In a groundbreaking decision, a United Kingdom High Court has ruled that the stablecoin Tether (USDT) qualifies as property under English law. This marks the first post-trial ruling in English courts addressing the legal status of cryptocurrencies, setting a significant precedent for future cases involving digital assets.
Tether’s Legal Status Confirmed
The case stemmed from a fraud victim’s lawsuit, where stolen cryptocurrency, including Tether, was laundered through various exchanges and crypto mixers. The court had to decide whether Tether could be considered property under English law.
High Court of Justice Deputy Judge Richard Farnhill, in a September 12 ruling, affirmed that Tether is a “distinct form of property,” which can be traced and treated as trust property similar to other types of assets. Farnhill noted that the ruling aligned with previous judgments and the 2023 England and Wales Law Commission report that classified digital assets as property.
Legal Clarity on Crypto Property Rights
This ruling follows a UK government bill proposed just a day earlier that seeks to formally recognize non-fungible tokens (NFTs), cryptocurrencies, and carbon credits as personal property under existing property laws. The alignment of the court’s decision with the government’s legislative efforts signals a broader move toward providing legal clarity for digital assets in the UK.
Case Against BitKub: A Mixed Outcome
The lawsuit also targeted Thai cryptocurrency exchange BitKub, with fraud victim Fabrizio D’Aloia claiming that the exchange had been “unjustly enriched” by receiving 400,000 USDT stolen from him. However, D’Aloia was unable to prove that any of his stolen Tether could be specifically traced to BitKub, mainly due to the complexity of crypto mixers used in the process.
Judge Farnhill acknowledged the fraud but ruled that there was insufficient evidence to connect D’Aloia’s assets to BitKub, dismissing the breach of trust claim against the exchange. Nicola McKinney, a Quillon Law partner representing BitKub, explained that while Tether can be identified in mixed pools, D’Aloia’s claims lacked sufficient proof.
Broader Implications for Crypto Cases
This case highlights the challenges victims of cryptocurrency fraud face, especially when trying to trace digital assets through mixed pools or decentralized exchanges. The judgment serves as a reminder for legal teams to carefully examine fact patterns and address complexities, such as crypto mixing, when pursuing proprietary claims.
Despite the setback in the BitKub case, the decision to recognize Tether as property lays a legal foundation that could assist future fraud victims in recovering stolen assets. Applications for further judgments and orders against the remaining defendants, including Binance and other exchanges, will be addressed in subsequent hearings.
