Cryptocurrency case tracker

Welcome to Mishcon de Reya's cryptocurrency case tracker. It covers the latest reported cases, regulatory announcements and corporate developments in the cryptocurrency sector.

regulatory 19 September 2018

Treasury Committee releases its report on 'Crypto-assets'

The UK Treasury Committee has published a report on 'Crypto-assets' which follows its inquiry into Digital Currencies and distributed ledger technology in the UK earlier this year. In the Report, the Treasury Committee advises on the need for the introduction of regulation in the "wild west" of crypto-assets. It believes that if the UK "develops an appropriate and proportionate regulatory environment for crypto-assets and if future innovations in crypto-assets proved themselves as beneficial to society and industry, the UK could be well placed to become a global centre for this activity…".

A link to the report can be found here.

regulatory 11 June 2018

FCA writes to CEOs highlighting crypto-asset risk

The FCA has written an open letter to CEOs of banks and financial institutions, setting out good practice guidance on how banks should guard against financial crime when dealing with clients crypto-assets.  Among the suggestions are enhanced due diligence on customers and increasing awareness amongst banks' staff.

A link to letter can be found here.

Skatteverket v David Hedqvist Case C-264/14
civil 17 April 2018

English High Court continues non-disclosure order in respect of stolen data

The Court found that it was appropriate to continue a non-disclosure order that the claimant obtained against unknown hackers.  The unknown hackers stole vast amounts of data and tried to blackmail the claimant for £300,000 in order not to publish it.  The Court was satisfied that the position had not changed since the interim non-disclosure order was granted and there was no evidence that the unknown hackers had complied with the original interim order.

PML v Person(s) Unknown EWHC 838 (QB)
criminal 13 April 2018

High Court refuses bail for alleged computer fraudster

The USA had appealed an earlier decision to grant bail to the respondent, who was accused of computer fraud, bank fraud and money-laundering.  The Court found that he had substantial assets at his disposal, including control of over $2 million of bitcoin.  The Court found there was a substantial risk that he would not surrender to bail.

United States v Panovas EWHC 921
civil 26 January 2018

English High Court grants disclosure order against defendant who relied upon crypto-card to take confidential information

Corbiere Ltd, who carry out quantitative investment research and software development were granted an order for disclosure in relation to confidential information misappropriated by the defendant. As part of long running proceedings, Mr Xu had failed to disclose certain items, including his blackberry and crypto-card, used by him to hack into Corbiere's systems.

tax 04 January 2018

Appeal against VAT registration treatment rejected by First Tier Tax Tribunal

Lunar Missions unsuccessfully appealed against a decision by HMRC that the company ought to have been registered for VAT from 16 December 2014, in the context of funds raised through the crowdfunding site, "Kickstarter" and the extent to which these funds were "prepayments".

criminal 17 October 2017

Court permits police to convert Bitcoins into sterling

Surrey police successfully applied for permission to convert 295 bitcoins, which were the subject of restraint proceedings, into sterling. This because of the volatility of bitcoins and the fact that they could be hacked, even when held by the police in a new wallet. 

R. v Teresko (Sergejs) Crim. L.R. 81
tax 03 August 2017

Appeal against right to deduct input tax rejected by First Tier Tax Tribunal

Navee appealed against a decision by HMRC to deny the company the right to deduct input tax of around £100,000 claimed in VAT. The tribunal agreed with HMRC that the input tax was incurred by Navee in a transaction connected with the fraudulent evasion of VAT and that Navee either knew or should have known of that fact. The transaction with which the matter was concerned was paid for in Bitcoin and HMRC noted that there was no audit trail to prove payment has been received.

tax 24 May 2017

Appeal allowed by High Court in relation to virtual currency debt

Mr Harding successfully appealed against a district judge's order granting summary judgment to Bartercard in relation to a case which related to whether a debt owed by a member of a virtual currency trading system to the company running the system had not become payable in pounds sterling rather than the virtual currency.

Harding v Bartercard UK Ltd EWHC 1742 (Ch)
civil 02 February 2017

High Court rejects application for relief from sanctions from defendants

The application by the defendants was refused as Judge held that the way in which they had lost or supressed data significantly prejudiced Michael's ability to prepare for a case turning on forensic analysis of said data. Part of the reason the defendants argued they could disclose material was because they suffered a cyber-attack in which the ransomware demanded payment of 1.2 Bitcoins.

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