Tether “Attracts Property Rights Under English Law,” UK Court Rules

The UK High Court ruled that the stablecoin Tether (USDT) is legally recognized as property under English law on 12 September 2024. The ruling marks the first full trial judgment in the UK on the legal status of crypto, setting a precedent for the treatment of these assets in the region.

The case involved a fraud victim whose stolen cryptocurrencies, including Tether, were transferred through various crypto exchanges after being laundered through crypto mixers.

The court’s decision to classify Tether as property was part of a preliminary issue in the lawsuit.

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Tether is “Distinct Form of Property”

In the ruling, Deputy Judge Richard Farnhill of the High Court of Justice stated that “USDT attracts property rights under English law.”

He further elaborated that Tether is “a distinct form of property not premised on an underlying legal right” and is subject to tracing and trust claims, similar to other types of property.

The judge also referred to a 2019 judgment from the same court, which supported the classification of cryptocurrencies as property. The ruling aligns with the 2023 report by the England and Wales Law Commission, which also classified digital assets as property.

Yup! Reminder: the @NewYorkStateAG found that #Tether 's claim of 1:1 backing with fiat USD is "a lie", its operations were "illegal" an it was perpetrating an "ongoing fraud" and banned it from operating in NY State!
cc: @ConsumersFirst https://t.co/dr9sXfej1F pic.twitter.com/cVln3UVl38

— Zero Shorts (@zeroshorts) September 12, 2024

The case was brought by fraud victim Fabrizio D’Aloia, who sought to recover stolen assets. The assets included 400,000 USDT that had been traced to the Thai crypto exchange BitKub.

However, D’Aloia was unable to convince the court that BitKub had been “enriched” by receiving 46,291 USDT allegedly traced from his stolen funds.

Judge Farnhill ruled that while D’Aloia had indeed been defrauded. D’Aloia could not conclusively prove that BitKub had received his Tether due to the use of crypto mixers, which obscured the flow of funds.

Nicola McKinney, a partner at Quillon Law representing BitKub, explained that the judge acknowledged the possibility of identifying assets in mixed pools but concluded that D’Aloia had failed to provide sufficient evidence linking his USDT to BitKub’s wallet.

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UK Regulates Cryptocurrencies

As reported, the UK government has introduced a new bill aimed at clarifying the status of digital assets, including non-fungible tokens (NFTs), cryptocurrencies, and carbon credits, as “things” and “personal property” under the nation’s property laws.

The proposed law is expected to aid judges in handling complicated disputes involving digital assets. It could address situations where digital holdings are disputed in legal proceedings, including cases related to asset division during divorces or other settlements.

Just recently, it was revealed that nearly 90% of cryptocurrency firms  applying for registration in the United Kingdom over the past year have been turned down by the Financial Conduct Authority (FCA).

The high rejection rate stems from the firms’ failure to meet necessary standards, particularly in areas related to fraud prevention and anti-money laundering protocols. The FCA revealed that only four of the 35 crypto firm applications submitted in the last 12 months were approved.

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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.