I trust you’ll look after my bitcoin

The case of D’Aloia v Binance Holdings & Others [2022] EWHC 1723 (Ch) raises two important developments in the rapidly developing field of digital asset litigation.

Following hot on the heels of the decision of the Supreme Court of the State of New York last month in LCX AG v John Does Nos 1 – 25 to permit service of court documents by “airdrop” of a special non-fungible token (NFT), Mr Justice Trower has ensured the English court is not left behind. Becoming only the second jurisdiction to do so, and the first in Europe, in the case of D’Aloia the English court has authorised service by airdrop of an NFT into the crypto wallets into which the claimant suspects his cryptocurrency has been misappropriated. This method of service could make it easier to serve defendants whose identity is not certain, as is common in the digital space.

Arguably even more significant, however, is the decision that there was a good arguable case that the five cryptocurrency exchange defendants are holding the claimant’s cryptocurrency as constructive trustees. If this is the case, then the crypto exchanges are obliged to ringfence the claimant’s cryptocurrency and ensure it is preserved. Bringing with it the potential ramifications of liability for breach of trust if they fail to do so, this is a serious development in the potential liability of crypto exchange providers, and may bring their role a few inches closer to that of a more traditional provider.