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 hadaway.co.uk solicitors North East UK

benefit sanctions universal credit uk

This instantly sounds like a terrible idea. Ending the “something for nothing” loophole abuse in which some people live entirely through benefits without bothering to seek a job sounds truly asinine in a time in which as much as people might want to work, there are simply no jobs to be had.

Whatever qualifiers must be shown to demonstrate a job-seeking initiative may not even be allowed due to enforced community distancing guideline.

And yet, it may not be that simple. As much as the UK government is indeed often a fount of terrible ideas, there are still often reasons why they do they things they do. Let us try to uncover their reasonings why.

What normally gets sanctions imposed on the unemployed?

The UK’s out-of-work benefits have long been framed in terms of responsibilities and rights, from which derives a system of conditionality and sanctions. The state expects its beneficiaries to do certain things as a condition for receiving out-of-work benefits, and failure to do these things as the consequence your benefits may be stopped. The state has no interest in pursuing a “something for nothing” culture of welfare.

If you are claiming –

  • Universal Credit
  • Income Support
  • Jobseeker’s Allowance
  • Employment and Support Allowance

You should have a document called a claimant commitment entailing your responsibilities to continue receiving benefits. If you don’t have such a document you may have been given a Job Seeker’s Agreement, action plan, or an appointment letter that makes similar specifications.

Welfare recipients are obligated to various ‘conditions’ when admitted to state support, including

  • Conditions of category: in which entitlements are conditional being a member of a defined category meriting support (being unemployed, disabled, homeless, etc.);
  • Conditions of circumstance: in which individuals may be included or excluded based on their circumstances (passing a test of means, having achieved personal circumstances that no longer qualify them as needing support, or demonstrating that they have a particular need);
  • Conditions of conduct: in which there is a requirement for a particular pattern of behavior from welfare recipients.

If you fail to accomplish the terms in your claim, usually to make an effort to seek a job and to engage with interventions, interviews, and observed word preparatory activities. Claimants may find their allowances cut by 40% to 100% for a minimum of 7 days for failure to meet work related activities and interviews, to 28 days for failure to undertake reasonable action to obtain work, and minimum of 91 days for an offense like a failure to take up an offer of paid work – all for the first offense.

Increasingly, people are being denied benefits on factor of conditions of conduct. Over punishment such as sanctions and denial of benefits are paired with more subtle means like intervention, persuasion, and social pressure have been used to encourage welfare recipients in particular ways.

Sanctions possibly a violation of the EHCR

This is not the first time that the UK government’s stance has been criticized as potentially unjust. The Economic and Social Research Council (ESRC) funded a research study – ‘Welfare Conditionality: Sanctions, Support and Behaviour Change’ – conducted by six UK universities.

Among key finding was that benefit sanctions did little to enhance people’s motivation to prepare for, seek, or enter paid work. They instead routinely trigger profoundly negative personal, financial, health and behavioural outcomes and push some people away from collectivised welfare provisions.

Imposing sanction can sometimes drive someone to destitution and adversely impact their ability to find work, which is counter-productive to the aims of the program.

Evidence suggested that benefit sanctions were often triggered for relatively minor transgressions such as being a couple of minutes late for a Jobcentre Plus appointment. On some occasions benefit sanctions were clearly inappropriately applied in spite of an individual’s best efforts to avoid them.

“I had an appointment with them, I phoned them saying that I’ve got a problem… my brother who died in [location] and I’m there it’s the burial ceremony, you understand?… They said, ‘No don’t worry, if you come back, just call us back’, and then ten days, I phoned them back… They say, no, they have to send it to the decision board to see and then they send me a letter after saying that I have to be sanctioned… that wasn’t human.” (MIGRANT, FEMALE, ENGLAND, UC RECIPIENT, WAVE C)

Researchers reported that the effects of welfare sanctions and conditional support trended to be “profoundly negative”. According to Project Director, Professor Peter Dwyer from the University of York’s Department of Social Policy and Social Work, “The common thread linking stories of successful transitions into work, or the cessation of problematic behaviour, was not so much the threat or experience of sanction, but the availability of appropriate individual support.”

“I got a sanction for not going to an interview. I got sanctioned for a month… It made me shoplift to tell you the truth. I couldn’t survive with no money.” (WSU, HOMELESS, MALE, ENGLAND)

While another reported:

“When I used to feel really low, I used to hit the bottle. Now… I’ll just ring [support worker] up and he’ll say, ‘Right do you want to come to speak to someone?’ Which is great… I’ve never felt more confident. I’ve got a job interview… through these guys… fingers crossed, I’ll be off benefits and back on proper money. Yes, that’s all I want.” (WSU, OFFENDER, MALE, ENGLAND)

The report further stated that respondents commonly regarded Jobcentres and Work Programme (WP) providers as being primarily focused on ensuring compliance with the mandatory benefit claim conditions rather than helping people into work. Pressure to achieve more demanding job application/work search requirements coupled with the recipients’ strong desire to avoid the punitive effects of a sanction resulted in people applying for jobs they had no realistic chance of getting. Intensified welfare conditionality therefore encouraged a culture of counterproductive compliance and futile behaviour that got in the way of more effective attempts to secure employment.

My job was solely to prove to that woman [referring to Work Coach] that I had applied for so many jobs, and that was it… whatever jobs were available. Whether they were suitable for me, whether I was suitable for them, whatever, it didn’t matter.” (UC RECIPIENT, MALE, ENGLAND, WAVE B)

Many respondents stated that they felt criminalized for applying for universal credit and one stated that the threat of sanctions was unnecessary because he is keen and active to find work: ‘I want to find a job. I don’t need people to tell me what I have to do and threaten me with taking money off if I don’t do it. I want to find a job as quickly as I can.’

His experience is that the frequent threat of tough sanctions was not balanced with effective support to find a job: “The Jobcentre used to try and help you find work, you’d go in and they’d get on the computer and say ‘Oh we’ve got that many jobs today’. That doesn’t happen anymore. They don’t really help you to find a job. They just help you to sign on every two weeks. You know, you go in and they say ‘Right, come back in two weeks’… They don’t really help you to find a job anymore.”

Comparing Universal Credit and Job Seeker’s Allowance, it was found that there was double the amount of sanctions imposed under UC than JSA.

In defense, the DWP spokesperson stated that This report completely fails to recognise that there are near record numbers in work and that the number of benefit sanctions has fallen dramatically.

“It’s only right that there are conditions attached to receiving benefits.”

A Dip Back to the Gloomy Normal

The UK’s social security system has managed to get emergency funds to tide over most of everyone left unemployed by the pandemic largely by gutting everything else in the system. No more checks, no inquiries, no standards – if you apply you get your claim.

The coronavirus was a death knell for the UK’s gig economy. Employees with zero hour contracts, easy to hire, easy to fire – abruptly a million of them were suddenly out of work and five million more self-employed workers found themselves in the same boat. The Universal Credit remains the only way for many to sustain themselves, and the surge in claims had forced the DWP to reassign workers simply to process claims.

It saved millions from the uncertainty of being able to feed themselves and keep their homes. The saying that many people are merely a single pay slip away from poverty is an old one, but true. People who file claims aren’t shirkers who prefer not to work – many would rather actually earn their living wage – but simply left unemployed due to circumstance.

And there is no way to correct themselves out of these circumstances. The novel coronavirus has proved the inherent fragility of this system that is determined to catch out parasites at every turn.

So Why Reimpose Sanctions?

Because Job Centres are reopening and it is part of procedure that sanctions are a part of the conditions for receiving Universal Credit and other unemployment assistance.

According to the DWP:

“Now our focus is rightly switching to Getting Britain Back into Work. From July, people can make an appointment with their work coach if they can’t get the help they want online or over the phone and work coaches will be calling all claimants to help them get ready for the world of work.”

It is clear what the government fears. Thousands of workers are losing their jobs and devasting whole swaths of the economy as many fear to return to work and employers dismiss those they cannot support in the face of reduced costumer presence. Already 5.2 million are claiming Universal Credit and unemployment is rising at exponential levels. The fear is a mass unemployment unseen since the 1980s and perhaps even the Great Depression.

In exchange, people have to go through hoops applying for jobs that are simply not available and vulnerable people like the physically and mentally ill are forced to show up into risky floorspace rife for contagion and a dehumanizing regime in job centers. The main beneficiary for the benefit system would ironically be the people directly employed by the benefits system to push the bureaucracy, not the destitute and the out of work. Jobs are made on the backs of those seeking jobs.

And via job-seeking rituals, it can be said that unemployment is under control and the economy might be on the road to reopening. Mayhaps this would invite consumer confidence again if it is said often enough.

Yes, it is illogical. But no one ever said the reason had to make sense, only that there is a reason.

For help with employment issues, Hadaway & Hadaway solicitors north east

redundant business woman

Enhanced Redundancy Protections 2020

Will you be removed from your job for redundancy in 2020? It’s an ever-more pressing fear in the looming environment of economic uncertainty, but as an employee you too have rights and options. There are some new legislation coming that may help to address some of these issues.

Defining Redundancy

Before you can appraise if you have a valid reason to claim or contest redundancy, first we must define what redundancy is. According to the Employment Rights Act 1996, an employee has been dismissed for redundancy if the reason is that:

  • the employer ceases to carry on the business in which the employee was employed;
  • the employer ceases to carry on that business in the place where the employee was employed;
  • the needs of the business for employees to carry out work of a particular kind cease or diminish; or
  • the needs of the business for employees to carry out work of a particular kind in the place where the employee was employed cease or diminish.

Note how this means a need for the same amount workers to do a particular job has diminished, not that the need to perform a job has diminished. If a task can be done with fewer employees, or if a company must move or restructure, then that is a valid case for redundancy. If there simply is less incoming work for employees to do, that is not redundancy. If you are doing a job and then they get someone new to fill that job, that is not redundancy! Redundancy happens when the job you are supposed to be doing no longer exists.

It is illegal in the UK to use redundancy as a reason for a dismissal when there no legitimate issues with employee performance.

Redundancy is often used as a convenient excuse for firing employees for reasons less sensitive to voice. It may be a matter of job performance, friction in the workplace, business income failing to support the number of employees, or some form of discrimination. If you get a notice that you may be let go for reasons of redundancy, it may be prudent to look behind that for the real reason.

There are upcoming laws in 2020 that make the excuse of redundancy easier to challenge. It is also sometimes advantageous for an employee to claim redundancy, since there are enhanced redundancy pay arrangements for long-serving employees. Get all that you are entitled to in a dismissal.

 

woring beyond Retirement Age

Working Beyond Retirement Age

The UK does not have a default retirement age anymore, and employers may no longer force employees to retire. Now, a company may have its own retirement cut-off age policy, but all dismissals must come from a justifiable basis instead of simply entitled discrimination, age-related or otherwise.

In a recent judgment of Ewart v The Chancellor, Master and Scholars of the University of Oxford, the Employer Justified Retirement Age policy was meant to provide a proportionate means of creating opportunities of employment for younger and more diverse staff. However, the statistical evidence provided by the claimant proved that the policy only created a small number of vacancies. It was decided by the tribunal that the University did not show sufficiently that the policy contributed to the achievement of its legitimate aims to an extent that it can justify the discriminatory effect.

State pension age in the UK is increasing, and age discrimination is something that concerns many employees who are at approaching an age where finding a new job is quite unlikely if dismissed.

 

Maternity Leave

Pregnancy and Maternity Leave Protection

Many employers don’t like paying out for maternity leave because it is a long period of time of reduced productivity, and there is an urgent need to find someone else to perform the job that the pregnant employee must leave behind. Then once the new normal has settled in, is there a need anymore for the previous employee? This is why women need stronger maternity protections as the mere mention of ‘pregnancy’ sends alarm bells ringing for employers.

According to a government report, one in nine women had been fired or made redundant when returning to work after having a child, or were forced out from unfair treatment. Research estimated that up to 54,000 women a year felt they had to leave their jobs due to maternity discrimination.

Maternity discrimination is of course illegal, and those on maternity leave have special protections in a redundancy situation. Under the Good Work Plan of 2020, there will be expanded redundancy protections – six months after return to work, and up to two years in total for the maternity period.

According to Regulation 10 of the Maternity and Parental Leave Regulations 1999, if your job is at risk of redundancy but you need to be present for interviews – if for health reasons you cannot be present, you do not have to attend interviews. Regulation 10 says that you should be given first refusal over suitable alternative jobs that are not substantially less favorable than your original job, over other employees being made redundant.

Sefton Borough Council v Wainwright EAT 2014 notes that a woman on maternity leave should be considered alongside other employees when assigning employees into other posts.

Men also have protections under Shared Parental Leave in the first year after birth or adoption to be immediately offered suitable alternative employment.

Dismissal Comes before Redundancy Trial Periods

The case of East London NHS Foundation Trust v O’Connor has Mr. O’Connor working as a Psycho-Social Intervention (PSI) worker for an NHS trust. In March 2017 he was informed that the role was being deleted under restructuring on 3rd of July 2017 and he was offered an alternative role of Care Co-ordinator. He began a trial of the role on that date.

O’Connor raised a grievance that the role was not a suitable alternative and the trust agreed to extend the trial period until this was resolved. In Nov 2017 his appeal was rejected and he declined the offer of the Care Coordinator role again. He was dismissed on Dec 2017, and the trust refused to make statutory redundancy payments on the grounds that it believed that the alternative employment had been unreasonably refused.

A tribunal decided that O’Connor had not actually been dismissed until December, and as such the trial period was not in actuality a statutory trial period.

If you are given notice that your role is being deleted, there is no rule of law that the notice of deletion was inevitably amount to a dismissal. Employment solicitors have noted that an employer must also carefully follow procedures in removing employees for redundancy instead of assuming things.

What if the Whole Company Goes Bust?

How will you get redundancy payments when your employer or company turned insolvent and now completely unable to pay your wages? Then you can claim it from the Redundancy Payments Office and the National Insurance Fund.

The Redundancy Payments Service was started to allow employees to receive their Statutory Redundancy Pay in a much more timely manner than having to wait for their employer’s assets to be liquidated.

You may claim your:

  • redundancy pay
  • holiday pay
  • unpaid wages/overtime
  • statutory notice pay

You may apply online at https://www.gov.uk/claim-redundancy.