Syed Rahman outlines why a UK court granted summary judgment to a crypto fraud victim but did not make a final award.
A recent case is notable for demonstrating the limits of the UK High Court’s willingness and ability to help crypto fraud victims.
The case, Tippawan Boonyaem v Persons Unknown Category (A) & Ors, was brought by a claimant who said she had been persuaded to invest $450,000 in Tether Tokens (USDT). She claimed she was then coaxed into moving a large proportion of that USDT to wallets controlled by the defendants, believing that this would be invested with the online platform INGFX. When she was then told she had to pay $260,000 in tax and other costs to withdraw her funds, she did so but was still unable to access her money and realised that she had been defrauded.
In 2023, the High Court made worldwide proprietary and non-proprietary freezing orders in respect of certain funds which had been traced to identifiable wallet addresses. The claimant sought summary judgment in respect of her proprietary claims to the traceable proceeds.
The judge granted summary judgment in favour of the claimant’s proprietary claim. The judge held that the claimant's USDT could be treated as property - meaning 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 until further order of the court.
But the judge did not grant final judgment against the first defendants, referred to as Persons Unknown Category A, because they could not be identified. The judge said it was not possible to sue unidentified parties who cannot be located or communicated with and adjourned the claim against the first defendants. Although the claimant is able to restore or make a fresh application if and when the defendants’ identities become known.
The judge did, however, grant summary judgment against the second and third defendants, referred to as Persons Unknown Category B, because they could be identified 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 second and third defendants were ordered to comply with the disclosure orders previously made and the claimant's costs were assessed on an indemnity basis, with the second and third defendants ordered to pay £70,000 within 14 days.
Eagerness
This is a case that (like others before it) shows the eagerness of English courts to help victims of crypto fraud recover what is rightly theirs. It also confirms that digital assets – in this case, USDT - are generally treated as property. The judge took a flexible approach in allowing the claimant to proceed against some of the defendants, even though their identities were not known, due to their ownership and operation of the wallet addresses.
But this case has also shown that while courts are prepared to allow proceedings to be brought against fraudsters who are anonymous and to grant interim relief, they cannot be expected to grant final judgment against unidentifiable defendants. The difficulties of enforcing a judgment against individuals who remain unidentified is an obstacle to granting final judgement that has not yet been surmounted.
This case, therefore, serves as a reminder that whilst crypto-related fraud is becoming well-trodden ground - and the legal principles (and their application) are becoming well established - there are still pitfalls to be mindful of. When issuing against persons unknown, the description given as to who these people are understood to be must be precise enough to make them sufficiently identifiable. The very simplified premise of this is that summary judgment cannot be effective against persons who cannot be identified and thus cannot satisfy the judgment.
Victims of this type of fraud will often face difficulties at the outset of issuing a claim when it comes to sufficiently identifying the bad actors, by virtue of the fact they will have little genuine information to establish their true identity. Thought must be given throughout the course of the litigation to amending the pleadings to provide sufficient information to identify the bad actors. This is something the court took into account in this instance by allowing the claimant to restore or make a fresh application in this regard.
