Tippawan Boonyaem v Persons Unknown Category (A) & Ors

Cryptocurrency tokens may constitute property capable of being held on constructive trust and traced in equity. On a summary judgment application, the court may determine proprietary claims where the evidence is uncontradicted and the defendant has no real prospect of defending them.

Persons unknown may be sued to judgment where they are identifiable by objective criteria and can effectively be notified, even though their names are unknown. That does not apply to wholly unidentified fraudsters who cannot be identified by reference merely to past conduct. Final judgment and enforceable injunctions therefore depend on sufficiently certain identification.

The claimant alleged that the defendants had induced her to transfer USDT in a fraudulent cryptocurrency investment scheme. Blockchain analysis traced a substantial part of the transferred tokens to wallets hosted by Coinbase, Huobi, Binance and OKX.

Interim worldwide proprietary and non-proprietary freezing orders had previously been granted, together with substituted service. The defendants did not acknowledge service, file a defence or participate in the proceedings.

The claimant sought summary judgment on her proprietary claims, continuation of the injunctions, disclosure orders and summary judgment on claims for compensation and damages. The central issues were whether the tokens were property capable of tracing, whether judgment could be entered against two categories of persons unknown, and whether the evidence justified final and interim relief.

1. Summary judgment. Permission was required because the defendants had not acknowledged service. Under CPR Part 24.3, summary judgment was appropriate where the defendant had no real prospect of successfully defending the issue and there was no other compelling reason for trial. The claimant’s evidence was properly served, uncontradicted and not obviously incredible.
2. Property and tracing. USDT was property for the purposes of the equitable rule stated in Westdeutsche Bank v Islington LBC. Subject to the ordinary rules of tracing, it could be recovered in equity. The court was not satisfied that the established authorities treating cryptoassets as property were plainly wrong. The redemption promise in the USDT terms also supported treatment of USDT as a thing in action governed by BVI law. The evidence established the necessary coordination between depletion of the claimant’s assets and acquisition of the assets in the identified wallets.
3. Persons unknown. Category A comprised wholly unidentified persons who could not be identified merely by reference to participation in the fraud. Final judgment could not presently be entered against them. Category B comprised persons or entities owning or controlling specified wallets. They were identifiable by objective criteria and could be notified through the authorised methods of service. Judgment could therefore be entered against them despite their names being unknown.
4. A bona fide purchaser for value would defeat the proprietary tracing claim, but no such defence had been advanced and the evidence gave the Category B defendants no real prospect of defending the claim. Summary judgment was accordingly entered against the second and third defendants on the proprietary claim. The damages and compensation application was adjourned generally because the Category A defendants could not yet be identified and the claimant’s loss could not yet be particularised.
5. The proprietary injunction was continued against the second and third defendants until satisfaction of the judgment or further order. The worldwide freezing injunction was also continued against them because there was a sufficiently good arguable case and a sufficient risk of dissipation. No injunction was continued against Category A because an order against wholly unidentified persons would not be sufficiently certain or enforceable. Disclosure orders were repeated, and permission was given to amend the prior order to include omitted jurisdictional gateways and to continue alternative service.
6. The claimant was awarded £70,000 costs on the indemnity basis.