For the first time, the British High Court recognized Bitcoin as “property,” for now, in an interim judgment on a cryptocurrency hacking case. Even though currently subject to ratification, the decision sets, for now, a legal precedent in the 800-year-old system; this makes it easier for victims of hacking to claim that cryptocurrencies are locked away in exchanges.
The judgment concerned the CEO of Alphabit, Liam Robertson, who claimed that he was swindled out of $1 million worth of Bitcoin in the past month. London’s Commercial Court has issued an Asset Preservation Order that ordered the exchange Coinbase to freeze the stolen funds temporarily – it means that the Court, for the first time, recognizes Bitcoin as lawful property.
So far, the British law says that Bitcoin is “data,” not property; it means that one cannot claim it back if someone has already stolen it. But Robertson’s lawyers, Marc Jones of Stewarts and David Heaton of Brick Court Chambers, have contended that Bitcoin is, in fact, his property. Ever since his Bitcoin’s theft didn’t involve a transfer of the property title, thus, Robertson still “owned” the stolen bitcoins, as they have asserted.
Although the Court’s decision to halt the assets is only a quick judgment, Robertson’s lawyer, Marc Jones, said it sets a legal precedent. “If someone finds themselves in a similar position, they’ll be able to refer to this case and say; ‘Judge, we’re not asking you to do something that’s never been done before—see the decision in Robertson v Persons Unknown.”
Early in July, the incident began when Robertson was on the phone with an algorithmic trading fund administrator, and impressed with the product and agreed to fork over 100 bitcoins, Robertson said in an interview.
Robertson claims that the phone line was bugged. He used complex spyware to clone the CIO’s email address after hearing that Robertson planned to send his bitcoins to the fund’s chief investment officer. After that, he posed as the CIO sending an email to Robertson requesting the funds to be sent to the hacker’s Bitcoin address.
Assuming that he was sending money to the company’s CIO, Robert cooperated with the trap.
The algorithmic trading fund has worked out, saying that it has been hacked and called Robertson the next day, July 6th warning him about the scam. Being too late, 80 bitcoins have already gone to Coinbase, 15 to LocalBitcoins.com, and an extra 5 to a cold wallet.
Robertson says that he got the funds back from Coinbase last Tuesday. His lawyers chased the hacker, who then refunded the money in a panic.
To get the remaining 15 bitcoin from LocalBitcoins.com and five bitcoins from the cold wallet, Robertson’s lawyers plan to use the parallel courses of actions. However, Jones said that things have become more complicated when the stolen funds sit in a wallet that was not held in exchange.
If the plans of Robertson’s lawyers can’t spook the remaining bitcoins from the hacker, they will have to identify first the owner of the wallet and then force them to transfer the funds thru a way of a court order – a lengthy and costly process.
Robertson’s lawyer, Jones, says that the judgment showed “that the English courts have shown they’re willing to grapple with these new issues.”
“It sent the right message: that if you’ve got these kinds of disputes, then the judges in the High Court are really well equipped to deal with it,” said Jones.
At this moment, the Court has been waiting for the consultation of the UK Jurisdiction Taskforce. This is a working group that was led by the industry and then supported by the UK government that has been working out whether to ratify if Bitcoin is indeed a property or not.