High Court crypto fraud decision reflects victim focused approach

Jennifer Craven, civil fraud expert at Pinsent Masons, said: “The decision is significant as it strengthens the availability of effective remedies where harm is being caused by anonymous or unidentified actors. It confirms that claimants can take action without first identifying specific wrongdoers, provided the class of ‘persons unknown’ is tightly and clearly defined. This is particularly important in crypto fraud cases, where speed is critical to prevent the rapid dissipation or movement of assets.”

In the case, Smithers v ‘Persons Unknown’, the High Court continued an existing freezing order over cryptocurrency asset accounts linked to participants in an international fraud scheme. It was alleged that crypto assets had been fraudulently appropriated, with claims of unlawful means conspiracy against ‘persons unknown’ identified through expert blockchain analysis. Notably, the conspiracy claim was advanced against the alleged participants in the fraud, rather than being confined to wallets said to hold the claimants’ specific stolen assets, illustrating how conspiracy claims can broaden recovery and freezing options beyond traditional tracing exercises.

A central factor in the decision was the risk of dissipation. The court found that the nature of cryptocurrency – its speed, portability, and the ease with which it can be transferred across jurisdictions – creates a heightened risk that those assets could be concealed or moved beyond reach. This made the continuation of interim relief pending a final order or full trial both appropriate and necessary.

Of particular importance was the court’s approach to jurisdiction. The court confirmed that the tort ‘jurisdictional gateway’ in the court’s practice direction, PD 6B.3.1.9, was satisfied, on the basis that there was at least a good arguable case that damage was sustained in England and Wales – where the victim of the fraud resides and from where the crypto assets were taken. The court rejected overly technical debates about the “location” of crypto assets and, for jurisdiction purposes, treated them in this case as situated where their owner resides.

Sanita Heer, a litigation specialist at Pinsent Masons, said: “The court adopted a pragmatic approach to jurisdiction, confirming that UK-based victims can rely on PD 6B to bring crypto fraud claims in England, without getting drawn into technical debates about where digital assets are located.”

“This reduces friction at the jurisdictional gateway in cross‑border crypto fraud cases and gives UK‑based victims greater confidence that proceedings can be brought in England and Wales even where wallets, exchanges or defendants are overseas.”

However, the case also highlights the risks associated with overly broad applications. Here, steps were taken to remove a particular account from the scope of the freezing order, recognising that it was operated on behalf of multiple users and could expose them to significant liability.

“This highlights the importance of carefully managing cross‑undertakings in damages and avoiding overly broad relief that may carry substantial financial risk for applicants,” said Heer.

The decision also highlights the pivotal role of expert evidence. The court  placed significant weight on detailed blockchain analysis linking the accounts to the scheme, reinforcing the importance of early investment in specialist forensic expertise in these types of complex disputes.

Craven said: “The judgment serves as a warning, as poorly drafted applications risk being refused or producing injunctions that are difficult to enforce. It is important that firms do not use overly broad or generic descriptions of defendants and prohibited conduct and instead invest upfront in careful evidence-gathering and precise drafting. Early legal advice will be critical to ensuring that any injunction obtained is both effective and resilient to challenge.”