cryptocurrency law uk

There is an ongoing legal problem with the use of cryptocurrency and cryptoassets when it comes to building wealth and protecting funds from seizure. Lawyers and those seeking legal counsel need to be prepared to deal with new laws and precedent regarding the use, discovery, recovery, and freezing of cryptoassets as part of trial investigations.


Are cryptocurrencies properties?

Before any question is raised to cryptocurrencies being subject to a freezing injunction, first it must be established if cryptoassets can be considered property at all.

When compared to other traditional assets, such as fiat currency, real estate, trusts and etc., cryptocurrencies are revealed that:

  1. They are not a chose in possessions (i.e., a tangible personal property that can be possessed or transferred), since they are virtual and not tangible items. It is not possible to posses a single cryptocurrency coin, but only to be granted access to said item via a wallet key that may be stored on more traditional media such as storage drives or printed out.
  2. They are not a chose in action (i.e., assets that carry with them rights to recover money or debt, such as titles, inheritances, bank accounts and bonds) since they do not contain or provide any enforceable right to the bearer to be repaid or transformed into other forms of property.

Therefore, to enable cryptocurrency to be defined as a ‘property’ that possesses value that can be pursued in court, it may be required to create a classification for intangible property.

Fortunately however, there are case precedents that establish that cryptocurrency can be considered property by international courts. Cryptocurrency –

“meet the four criteria set out in Lord Wilberforce’s classic definition of property in National Provincial Bank v Ainsworth [1965] 1 AC 1175 as being definable, identifiable by third parties, capable in their nature of assumption by third parties, and having some degree of permanence.”

Therefore cryptoassets are subject to a freezing injunction.

The question therefore becomes, are cryptoassets at all enforceable to being frozen under an injunction?


Finding value in pairs of random numbers

The most famous example of cryptocurrency is Bitcoin. Essentially, a Bitcoin is a piece of cryptography – a unique sequence of lines and numbers – that is then encoded into a blockchain, a line in a distributed ledger. This ledger is stored independently in potentially millions of computers all over the world, without any one person or organization to claim ownership or identify the owner of a particular bitcoin. This anonymity and resilience against government-backed currency manipulation and unlawful seizure of property is supposed to be the main selling point of cryptocurrency.

A piece of cryptocurrency on the blockchain is composed of two codes – a public key, which is broadcast to the system, and a private key that is known to no one but the sender. This key opens the ‘wallet’ which decrypts the public key using the private key as proof of ownership facilitating transfer. The private key is a string of numbers that can be stored anywhere, from a text file, on usb device, embedded onto a physical coin, or written out on a piece of paper.

The private key enables anyone knows of it to deal with the cryptocurrency in the wallet. At no point in the transaction are personally identifying details such a name or location ever involved (in contrast to bank transfers which require account details). Once a digital token or coin is transferred, it is irreversible. The inability to force a freeze or refund nor to identify the recipient presents problems to anyone who hopes to recover from a cryptocurrency-based scam.

When considered part of a portfolio, cryptoassets do have their value and growth potential. For cryptocurrency to be viable as investment properties, the owner must retain possession of the private key for their crypto wallets.

In practice, a piece of cryptocurrency is as valuable as only what someone else may pay for it in fiat currency. Its value can vary greatly, more than stocks, which is why some prefer to use it as a vehicle for speculation as much as its traits of secrecy and security.


investment cryptocurrency

Standardized Freezing Orders Adapted to Handling Cryptocurrency

It is required to use a standard form of wording when writing a proprietary freezing injunction to restrict the use of specified assets. Any departure from the standard wording must be drawn to the attention of the judge. Accordingly, a freezing order ought to feature the words –

  • Until the return date or further order of the court,
  • the respondent must not remove from England and Wales
  • or in any way dispose of, deal with or diminish the value of the following assets
  • which are in England and Wales, namely:
  • [specify in detail]


Therefore, when dealing with cryptocurrency, there are special considerations compared to traditional assets:

  • Immediately it must be proven that the person has possession of these cryptoassets via the physical possession of the public key, whether it be in the form of emails, registration in a cryptocurrency exchange, a usb device, or any other storage medium.
  • Being that cryptocurrencies are stored in a blockchain, which simultaneously exist in many computers all over the world, there is no need to prove that the asset exists in England and Wales,
  • The respondent and others must be prevented from moving cryptoassets around, which can only be done by securing their possession of the public key and preventing this public key from being used in any other computer. Remember, anyone with the public key can manipulate the wallet containing the crypto-assets.
  • Ironically, the same fact that cryptocurrency must be taken for granted to exist in England and Wales also means that moving them means removing them from England and Wales because once any transfer is done, those digital tokens become anonymized and could be anywhere under a new private key or converted to fiat currency.
  • Cryptocurrency assets must not be referred to in terms of monetary value, since their prices in the exchange vary heavily and suddenly, but instead must be noted in specific amounts of tokens and coins.


Exerting Control over the Cryptocurrency Assets

The difficulties regarding the intangibility and highly complicated nature of cryptoassets would require orders that deal with disclosure and the instruction of experts. Since the identification of cryptoasset holdings rely on the possession of private keys, it is correct that the first thing to do is to obtain physical possession and analysis of devices which may contain the relevant ‘wallets’.

Should the respondent be using a wallet provided by a cryptocurrency exchange, it is possible to order a freeze on these account. A company that provides such a financial service would comply under the force of law. Obtaining the respondent’s passwords to cryptocurrency exchanges would also allow monitoring of the assets held in place.

A cryptocurrency exchange usually serves also as a means for speculation, buying and selling cryptocurrency the same way as foreign exchange speculation takes advantage of fluctuating differences in currency value. Cryptocurrency, as property, can even be included in trusts. Cryptoassets used as a legitimate investment vehicle that require identification information can more easily be frozen.

Cryptoassets held as a reserve however need more aggressive measures.

An order for the seizing, custody, and preservation of devices that may contain the private keys is sanctioned by certain sections in the Family Procedure Rules 2010. It may be more important to obtain this custody immediately than just a conventional freezing order.


Disclosure of Crypto-Assets

As cryptoassets are valid property, they must be disclosed under an order. This order may precede the freezing order. Disclosing the existence of crypto assets to an Expert instructed by the court may be the only way to get those devices which may contain access to the ‘wallet’ returned.

As long person subject to the investigation and freezing order does not;

“sell, transfer or otherwise deal with the cryptocurrencies whose details are stored on the USB devices [and (other devices)] returned by the Expert save with the written consent of the applicant or pursuant to a further order of the court, and the respondent must not instruct, encourage or otherwise permit any other person to do so on his behalf.”

If the respondent actively attempts to hide and transfer assets rather than disclose them, they would be subject to a criminal charge of perjury, have their assets continually be examined and again in the future for signs of malfeasance, and once discovered would possibly be subject to other criminal charges such as tax evasion, etc.

Article by solicitors North East UK

google uk law

The recent ruling in favor of a businessman that wanted Google to delist search results about his past crime is just the latest skirmish between two different value systems on privacy.

The UK’s ruling is based on the concept that after having already served his punishment and showed true remorse, after a certain span of time convictions should be ‘spent’, that the offender becomes a regular citizen that for all intents had never been convicted at all, and thus make it easier to find and maintain lawful employment and dis-incentivize a return to crime.

Google’s argument is based on public interest, and that ability to look up information about previous behaviors is pertinent to future employers and relationships. Both have valid points. It is a rights vs rights argument: privacy vs free speech, freedom against harassment against vs right of others to know.

The Rulings

The recent lawsuit filed against Google actually involved two businessmen who petitioned google to unlink search results to previous legal cases. The first denied petition was about a previous conviction 10 years ago for “conspiring to intercept communications” and had served six months in jail. He plead guilty to the charge. Judge Mark Warby stated that because the first individual had reformed and the crime was less serious, it was no longer relevant information.

The other businessman was convicted for money or informational fraud, for which he had served four years in prison. Judge Warby ruled in favor of Google that it is remains relevant information and search results that include his name with regards to his crime should remain listed.

The Court observed that:

… it may be misleading to label the right asserted by these claimants as the “right to be forgotten”. They are not asking to “be forgotten”. The first aspect of their claims asserts a right not to be remembered inaccurately. Otherwise, they are asking for accurate information about them to be “forgotten” in the narrow sense of being removed from the search results returned by an ISE in response to a search on the claimant’s name. No doubt a successful claim against Google would be applied to and by other ISEs. But it does not follow that the information at issue would have to be removed from the public record … And a successful delisting request or order in respect of a specified URL will not prevent Google returning search results containing that URL; it only means that the URL must not be returned in response to a search on the claimant’s name.

“We are pleased that the Court recognised our efforts in this area, and we will respect the judgements they have made in this case,” was Google’s response to the rulings.

While it can be argued that this particular case had a neutral result, it is most significant by the precedent it sets. The same ruling against Google here could be used against other search engines and will set the tone for future petitions.

What is The Right to Be Forgotten?

In May 2014, the Court of Justice of the European Union established a RTBF (Right to Be Forgotten). It allows Europeans to request that search engines delist links present in search results containing an individual’s name, if the individual’s right to privacy outweighs public interest in those results. The delisted information must be “inaccurate, inadequate, irrelevant or no longer relevant, or excessive in relation to those purposes and in the light of the time that has elapsed.” The ruling requires that search engine operators conduct this balancing test and arrive at a verdict.

Three Years of the Right to be Forgotten white paper by Google

The particular precedent for this case was May 2014 EU Court judgement of Google Spain vs Agencia Española de Protección de Datos (AEPD) that decided that individuals do have a right to request search engines to remove links to webpages when the individual’s name is used as the search entry. Google does not have a journalistic exemption to the Act 1 of the General Data Protection Regulation.

  1. The data subject shall have the right to object, on grounds relating to his or her particular situation, at any time to processing of personal data concerning him or her which is based on point (e) or (f) of Article 6(1), including profiling based on those provisions. 2The controller shall no longer process the personal data unless the controller demonstrates compelling legitimate grounds for the processing which override the interests, rights and freedoms of the data subject or for the establishment, exercise or defence of legal claims.

The Right to Object is meant to be universal across all the EU, as it defines protections against the use of personal data for marketing and profiling. Contrary to expectations, most petitions are not to erase mentions of previous crimes. References to Crime and Professional Misconduct only comprise 6.1% and 5.6% respectively. (1/21/2016 – 04/26/2018 data)

By comparison, requests to remove non-sensitive Personal and Professional Information comprise 5.5% and 18.5% respectively. Another 4.5% on the Google transparency report could be the removal of sensitive personal information. A further 7.6% are requests to remove self-authored works.

As can be seen on the link, 88% of all requests come from private individuals. Delisting is not just about reputation management.

While removing personal histories might feel disingenuous, one has to remember that it has been less than two decades since social media has exploded into the global consciousness. Prior to the wide mainstream use of Internet, people had a general expectation of privacy. People have the right not to be exposed onto global scrutiny without their consent. People have a right to feel safe from being tracked or harassed by strangers. People have a right to object to false use of their identities. People have a right not to allow the stupid things they’ve said or done while teenagers or otherwise debilitated to haunt them later in their lives. People have a right not to have their personal information used for marketing purposes.

To sum it up, people have a ‘right to be forgotten’, a ‘right not to have their personal information be collected, remembered, and made use of by entities without their awareness of permission’.

Individuals cannot force government or journals to erase their content, but as a data processor they can petition Google to make it harder to find. For legal and investigative purposes, a background search could still be accomplished with other services designed for such activities.

The extremely broad net that Google and seach engines casts of the visible Web means that they are the primary tool to enable this right. The requester must file reasons for why the information must be de-listed. It is not automatic for Google however, and an argument can be said that this levies excessive obligation to treat each petition on a case by case basis.

What’s so bad about this?

Losing the ‘landmark’ Right to Be Forgotten case in the UK sets the precedent that if Google refuses to delist the information, individuals may appeal to their local privacy court. This may have unfortunate consequences if it becomes a common recourse.

  • The most obvious, of course, is that the appeals process moves the judgment for delisting to the courts, and so Google and the petitioner will have to present their arguments. Every court case makes it more annoying, more expensive, and slower for literally everyone involved.
  • The Streisand Effect may in the cause of attention to hide information make it more public instead.
  • This sets up a precedent of the local government having primacy over what is allowed to be listed under public interest. Sure, it might not sound as bad when it’s done by a court looking out for general public welfare. But the fact the Google can be ordered to delist by governments even though they have internationally located servers mean that less benevolent, less democratic governments can exercise more complete information control to the detriment of their own citizens.
  • Perhaps the most necessary but worst consequence is that the sheer load of petitions received and the need to evaluate each of them on a case by case basis means that automation might be the only way out for Google. Unfortunately, as proven by many other systems for automatic verdicts (such as Youtube’s whole mess of a copyright takedown system), software are… dumb. As much as it will make sending and processing petitions faster, it will very probably also make mistakes so much faster and more widespread, causing extra complaints and headaches for Google and all related websites.

The right to free speech means the right to let the public know true information that assists their interests. There are those that fear this may be a serious blow to the freedom of information that enables the Internet to be platform for advocacy for justice and liberty. On the other hand, the Internet has a proven record of abusing and harassing people for their lapses of privacy.

This is not an easy question to solve. There’s few wars as destructive as when good intentions come head to head. The best we can hope for is that Google and the EU come to a compromise in a way that could serve as a useful template for other countries and their people’s expectations for safer online interactions.