Report: Court Ruling to Return Mistakenly Sent Cryptocurrency Could Set Precedent

A Dec. 12 Business Law Blog post from the University of Oxford Faculty of Law notes possible repercussions for lost and stolen crypto claims following a case in a Canadian trial court earlier this year.

In the post, SAFE Frankfurt researcher Grygoriy Pustovit notes the case of Copytrack Pte Ltd v Wall.

The superior trial court of British Columbia ruled that Ethereum tokens, which were mistakenly sent by the plaintiff, Singapore blockchain startup Copytrack, to the defendant, Brian Wall, must be returned to Copytrack.

The defendant mistakenly received 530 Ethereum coins from Copytrack instead of 530 Copytrack tokens that he was supposed to receive after participating in Copytrack's initial coin offering.

The Ethereum amounted to 495,000 Canadian dollars, while the value of CPY tokens he intended to purchase was 780 Canadian dollars at the time.

"This precedent may have major repercussions for the enforcement of claims regarding lost or stolen cryptocurrency," Pustovit claims, as the ruling allows the plaintiff to trace and recover tokens "In whatsoever hands those Ether Tokens may currently be held."

As professional services for tracing digital assets develop, the rightful owners of certain assets could trace them on a public ledger and ostensibly recover tokens once they appear in an exchange's wallet.

Pustovit also states that the Canadian court "Missed the opportunity" to define the legal character of cryptocurrencies because it "Could not be handled through summary judgment." Since the defendant was deceased, "There would be no practical utility in sending this matter to trial." The court therefore ruled the Ethereum tokens to simply be the property of the plaintiff and that they should be returned.

While the legal status of cryptocurrencies in case law remains hazy, "There is an increasing number of decisions recognizing that other intangible assets, e.g. funds, shares and mineral interests, may be subject to claims in conversion and detinue."

In the summer of 2018, the Canadian government issued an official draft regulation for crypto exchanges and payment operators.