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Life, Liberty and Bitcoin?

  • Hong Kong
  • Crypto assets


When John Locke penned the often-cited phrase, he is unlikely to have contemplated the notion that the definition of property would extend to crypto-assets. Notwithstanding this, judgments which accept such a status appear to be the recent trend amongst court decisions from England to New Zealand. The latest judgment has been handed down by the High Court of Hong Kong in Nico Constantijn Antonius Samara v Stive Jean Paul Dan [2022] HKCFI 1254.

In Nico, the Court granted various proprietary remedies over misappropriated Bitcoins with the aim of permitting the Plaintiff to recover the Bitcoins in question and the sale proceeds thereof. This decision reinforces the position that crypto-assets may be protected as property as a matter of Hong Kong law.

The Background to Nico

The Plaintiff, Nico Constantijn Antonius Samara, is a citizen of The Netherlands living in the Dutch Caribbean island of Curaçao. He claimed that he met the Defendant, Stive Jean Paul Dan, in June 2017 and they entered into a verbal agreement in which the Plaintiff was to pay the Defendant a commission for selling the Plaintiff’s Bitcoins as his sales agent. The Plaintiff then transferred his Bitcoins to the Defendant’s electronic wallet. This involved the Plaintiff’s Copay Wallet, an electronic software ‘wallet’ that can be installed on mobile devices and PCs and which allows users to store keys for types of cryptocurrency, and the Defendant’s account with Gatecoin Limited, a now-defunct crypto-asset token exchange that was based in Hong Kong.

As the Plaintiff could not open a bank account in Hong Kong to receive the proceeds from the sale of his Bitcoins, the parties agreed that the proceeds should be deposited into the Defendant’s bank account in Hong Kong (“HK Account”). The Defendant gave the Plaintiff access to the HK Account by providing him with the login details and the security token for the bank account. The Plaintiff could then make fund transfers to his account in Germany.

The arrangement fell through after a few months when the Plaintiff was unable to access the HK Account and could not locate nor communicate with the Defendant. The Plaintiff commenced court proceedings against the Defendant in Hong Kong and sought, amongst others, claims for failure to account for his Bitcoins and the sale proceeds thereof.

In defence, the Defendant asserted that he never acted as a sales agent of the Plaintiff. He argued that as a Bitcoin trader, his relationship with the Plaintiff was one of seller and buyer dealing directly with each other, and all trades between them were concluded on the spot with payment being made in cash or by wire transfer.

Findings of the Court

On 28 April 2022, the Hon Wilson Chan J held that:

  • when dealing with the Plaintiff’s Bitcoins and sale proceeds, the Defendant acted as his sales agent;

  • based on the documents produced pursuant to a discovery order made by the Hon Le Pichon DHCJ (“Discovery Order”), the Plaintiff was able to identify the assets that represented the fruits of his Bitcoins and the proceeds of their sale;

  • given their agency relationship, the Defendant owed fiduciary duties to the Plaintiff, which comprises, among other things, duties to avoid conflicts of interest, not to profit from his position as agent, and not to use the Plaintiff’s property to acquire secret profits; and

  • the Defendant breached his fiduciary duties to account for the Plaintiff’s Bitcoins, sale proceeds, and any income or profits derived thereof, by disposing them for his own use or benefit.


The Court granted various proprietary remedies to the Plaintiff, amongst others:

  • declarations and orders that the Bitcoins and sale proceeds thereof were held by the Defendant on trust for the Plaintiff, and the Defendant shall procure the transfer of the same to the Plaintiff;

  • order for all necessary accounts, inquiry and directions as to what was due to the Plaintiff and for the Defendant to transfer all such sums and property found due; and

  • order that the Defendant shall pay equitable compensation to the Plaintiff if the Plaintiff is unable to recover the Bitcoins in specie, with quantum to be assessed.

Key Takeaways

Nico demonstrates the willingness of Hong Kong Courts to provide relief, in appropriate cases, to secure assets, even in circumstances where the assets which give rise to the application are virtual rather than tangible. While the Court did not explicitly address whether Bitcoins (or crypto-assets more generally) constitute “property”, in this instant case, the Court’s willingness to order significant injunctive relief in the form of (1) a Mareva injunction to restrain the Defendant from disposing his assets in Hong Kong, including Bitcoins (up to US$2.6 million), and (2) the Discovery Order, to reveal what has become of the Bitcoins and the fund flow of the sale proceeds will provide crypto-market participants in Hong Kong with assurance of the likely approach of the Hong Kong Courts in future cases.

The Nico decision follows the approach adopted in other common law jurisdictions concerning the legal status of Bitcoins and other crypto-assets. More importantly, there appears to be an increasing willingness of courts to provide interim relief in appropriate circumstances.

English courts have held that crypto-assets, such as Bitcoin, can be treated as property under English law (see AA v Persons Unknown who demanded Bitcoin on 10th and 11th October 2019 and others [2019] EWHC 3556 (Comm) and our Firm’s briefing on this decision here). Similarly, in New Zealand, the courts held in Ruscoe v Cryptopia Ltd (in liquidation) [2020] NZHC 728 that crypto-assets constitute a form of property, and are capable of being held on trust. Earlier this year, the Singapore High Court, in CLM v CLN [2022] SGHC 46, held that crypto-assets met the definition of a “property right”, and hence the plaintiff in that case could prove a serious arguable case that the stolen crypto-assets were capable of giving rise to proprietary rights and thus could be protected with proprietary injunction. In coming to these determinations, the Singapore courts considered the growing body of case law from other jurisdictions, in particular the analysis in Ruscoe.

With the advent of digitalisation and the decentralisation of finance, the Nico case also demonstrates the powerful impact blockchain technology can have in the context of crypto-asset-tracing. Blockchain technology, as a type of distributed ledger technology, has an inherent feature that all historical transaction sequences are immutable, publicly accessible and traceable by all node participants. Here, the Court in Nico appeared to have relied on, amongst others, the transaction records in a Gatecoin report, together with the transactions records within the public ledger for Bitcoin, to ascertain the ownership and the transfer of the Bitcoins from the Plaintiff to the Defendant.

In the context of investors seeking redress for misappropriated crypto-assets, this a welcomed development, and an area to watch out for during the latter half of 2022, especially as the cryptocurrency market experiences a degree of recent volatility.