Stephen Wilden v Person Unknown & Anor

A proprietary freezing injunction may be continued where the claimant shows a good arguable case, a real risk of dissipation defeating enforcement, and that relief is just and appropriate. Crypto assets may, at least for interim purposes, be property to which proprietary rights attach, and tracing or following may remain available despite mixing where the asset’s identity is preserved. A third-party disclosure order may be granted under the Bankers Trust jurisdiction where the claimant establishes ownership, a real prospect that disclosure will locate or preserve the assets, necessity and proportionality, and gives appropriate undertakings. The court may permit service out of the jurisdiction and alternative service where the relevant procedural gateway and forum requirements are satisfied.

The claimant sought continuation of a proprietary and worldwide freezing injunction against an unknown fraudster and a disclosure order against Huobi Global S.A., believed to operate the HTX cryptocurrency exchange. He alleged that the first defendant had fraudulently induced him to transfer Bitcoin worth approximately EUR 2.6 million and that forensic analysis traced the assets through pooling transactions to HTX infrastructure. The defendants did not appear. The court considered whether the freezing injunction should continue until trial, whether Huobi should disclose information identifying the person controlling the relevant account, and whether service out of the jurisdiction and alternative service should be permitted.

1. Freezing injunction continued. The claimant established the three requirements for interim freezing relief: a good arguable case on the merits, a real risk that a judgment would go unsatisfied because of unjustified dissipation, and that the order was just and appropriate. The evidence supported a good arguable case in deceit. The expert tracing evidence showed that the claimant’s Bitcoin remained identifiable despite pooling transactions, and that there was a very high risk of dissipation. The injunction was continued until trial or further order.
2. For interim purposes, there was a good arguable case that crypto assets could be subject to proprietary rights. Both tracing and following were available in principle where the identity of the crypto asset had been preserved despite mixing. The claimant’s expert evidence satisfied that requirement.
3. Disclosure order. The criteria identified in Kyriakou v Christie Manson & Woods [2017] EWHC 487 (QB) for the Bankers Trust jurisdiction were satisfied. The claimant showed good grounds for concluding that the Bitcoin belonged to him; Huobi was likely to hold information capable of identifying the fraudster; the order was confined to the particular assets; the claimant’s interest outweighed the minimal detriment to Huobi; and appropriate undertakings had been given.
4. Permission to serve out was granted under CPR Practice Direction 6B, paragraph 3.1(25). Permission for alternative service on Huobi by email was granted under CPR 6.15 because its location and address for service were opaque. Permission was also granted to serve the claim form on the first defendant by email.
5. The claimant was awarded all his costs of the applications, assessed summarily and on the indemnity basis, in the sum of £60,993.91 inclusive of VAT. Both defendants were potentially liable: the first because he perpetrated the fraud, and Huobi because its complete lack of engagement was wholly unreasonable.

First-instance decision. No earlier appellate decision is stated in the judgment.