Brown Rudnick Lawyers Publish Global Legal Insights Chapter on Cryptoasset Recovery

Partner Jane Colston and Associates Jessica Lee co-authored a chapter for Global Legal Group’s Blockchain & Cryptocurrency Regulation 2023 entitled “Tracing and Recovering Cryptoassets: A U.K. Perspective.”

This fifth edition of the book, published on Oct. 27, covers a range of topics, including cryptocurrency regulation, money transmission laws, anti-money laundering requirements and mining.

In the Brown Rudnick chapter, the authors noted that they have seen cryptoasset-related disputes continue to increase with the courts stepping in to provide meaningful remedies and continuing “to play a critical role in resolving crypto-related disputes and assisting victims of fraud in recovering their stolen cryptoassets.”

“The E&W Courts have now confirmed in a number of cases that various existing legal remedies such as asset preservation orders (including both proprietary and freezing orders) and disclosure orders (compelling third parties to produce certain information aimed at identifying fraudsters and asset tracing) can be applied to cryptoasset cases.”

They commented that while certain scams have decreased, partially due to the crypto winter that hit crypto markets earlier this year, other frauds are on the rise: “However, despite an overall drop in both illicit and legitimate transaction volumes, hacking and stolen funds have become more of an issue. Users’ digital wallets continue to be subject to spoofing and phishing attacks, and entire exchanges (platforms on which customers can trade cryptocurrencies) have been the target of sophisticated hackers, with a particular rise in funds stolen from decentralized finance protocols with hackers exploiting vulnerabilities in the open-source code underlying those protocols.”

Their chapter also focuses on recent developments in the legal and regulatory sphere in the U.K., including the Financial Conduct Authority’s regulations of the financial promotion of cryptoassets to U.K. consumers; making the use of cryptoassets to circumvent sanctions a criminal offense; and an extension of anti-money laundering regulations to the transfer of cryptoassets.

Read the full chapter here.