Court Overturns Judgment in Crypto Fraud Case After Discovering Bitcoin Never Reached Wallet

A four-year-old judgment in a crypto fraud case has been overturned by the Court of Appeal after it was discovered that the Bitcoin at the center of the dispute never reached the wallet ordered to be emptied.

The victim, who had invested nearly half a million pounds in Bitcoin between January 2019 and January 2020, hired a cyber investigation consultancy to track down the stolen funds. The company reported that a particular wallet, controlled by Huobi Global Ltd, was connected to the fraud.

Based on this report, the victim obtained a court order requiring Huobi to hand over 98.2 Bitcoin from the tHEL wallet. However, when Huobi went looking for the Bitcoin, it debited the entire amount from Kyrrex Ltd's account, which had deposited its customers' Bitcoin into the same wallet.

Kyrrex later discovered that none of the victim's stolen Bitcoin could be identified as having reached the tHEL wallet, rendering the original tracing fundamentally flawed. The Court of Appeal set aside the relevant paragraphs of the 2022 order and directed the parties to agree on security arrangements for the Bitcoin in the meantime.