Catherine Naylor explores the challenges of cross-border asset tracing cases involving digital assets in Thomson Reuters Regulatory Intelligence

For victims of cryptocurrency fraud, the latest in a line of decisions[1] in which the English High Court has granted worldwide freezing injunctions against "persons unknown", accompanied by disclosure orders against crypto exchanges believed to know the identity of the alleged fraudster, is a welcome reminder of our judiciary's willingness to deploy established interim remedies in cases involving this still relatively new asset class. But beyond the injunction, the path to ultimate recovery for victims is increasingly complex and uncertain. The challenge now is how to bridge that gap.

Fraud involving digital assets has become mainstream. It accounts for over two-thirds of reported investment fraud[2], with losses running to hundreds of millions of pounds domestically, and billions of dollars globally.

Where the courts have led the way, Parliament is slowly catching up. The Property (Digital Assets etc) Act 2025 confirms the position adopted by judges since December 2019[3] that "things" that are neither things in possession (tangible objects) nor things in action (creating a right to sue), of which cryptocurrency is a prime example, are not prevented from being personal property. And on 15 July 2026, the government published a call for evidence to combat unauthorised fraud, citing the rapidly evolving digital economy as a key enabler. But law enforcement's job of prevention and prosecution does not always equal recovery for victims. For that, victims still must turn to civil remedies.

Urgent without notice freezing injunctions against unknown fraudsters have become a crucial weapon to combat the speed at which stolen cryptoassets can be moved across wallets, mixers and offshore platforms. English judges have taken an expansive view on jurisdiction in these cases[4], finding that where cryptoassets are taken from a person resident in England and Wales, the damage is treated as sustained within the jurisdiction for the purpose of the tort gateway in Practice Direction 6B. More recently, Practice Direction 6B.3.1(25) has enabled service of disclosure orders against foreign crypto exchanges, which may hold KYC information identifying the fraudster.

But initial success may be short-lived. Particularly when exchanges fight back, many claimants are finding that the gap between injunction and ultimate recovery is fraught with difficulty.

The first problem can be securing compliance with interim orders. In the Wilden case, Huobi Global, which owns the HTX exchange and is domiciled in the Seychelles, was ordered to pay the claimant's costs for failing to engage. But its foreign domicile means that neither the freezing order nor the order for disclosure automatically bite. Huobi's directors are not at risk from contempt of court proceedings. To enforce against Huobi, the claimant would have to start again in the Seychelles, causing delay and additional cost. An early assessment of the likelihood of requiring a mirror order is therefore vital, particularly as interim relief is excluded from enforcement under the 2019 Hague Convention[5].

Another significant obstacle is the operational architecture of centralised exchanges. When a fraudster deposits stolen cryptocurrency on a centralised exchange, the assets are swept into an omnibus wallet and pooled with assets belonging to many other users. That can create a tracing problem for claimants.

In D’Aloia v Persons Unknown and Others[6], the first cryptoasset case to proceed to a fully contested trial, deficiencies in the claimant's tracing analysis (identified by the exchange under attack in the proceedings) meant that the court was unwilling to find that any of the stolen funds had reached the target exchange.

The challenge of tracing into a mixed fund it is not only a question of evidence. It can also affect available defences. In the earlier case of Piroozzadeh v Persons Unknown and Others[7], the claimant pursued a constructive trust claim against the Binance exchange. Mr Piroozzadeh began successfully, obtaining an interim injunction. However, it was subsequently discharged when the court found that he had failed in his duty of full and frank disclosure to explain that Binance had a potential defence to the claim, namely that it was a bona fide purchaser without notice of the fraud. That possible defence arose from the omnibus way in which Binance operated: multiple users' cryptoassets were pooled and Binance then credited each user's account with an amount equivalent to that user's deposit, akin to a traditional bank. Binance argued that the credit was, in effect, a crypto purchase.

Whether such a defence would withstand scrutiny at trial remains to be tested, but its potential illustrates the growing legal complexity of crypto claims, in which the tort of conversion is unavailable (because cryptoassets are not tangible property in the relevant sense[8]) and claimants must deploy constructive trust, unjust enrichment and knowing receipt arguments.

This need for detailed pleadings and increasingly sophisticated expert evidence is changing the economics of crypto cases, with litigation funding only a realistic option for very high value claims, and even then, only after a front-loaded investment in counsel's advice and robust tracing evidence.

And, as with all civil litigation, even a successful judgment may not produce recovery if the assets cannot be extracted from a non-compliant exchange, forcing claimants to consider the full range of enforcement options, including judgment recognition, court-appointed receivership and third-party debt orders.

For practitioners, the practical lessons are clear.

First, forensic blockchain expert evidence must be built from day one. Automated tracing reports may be useful initial tools, but they are unlikely to be enough where the defendant or exchange challenges the proprietary link. The expert should be embedded into the legal team, building evidence capable of withstanding rigorous cross-examination at trial.

Secondly, claims should be pleaded with alternative routes to recovery in mind. A claimant who relies only on unjust enrichment will fail if assets cannot be traced through a mixed fund. A constructive trust claim or claims in knowing receipt may provide essential fallbacks. Consideration should also be given to whether to target the exchange, as constructive trustee but also via the unresolved question of whether it is possible to visit responsibility on an exchange for failing to prevent a fraud, relying on the so-called Quincecare duty[9] by which a bank is under a duty not to execute a payment instruction when the bank is on notice that the fraudster's instruction may be part of a fraud[10]. In that banking context, the Supreme Court recently decided that no Quincecare duty arises in cases of authorised push payment fraud, where the customer themselves issues the instruction to the bank[11]. But the Supreme Court left the door open as to whether the bank owes a duty to a customer to seek to retrieve funds once it is on notice of the fraud. Subsequent cases have not reached a firm conclusion[12][13]. There are obvious parallels in the crypto context when fraudsters have persuaded victims voluntarily to transfer funds.

Thirdly, enforcement considerations should happen at the very outset, even before an injunction is obtained, including an assessment of whether mirror orders (or similar) may be needed.

There is little doubt that crypto-related civil litigation has scaled up sharply. England’s courts have adapted impressively. They have recognised property rights, opened jurisdictional gateways and deployed urgent remedies with notable pragmatism. But the next battleground is no longer simply whether an injunction can be obtained. It is whether the claimant can prove the tracing case at trial, fund the fight and convert judgments into recoverable assets. For victims and exchanges alike, that is where the real battleground now lies: beyond the injunction.

[1] Stephen Wilden v Person Unknown and Huobi Global S.A. [2026] EWHC 1355 (KB)

[2] According to the City of London Police, citing data from 2024

[3] The first fully reasoned decision on this point was in AA v Persons Unknown [2019] EWHC 3556 (Comm)

[4] Ion Science Ltd v Persons Unknown and others (unreported), 21 December 2020 (Commercial Court)

[5] Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters

[6] [2024] EWHC 2342 (Ch)

[7] [2023] EWHC 1024 (Ch)

[8] Yuen v Li [2026] EWHC 532 (KB)

[9] Barclays Bank Plc v Quincecare Ltd [1992] 4 All ER 363

[10] Although it is not an independent duty, rather it is simply the duty to act in accordance with a customer's instructions unless the bank is on inquiry that the instructions (given by an agent) may in fact be outside the scope of the bank's authority

[11] Philipp v Barclays Bank UK Plc [2023] UKSC 25

[12] Barclay-Ross v Starling Bank Ltd [2025] EWHC 2158 (KB)

[13] Santander UK plc v CCP Graduate School Ltd [2025] EWHC 667 (KB)