In October 2019, unknown hackers installed a malicious program BitPaymer, which corrupted computer data and systems, and hacked a Canadian insurance company. The hackers demanded that the company pay $ 1.2 million in Bitcoin (BTC) for a free program to restore access to its systems.
Only one lender from the UK – known as AA – arranged to pay the BTC price, and the company’s system was up and running in a matter of days. At the same time, AA has begun a legal way to recover BTC obtained by hackers. He hired the analytical firm Chainalysis blockchain, which found that 96 of the 109.25 BTC were transferred to the wallet in connection with the Bitfinex exchange.
So far, this story (unfortunately) is not unusual. Bitcoin depends on the fact that most payments are confidential, accessible (makes it easier to redeem victims) and the ability to verify the exchange (allows criminals to verify after payment). However, the unusual thing in this case was the 14-month legal battle between AA and Bitfinex, which ended only after AA’s lawsuit against Bitfinex in the United States was over. . The Supreme Court of the United Kingdom.
AA filed a lawsuit against Bitfinex in December 2019 after noticing a stolen BTC from the Bitfinex platform – and the identity of the hackers is unknown. This is a rare occurrence: courts in the UK have different decisions, they can help victims of fraudulent attempts to get their property back. In the event that a bank, stock exchange, or other intermediary unknowingly steals or receives or keeps stolen property, victims of fraud may believe:
The Norwich Pharmacal Order, which requires third parties to disclose certain information that facilitates recovery efforts for applicants. In this case, the information is the identity of the holder of the wallet tracked in BTC and / or the details of other transactions related to BTC from the date of receipt of the wallet associated with the exchange.
An order restricting the defendant from dealing with his property until further notice is issued. The exchange, which has been notified of the confirmation order related to the client, must take measures to open an account to prevent the client from taking away or wasting his property.
If it is proved that the fraud belongs to a third party, a monopoly order may be issued to prevent a third party from gaining access to private property. Claims related to the disclosure of information that is the subject of a new information trial are usually of the Norwich Pharmacal type described above.
Cryptocurrency as an asset in the UK
British courts are well aware of the decisions made when withdrawing bank accounts and money. Recently, the court asked how these principles relate to cryptocurrency. However, it is clear that the courts are ready to make these decisions for victims who try to apply clear rules and collect stolen crypto-assets.
In the AA case, Judge Simon Brian – for the first time ruled that Bitcoin is a property under UK law, so he can make a decision on that property. This may seem intuitive, but traditionally the law considered property to be material or enforceable for the right to sue. Of course, cryptocurrency does not meet the requirements, but the courts have used a pragmatic approach to consider new intangible assets, such as property.
This effective approach allowed AA to recover damages. Bitfinex legally maintained the account and provided the AA with information about the customer’s wallet with the stolen BTC.
BA contacted AA lawyers and apparently refused to return the money to Bitfinex. AA managed to maintain confidentiality with the Bitfinex client (also accused in the AA lawsuit), and then turned to Bitfinex for more compensation. The broker has filed several lawsuits against Bitfinex, including allegations that BTC bought the exchange (