A UK court has granted summary judgment to the victim of a fraudulent cryptocurrency scheme but stops short of making a final award.
In a recent decision, the UK High Court has granted summary judgment in favour of a victim of a fraudulent scheme operated by certain, unidentified, defendants. In the case of Tippawan Boonyaem v Persons Unknown Category (A) & Ors, the claimant alleged she was induced to invest ca. $450,000 in Tether Tokens (USDT) and then transferring a significant amount of that USDT to wallets controlled by the defendants in the belief that it would be an investment with an online platform INGFX. She was later told that, to withdraw her funds, she would need to make payments in respect of tax and other costs in the amount of $260,000, which she did, but still unable to withdraw her funds and realised that she had been deceived.
Last year, the court made worldwide proprietary and non-proprietary freezing orders in respect of certain funds which had been traced to identifiable wallet addresses. At this hearing, the claimant sought summary judgment in respect of her proprietary claims to the traceable proceeds.
Decision
The judge granted summary judgment in favor of the claimant in relation to her proprietary claim. The judge held that the claimant's USDT could be treated as property, and therefore, she was entitled to a declaration that the USDT in the identified wallet addresses belonged to her. The judge also continued the proprietary freezing injunction until the judgment was satisfied or further order of the court.
However, the judge did not grant final judgment against the first defendants, referred to as "Persons Unknown Category A," as they could not be identified. The judge explained that it was not possible to sue unidentified parties who cannot be located or communicated with. The judge adjourned the claim against the first defendants, allowing the claimant to restore or make a fresh application once their identities were known.
The judge granted summary judgment against the second and third defendants, referred to as "Persons Unknown Category B," as they were identifiable through their ownership and operation of the wallet addresses. The judge found that they had no real prospect of defending the claimant's proprietary claims.
The judge also continued the worldwide non-proprietary freezing injunction against the second and third defendants, as there was a good arguable case and a sufficient risk of dissipation. The judge ordered the second and third defendants to comply with the disclosure orders previously made and assessed the claimant's costs on an indemnity basis, ordering the second and third defendants to pay £70,000 within 14 days.
Comment
This case demonstrates the English court's willingness to assist victims of crypto fraud and confirms that digital assets, such as USDT, are generally treated as property. The judge showed flexibility by allowing the claimant to proceed against the second defendants, even though their identities were not known, based on their ownership and operation of the wallet addresses.
However, it is important to note that while the courts may permit proceedings against anonymous fraudsters and grant interim relief, they are reluctant to grant final judgment against unidentifiable defendants. This is due to the practical difficulties of enforcing a judgment against individuals who cannot be identified.
For many, the trial and subsequent conviction of Sam Bankman-Fried is all about the numbers. And that is understandable. The 32-year-old co-founder of crypto exchange FTX is now starting a 25-year jail sentence for fraud – a fraud that has seen his customers lose $8 billion.
