"Although still relatively unchartered territory, cryptocurrency frauds are becoming increasingly common," she said.
"Cryptocurrencies are one of the most volatile investment opportunities out there, and investments can be a target for fraudsters. In the UK, victims are also less well protected, since cryptocurrencies are unregulated. There are also additional challenges in fraud cases involving cryptoassets which need to be skilfully navigated. Tracing cryptocurrencies which have been dissipated in the ways alleged in the CFTC complaint is made more difficult because of their pseudonymous nature. There are also currently some uncertainties about whether cryptoassets are 'property', which may impact on the remedies available to a victim," she said.
In the US, some cryptocurrencies are regulated by way of the federal commodity laws. The CFTC is therefore seeking civil monetary penalties, customer restitution and trading and registration bans as part of its action. This is not the case in the UK, although UK and EU regulators are currently examining how best to react to the growth in these forms of exchange.
A UK Cryptoassets Taskforce, established last year, includes representatives from the UK Treasury, Bank of England and Financial Conduct Authority. The Law Society of England and Wales is also working to clarify the law in relation to cryptoassets, distributed ledger technology and 'smart' contracts through its LawTech Delivery Panel UK Jurisdiction Taskforce.
Craven said that the taskforce, which is made up of judicial, legal and industry experts, planned to publish an 'authoritative legal statement' on these issues later this year, to include clarification over whether cryptoassets should be classed as 'property'.
"The taskforce has recently consulted on the issues it should consider, and Pinsent Masons has contributed to that discussion," she said. "This will hopefully provide greater clarity."
In the meantime, UK fraud victims should consider the civil law remedies available to them, although this is "arguably more challenging where there is a cryptocurrency angle", she said.
"Victims should react quickly and explore their ability to use the powerful civil fraud tools English law has to offer – including worldwide freezing and disclosure orders," she said. "Indeed, given that cryptocurrency transactions often do not utilise intermediaries, moving swiftly is even more essential in order to maximise the chances of recovery."