Содержание
In Billy Nicholls, Tracey Matthews v Adam Little [2022] EWHC 2344 (QB), the High Court in London granted a Worldwide Freezing Order and other measures in connection with the failure to recover the cryptocurrency Ether (ETH).
What happened?
Billy Nichols and Tracy Matthews approached Adam Little about investing in ETH. They considered Adam to be an expert in the matter. It appears from the judgment that the claimants transferred ETH to Adam’s wallet or provided the keys to it. Under the agreement, Adam was to return the Ether along with the profits. Despite the demands, Adam returned neither the investment nor the profits. Billy and Tracey obtained a default judgement against Adam. As of July 2022, the value of the ETH transferred was £130,000.
It appears from the judgement that, at first, Adam responded to the letters, but kept changing his position. In October 2021, Adam wrote that he would give Billy back ETH, but only after the ETH 2.0 release. Allegedly he couldn’t give ETH back before the release of the update. Already in November, Adam changed his mind, put the police on a copy of the letter and said that Billy had sold “debt” to “some loanshark type of person”, that the claimants had behaved threateningly, and that “police action is now the only sensible option”. The defendant also claimed that he would appeal the default judgement. It appears from the judgment that Adam did none of this.
The claimants traced the address where their ETH was held and asked the court to grant a Worldwide Freezing Order (WFO), ordering the defendant to preserve the assets and provide information and keys to the cryptocurrency wallet.
What did the court decide?
The court granted the application and took the following into account:
- This case was different from situations where WFOs are applied for before a judgment on the merits has been rendered. In this situation, an enforceable default judgment confirmed the claim.
- Four months had passed since the date of the default judgement, and Adam Little had not appealed. The court accepted the evidence that ETH was in Adam’s possession.
- Adam Little was duly notified of the meeting. He could have participated and objected but chose not to do so.
- The claimants had no knowledge of the defendant’s other assets other than the cryptocurrency.
- In this case, it was not enough to freeze assets. The claimants must have the keys to the cryptocurrency wallet in order to enforce the judgement.
The court also granted legal costs of £20,000.
Comment
Unfortunately, this is not the first and not the last cryptocurrency investing case. The plot has become typical: investors buy or give cryptocurrencies to private intermediaries promising profits. In the end, investors are left with no profit or investment.
The reason may be the still lack of information about cryptocurrencies. For many (if not most), cryptocurrency is synonymous with “fraud”, “pyramid scheme”, and “bubble”. Cases like this can only reinforce this perception.
Interestingly, some Adam Little is related to the London Football Exchange (LFE) project. The startup promised that LFE token holders would indirectly own shares in football clubs and other benefits. In Blockchain Optimization SA v LFE Market Ltd [2020] EWHC 2027 (Comm) case, in which I had the honour of participating, investors lost $2.2 million and alleged fraud.
Violation of court orders can result in imprisonment. However, in this case, as in many others, the defendant’s whereabouts remained unknown.
The good news is that there is already an established practice in the High Court in London to “freeze” cryptocurrency. I am sure that sooner or later such defendants will be brought to justice.
