British Virgin Islands:
First Ever Third-Party Debt Order Granted In English ICO Fraud Proceedings
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In a judgment made public on 24 February 2022, the English High
Court has granted what is thought to be the first ever third-party
debt order in proceedings arising from cryptocurrency fraud.
Sitting in the High Court Business and Property Division, Master
David Cook made final an interim third-party debt order against
Payward, Inc, a subsidiary of cryptocurrency exchange and bank,
Kraken.
The judgment is the latest in the Ion Science and Duncan Johns v
Persons Unknown and Ors proceedings, which arise out of claims by
an English company and its sole director that they were
fraudulently induced into investing in a bogus Initial Coin
Offering (“ICO”) called Oileum.
Comment
The Ion dispute was the first ICO fraud case to come
before the English High Court, and so it is unsurprising that it
has generated so much jurisprudence in this fast evolving area of
law. This year has already seen an influx of momentous judgments in
the crypto-sphere, including the recognition of digital currency as assets and
property in the British Virgin Islands, the refusal to accept digital assets as security
to cover future litigation costs, the first seizure of Non-Fungible Token and other
digital assets by Her Majesty’s Revenue and Customs, and
now the first third-party debt order to be granted in a
crypto-fraud.
The world of asset tracing and enforcement is developing at
lightning speed, and it is becoming ever clearer that the veil of
anonymity which has long been associated with digital assets and
currency is now beginning to slip.
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