cryptocurrency wallets frozen;
  • Claims by investors following Initial Coin Offerings;

Working closely with our Non-Contentious Fintech team (see our experience here) we have advised on some of the first disputes in the UK relating to digital currencies, including:

  • Acting for a cryptocurrency trader in a dispute with a BVI based cryptocurrency exchange. The trader’s account was frozen by the exchange following a cryptocurrency trade which made a very significant profit. Proceedings have been brought in the BVI in an attempt to resolve the dispute.

  • Acting for a healthcare start up in a dispute with a number of investors. The company raised capital for a project by exchanging the cryptocurrency Ethereum for utility tokens. The utility tokens could be exchanged by the investor in exchange for services in the company. Unfortunately, the price of Ethereum crashed in 2018 and the project stalled. We have defended the company from the investor’s claims for alleged losses.

  • We are acting for a number of cryptocurrency wallet holders in a potential dispute against a well known Ethereum wallet provider. The wallet provider suffered a catastrophic bug which resulted in hundreds of millions of dollars held in Ethereum wallets being permanently frozen.

In circumstances where an individual or owner of a company suspects foul play in relation to the sale and/or purchase of cryptocurrency we can also advise on seeking a freezing injunction and disclosure orders from the English courts to increase the likelihood of recovery.

Additional information