The United Kingdom High Court has ruled that Tether as Property falls under English law. This ruling marks the first time a UK court has definitively addressed the status of cryptocurrency following a full trial, setting a significant legal precedent for digital assets in the country.
The case revolved around the legal treatment of Tether (USDT), a widely used stablecoin, which was declared to have property rights in the context of a case involving fraud. The plaintiff, fraud victim Fabrizio D’Aloia, had his stolen cryptocurrency, including Tether, transferred through a series of crypto mixers and then offloaded across various exchanges. His attempt to recover the funds hinged on whether Tether as Property could be traced and recovered under English law.
Major Ruling on Tether as Property
Deputy Judge Richard Farnhill, delivering the September 12 ruling, declared, “Tether attracts property rights under English law.” This decision, hailed as a watershed moment for cryptocurrency regulation in the UK, provides clarity on how digital assets such as Tether will be treated in the courts. Farnhill further elaborated that Tether represents “a distinct form of property not premised on an underlying legal right,” adding that it can be traced and held in trust in the same way as other types of property.
The ruling cements Tether as Property that can be the subject of legal claims and trust litigation. Legal experts are calling the ruling an important step toward recognising digital assets under traditional property frameworks, adding a layer of legal protection for individuals and entities dealing with cryptocurrencies.
Legal Foundations of the Decision
This decision builds upon previous judgments, including a 2019 ruling in the same court, which, while not a trial verdict, suggested that cryptocurrencies could be considered property. It is also aligned with the England and Wales Law Commission’s 2023 report, which recommended that digital assets be categorised as property under the law. This new ruling establishes Tether as Property explicitly, moving the conversation from theory to legal practice.
Just a day before this ruling, the UK government introduced a bill that seeks to clarify that cryptocurrencies, non-fungible tokens (NFTs), and even carbon credits are considered “things” or “personal property” under existing property laws. The timing of the bill and this ruling signals the UK’s increasing efforts to bring clarity to the legal status of digital assets, with Tether as Property now firmly established.
Fraud Case Focus: The Role of Tether
The ruling came in the context of a broader fraud case involving D’Aloia, whose stolen cryptocurrency, including 400,000 USDT, was traced through various exchanges. However, despite the ruling on Tether as Property, D’Aloia was unable to recover his funds from the Thai exchange Bitkub. The High Court found that D’Aloia’s USDT could not be definitively traced to a specific Bitkub wallet due to the use of crypto mixers, which obfuscate the origin of funds in blockchain transactions.
Quillon Law partner Nicola McKinney, representing Bitkub, commented on the ruling, stating, “The judge concluded that while Tether as Property can be identified in mixed pools, D’Aloia failed to show, on the balance of probabilities, that any of his USDT was traced to the relevant Bitkub wallet.”
The court acknowledged the fraudulent nature of the transactions but noted that without clear evidence linking D’Aloia’s Tether to Bitkub, his claims could not succeed. Farnhill noted that there was no defective transaction between D’Aloia and Bitkub, further weakening the case.
Legal Implications of the Ruling
Matt Green, the blockchain and digital assets head at law firm Lawrence Stephens, provided further insight into the implications of this ruling, particularly concerning the status of Tether as Property. Green explained that this decision serves as a reminder of the importance of thorough evidence when dealing with blockchain analytics and cryptocurrency-related legal claims. “It is vital that legal teams understand the fact patterns carefully in order to advance proprietary claims and ensure mixing issues are dealt with accordingly,” he told Cointelegraph.
The ruling also highlights the complexities that arise when dealing with digital assets that have been processed through mixers, which makes it challenging to trace and recover stolen funds. Despite this, the recognition of Tether as Property provides a pathway for future legal cases involving digital assets.
Tether as Property: UK’s Regulatory Shift on Crypto
The ruling underscores the UK’s growing efforts to regulate the cryptocurrency market. With Tether as Property now firmly recognised, the ruling sets the stage for other cryptocurrencies to receive similar treatment in UK courts. The decision comes as regulators worldwide are grappling with how to incorporate digital assets into traditional legal and financial systems.
This case could serve as a benchmark for future legal battles involving stolen or misappropriated cryptocurrencies. As Tether as Property gains recognition, it opens the door for broader legal protections for investors and crypto holders in the UK.
As the UK moves towards clearer crypto regulations, this ruling on Tether as Property is likely to play a significant role in shaping future litigation and policy development. It signals a shift in how the legal system approaches digital assets and could encourage further regulation to protect investors and ensure accountability in the crypto space.
The UK High Court’s decision to recognise Tether as Property marks a pivotal moment in the evolving legal landscape for cryptocurrencies. As the first English law ruling after a full trial, it establishes a legal framework for treating digital assets like Tether as traceable property, providing stronger protection for fraud victims and clearer guidelines for future disputes involving cryptocurrencies.
