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Crypto and Insolvency Brochure

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U.K. and U.S. Case Studies (cont.) 03 Cryptoassets & Insolvency 40 The Claimant's account was hacked and cryptoassets having a value of c.$2.6m were sold at a huge undervalue to wallets believed to be held by those perpetrating the fraud. Considering the application for a proprietary injunction, the Court found that the assets were a form of property. However, in contrast to AA the Court found them a species of chose in action—though provided no reason to support this finding (nor did it refer to AA). As such, there are now conflicting decisions on the proprietary categorization of cryptoassets. Granting a proprietary injunction and worldwide freezing order against the exchange (Binance), the Court followed the decision in Ion and concluded the lex situs of such assets ought to be the law of the place where the owner is domiciled. Proprietary relief was also drafted to make clear that any cryptoassets otherwise caught by the order but held by innocent purchasers for value would not be caught. The Claimant also sought ancillary information disclosure from Binance in the form of Norwich Pharmacal and Bankers Trust relief. The Court, though appearing to take a critical view of prior authority which established that Norwich Pharmacal relief was not available in respect of entities outside the jurisdiction, granted such relief in respect of the U.K. Binance entity only. However, following Ion, the Court distinguished the principles applicable to Bankers Trust relief from those of Norwich Pharmacal relief, although noted that there was a serious issue to be tried as to whether that distinction could properly be maintained. Fetch.ai Ltd v. Persons Unknown (2021) 03

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