Protecting the value of frozen crypto assets | Fieldfisher
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Protecting the value of frozen crypto assets


United Kingdom

The recent decision of Law v Persons Unknown & Ors (unreported) saw yet a further innovative development in the area of crypto asset recovery.

In Law the High Court granted ancillary relief in support of a post-judgment freezing order which provided for the relevant crypto currency, which had been stolen from the claimant, to be converted into fiat currency and transferred to the Court Funds Office. This raises the interesting question of whether crypto assets could be subject to mandatory injunctions to be converted into more stable fiat currency pre-judgment in order to protect their value.

Law v Persons Unknown

The Claimant in Law had fallen victim to a sophisticated fraud whereby he was persuaded to transfer crypto currency to a fake exchange, which then prevented any withdrawals of his assets. The Claimant obtained a proprietary injunction and worldwide freezing order against several categories of persons unknown. Post-judgment, the claimant applied for ancillary relief for delivery up of the traceable proceeds of the crypto assets subject to the proprietary injunction, but also for relief requiring other crypto assets, which had been mixed up with the claimant's traceable assets, to be converted into sterling and transferred to the Court Funds Office. The Claimant then made a further successful application under CPR 72.10 for the Court to release the funds to him in order to satisfy the judgment. CPR 72.10 provides that if money is standing to the credit of the judgment debtor in court, the judgment creditor may apply for an order that it be paid to them to satisfy the judgment and costs of the application.

Pre-judgment mandatory Mareva relief

Whilst Law was concerned with post-judgment relief to convert crypto assets into fiat currency, there is case law which holds that assets may be safeguarded in a particular way pre-judgment. Typically, in instances of crypto fraud, the claimant will seek worldwide and/or proprietary freezing injunctions in order to prevent the dissipation of the stolen crypto assets. However, this will not necessarily ensure effective enforcement of a money judgment if obtained, particularly if the assets are located outside of the jurisdiction.

A claimant can apply for a mandatory Mareva order in order to require assets to be moved, either to England or to where an English judgment is enforceable. In United Norwest Cooperatives v Johnstone (CA, 1994, unreported), the Court of Appeal held that the Court's jurisdiction to order a Mareva injunction extends to ordering that a specific asset, which might otherwise be dissipated, should be safeguarded in particular way, including by payment into Court (provided that this would not unfairly or unjustly prejudice the defendant by depriving them of the immediate use of the asset).

The requirements for such an order are that the defendant must be subject to the English jurisdiction, wherever the assets are located, and there must be certainty as to the location of the assets.

The application of Mareva relief in this respect has historically been concerned with fiat currency, but it raises the question of whether it could be applied to frozen crypto assets in order to protect their value before judgment.

Protection of unstable frozen assets

There is a significant body of case law in which the Court has ordered there to be active protection of precarious assets, where a freezing injunction is not sufficient because without active intervention the value will be lost. For example, if a valuable frozen property required urgent repairs to avoid serious damage the Court could order mandatory relief for those repairs to be completed.

In PrivatBank v Kolomoisky [2022] EWHC 1445 (Ch), the defendant held a frozen asset, being a $926 million receivable from an associate. The Claimant applied for a mandatory injunction for the receivable to be converted into cash so as to more easily enable any enforcement. The Court ordered the Defendant to issue a formal demand for payment of the receivable, and ordered the Defendant to use reasonable endeavours to obtain payment of it.

Crypto assets are often inherently unstable and the value has the potential to fluctuate wildly. If a victim of fraud traces the proceeds of his stolen assets into a highly unstable crypto asset, there is a significant risk that by the time judgment is obtained, those assets could be effectively worthless, notwithstanding the existence of a freezing injunction.

In theory, a claimant could seek a mandatory Mareva injunction in order to have the relevant unstable crypto assets converted into stable fiat currency pending judgment and subsequent enforcement. Such an order would undoubtedly require significant cross-undertakings given that the defendant would be deprived of an asset that could also increase in value.

This type of application may contrast unfavourably by analogy to fluctuating fiat currency. If a claimant's traceable proceeds of their stolen assets are found to be in, say, Turkish Lira or Argentinian Pesos (which have historically been subject to volatile fluctuations), it's difficult to see a Court ordering those traceable proceeds to be converted into more stable fiat currency such as sterling, merely because they have been historically volatile. However, crypto assets are not fiat currency and represent a different asset class (as the Law Society has recently recommended that digital assets be confirmed as a third category of personal property through legislation), so the two asset classes can be clearly differentiated.


The High Court has over past several years consistently pushed the envelope to enable victims of crypto asset fraud to recover what has been taken from them. Mandatory injunctions to preserve the value of crypto assets pending judgment may be one further development in an ever-evolving body of cutting-edge case law.

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