When it comes to investing, only time will tell. We had previously written on how “time is money” when faced with a banking or a financial dispute
If you were one of many who joined the crypto bandwagon, only to find that a bot has hacked into your account and made unauthorised withdrawals in small amounts over long periods of time to wallet addresses in other cryptocurrency exchanges, what can you do?
You might have written in to customer support to those cryptocurrency exchanges, who said you need a police report first, you may then have filed a police report, or you may even have reached out to a blockchain analysis expert. In this article, we explore the legal mechanisms available to you if you want to have greater control over the intended outcome of recovering your stolen crypto assets. Crypto asset recovery is complex and a still developing area of law – usually the perpetrators are unknown, and the tokens can be ‘off-ramped’ (i.e., converted to fiat currency), making asset tracing a more complicated and less efficacious exercise. It is highly recommended that you engage legal counsel with expertise in the area as early as possible so we can stem out continued outflows and expedite the recovery process when dealing with unknown thieves. We have advised and act for major corporate clients, even cryptocurrency firms, in asset recovery and fraud matters.
1. Unmask the Perpetrator: Banker’s Trust / Norwich Pharmacal Application
If you are a company or individual with ties to Singapore (your funds were stolen and you live in or operate out of Singapore), you can consider bringing a Banker’s Trust or Norwich Pharmacal Application before the Singapore courts against the cryptocurrency exchanges to which the funds were directed, as well as “Persons Unknown” (being the perpetrators of the theft). A Banker’s Trust Application is a type of pre-action injunctive remedy that requires a financial institution to provide information and documents in respect of a customer who has perpetrated a fraud. This allows Singapore courts to order that the financial institution disclose the documents and/or information sought, such as the identity of the wallet holders, and this order can be served on any number of financial institutions implicated or used to perpetuate the theft and/or fraud.
2. Stop Continued Theft: Mareva Injunction
Where there is urgency involved in preventing continued outflow of funds from your crypto account (in circumstances where it is not possible to withdraw all your tokens and close the account, for instance, where the tokens are locked in for a vesting period), a viable mechanism is a Mareva injunction.
A Mareva Injunction can be sought domestically or worldwide to injunct or prevent the cryptocurrency exchanges from allowing the defendants to deal with any of the assets that are highly likely to be dissipated by an alleged thief. Such an order granted by the Singapore Courts can be served on as many exchanges cross-jurisdictionally as deemed necessary.
A Mareva Injunction needs to be accompanied by a statement of claim, which sets out the facts and legal causes of action that would commence litigation. We highly recommend acting fast and seeking legal advice as soon as possible to investigate into potential causes of action, such as trust and unjust enrichment – complex areas of law that need to be analysed with precision when applying it to the specific facts of your case. SC LLC is known and commended for our ability to weave together novel legal arguments with “gumption, intellectual agility” and “thorough professionalism”.
3. Risks
Litigation is not without its risks, and you need careful counsel to deftly navigate the potential landmines in bringing your claim.
In an English High Court case of D’Aloia v Persons Unknown [2024] EWHC 2342 (Ch), the first time that a case on cryptocurrency had been decided following a full trial, the Claimant alleged he was the victim of a cryptocurrency scam resulting in the loss of about 2.5 million pounds worth of cryptocurrency. Ultimately, the Claimant failed on its expert evidence to prove that the cryptocurrency was his. If both his expert evidence and his pleadings (which the trial judge dedicated significant ink to identifying whether the claims pleaded were the ones advanced at trial) had been watertight, he may well have succeeded in his claim.
SC LLC frequently works with experts from various jurisdictions in matters of fraud or breaches of complex commercial or investment contracts to decipher and uncover how to marry technical expertise with expert evidence in preparing pleadings and aligning on legal strategy from the start.
A General Counsel of a leading US company for whom we acted had this to say: “Their preparation for the arbitration put us in a position to negotiate a settlement in a short timeframe, and just hours before the arbitration would have proceeded. Because we were in such a strong factual and legal position, with a very detailed and fully supported opening statement, we were able to achieve a successful settlement.”
4. Conclusion
Choosing the right advocate to evaluate and execute the right strategy is pivotal to your success. Our Managing Director, Shobna Chandran, has extensive experience in asset recovery work, including with cryptocurrency.
Let us help you navigate the legal process with confidence and determination, galvanising our expertise and knowledge to ensure time and cost efficiency for your benefit. Your success and satisfaction are our top priority, as we are committed to delivering exceptional results for our clients. For more information, kindly contact Shobna Chandran.
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