In a landmark decision on September 12, 2024, the United Kingdom High Court has declared that Tether (USDT) qualifies as property under English law. This ruling, the first of its kind in England, sets a significant precedent for the legal treatment of cryptocurrencies following a full trial.
The case at hand involved a fraud victim, Fabrizio D’Aloia, whose stolen cryptocurrency—including Tether—was laundered through various crypto exchanges and mixers. The key issue was whether USDT could be classified as property for legal purposes, enabling its tracing and potential recovery.
High Court of Justice Deputy Judge Richard Farnhill delivered a pivotal judgment, stating that USDT “attract property rights under English law.” According to Farnhill, USDT is a “distinct form of property not premised on an underlying legal right” but can be “the subject of tracing and constitute trust property” just like traditional assets.
This ruling aligns with previous legal interpretations, including a 2019 judgment that acknowledged cryptocurrencies as property and the 2023 England and Wales Law Commission report which reiterated this stance. Farnhill’s decision comes on the heels of a UK government bill proposing that NFTs, cryptocurrencies, and carbon credits be officially recognized as “personal property” under property laws.
The case also highlighted the challenges of tracking stolen crypto. Although D’Aloia’s stolen USDT was allegedly transferred to Thai exchange BitKub, the court was unconvinced that any of the USDT could be directly traced to BitKub’s wallet. This was partly due to the use of crypto mixers, which obscure the origin of transactions.
Nicola McKinney from Quillon Law, representing Bitkub, emphasized that while USDT could theoretically be identified in mixed pools, D’Aloia failed to provide sufficient evidence linking his USDT to Bitkub’s wallet. Matt Green, head of blockchain and digital assets at Lawrence Stephens, stressed the importance of precise evidence presentation in such cases, noting that understanding the specifics of crypto transactions is crucial for legal teams advancing proprietary claims.
The court also noted that D’Aloia had transferred approximately £2.5 million ($3.3 million) to fraudsters in multiple transactions. Besides BitKub, D’Aloia had named several other entities, including Binance and Polo Digital Assets, in his claim.
As the court awaits further applications for summary judgment and consequential orders, this ruling underscores a growing acceptance of cryptocurrency as property within legal frameworks, setting the stage for more nuanced legal discussions and cases in the future.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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