Blockchain & Cryptocurrency , Cryptocurrency Fraud , Fraud Management & Cybercrime

UK Court Orders Crypto Firms to Share Data to Track Thieves

Alleged Hacker Moved Funds Via Binance, Coinbase and 4 Other Exchanges
UK Court Orders Crypto Firms to Share Data to Track Thieves
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A British court ordered six cryptocurrency exchanges to reveal the identities of account holders allegedly tied to a 2020 hack of an anonymous English cryptocurrency platform during which thieves stole $10.7 million worth of digital assets.

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The exchanges must share the status of the stolen funds, the "know your customer" details of the alleged hackers and their bank account and payment card details, email addresses, residential addresses, phone numbers and bank statements, High Court Justice Christopher Butcher ruled.

His Tuesday order on behalf of a plaintiff whose identity isn't public - the plaintiff goes by the moniker LMN in court and isn't associated with a similarly named NFT collection of cartoon lemons - directs the exchanges to cooperate without "avoidable delay." The exchanges are Binance, Bitflyer, and Payward - which operates as Kraken, Luno PTE, Coinbase Global, and Huobi Global.

The victim company initially contacted law enforcement authorities and later hired a cryptocurrency expert to trace the stolen funds. That investigation hit a dead end with the platforms, since the wallet addresses the investigator found were omnibus accounts used by the platforms to manage the trades of multiple individuals.

Syed Rahman, a partner at law firm Rahman Ravelli who filed suit on behalf of the victim platform, told Information Security Media Group the expert "traced $1.7 million of the assets to 26 accounts, all of which were owned or operated by one of the six exchanges in question."

He hailed Butcher's ruling as a "landmark" putting cryptocurrency thieves on notice that courts will "help individuals and companies trace and recover stolen assets."

Ari Redbord, a former senior adviser to the Department of the Treasury on money laundering and an ISMG contributor, said, "It will be interesting to see how the exchanges in this case respond." Most will likely respond to the court order, he said. "That said, it is hard to enforce legal process outside of the jurisdiction. So if an exchange decides not to comply, enforcement could be a challenge."

The exchanges, including Coinbase - which actively participated in a Nov. 11 hearing leading to the order - did not respond to a request for comment, including whether they intend to comply with Butcher's order.

The British judge issued the order despite the exchanges' location outside the United Kingdom by citing an October 2022 update to civil procedure law that streamlined orders for information disclosure against foreign entities in cases of fraud intended to be pursued in English or Welsh courts.

Before the update, it would have been "much more difficult" to subpoena crypto trading platforms based outside of Great Britain, Rahman said. That made pursuing civil cases against crypto fraud particularly hard, he said.

Rahman said he expects the High Court to schedule a follow-up hearing to ensure the exchanges receive proper notice of the order.

About the Author

Rashmi Ramesh

Rashmi Ramesh

Assistant Editor, Global News Desk, ISMG

Ramesh has seven years of experience writing and editing stories on finance, enterprise and consumer technology, and diversity and inclusion. She has previously worked at formerly News Corp-owned TechCircle, business daily The Economic Times and The New Indian Express.

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