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Serving court documents by NFT will help fraud victims recover assets - but crypto exchanges are 'likely to be on red alert' after trust ruling

Published on 13 July 2022

• International law firm RPC says ruling in D’Aloia v. Persons Unknown and Binance Holdings Limited & Others is 'very significant' for crypto fraud victims
• But cryptocurrency exchanges could now face claims for breach of trust for misappropriated funds held on their platforms

RPC partner Dan Wyatt and senior associate Christopher Whitehouse, who specialise in cryptocurrency litigation, look at the impact of today's news that legal documents can now be served by NFTs for the first time. 

Christopher Whitehouse said: "In one of the most significant cryptocurrency case developments to date, the High Court in D’Aloia v. (1) Persons Unknown (2) Binance Holdings Limited & Others has granted an injunction and permitted the claimant to serve proceedings by non-fungible token (NFT) airdrop on the crypto wallets operated by the unidentified alleged fraudsters. 
 
"This first in the English jurisdiction follows a case in the United States permitting a claimant to do the same. 
 
"Even more significantly, the court found there was an arguable case that the cryptocurrency exchanges (including Binance) to which the claimant's cryptocurrency was followed held the claimant's identifiable cryptocurrency as constructive trustees."  
 
Dan Wyatt said: "Both developments are very significant for the victims of crypto fraud. 
 
"Establishing a new method by which fraudsters may be served with proceedings is incredibly useful and will comfort claimants whose only information about the fraudster might be their crypto wallet address. 
 
"For claimants who can track their misappropriated assets to crypto exchanges, this decision - if followed in future cases – could make recovering assets much more straightforward. 

Christopher Whitehouse added: "Crypto exchanges will however be on red alert as a result of these developments. They could potentially face claims for breach of trust to crypto fraud victims in respect of any misappropriated funds held on their platforms."