Fire Magazine Issue 24 by thoughtleaders4

ISSUE 24 - FEB 2026

MAGAZINE Fraud • Insolvency • Recovery • Enforcement

FIRE Starters 2026 Edition: Pass the Torch. Shape the Future.

Thought Leadership for and by the FIRE Community

ThoughtLeaders4 FIRE Magazine • ISSUE 24

INTRODUCTION

“Opportunities don’t happen. You create them.” - Chris Grosser Our first issue of 2026 is here, and we are delighted to present our Issue 24 - FIRE Starters Edition, in conjunction with the FIRE Starters Global Summit. In this engaging edition, our practitioners explore the effects of fraud, sanctions, freezing orders, and lessons from recent cases, all curated by just some of our fantastic next-gen practitioners. Our issue features a series of our entrants of our 5th Edition of the ‘Future Thought Leaders Essay Competition’. Congratulations to Nataliya Yankovska of PCB Byrne who was our 2026 winner along with Catherine Bar of Linklaters who came second and Michal Hain of Twenty Essex who came third respectively. Thank you to our esteemed judging panel and other entrants to this year’s competition.

The ThoughtLeaders4 FIRE Team Paul Barford Founder/Managing Director

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Amelia Gittins Senior Strategic Partnership Executive

Ben Sullivan Commercial Director

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Melody Mok Conference Portfolio Manager

| LETTE R TO THE E DITOR | Debarring Orders in English and British Virgin Islands Courts .........................................

Full Disclosure: The Tort of Bribery and Dishonest Assistance ...............................

Arena Television - Red Flags, Authority and the Boundaries of Bank Duties ................. 11 Credit Suisse Life Ltd vs Ivanishvili - Reliance in Deceit Without Conscious Awareness ..................... 13 The Mareva Injunction - Is It Time for Reform? ........... 16 60 Seconds With... Karin Troiani . ................................. 19 Waiver By Election - Why “Carrying On” May Not Kill a Termination Right You Didn’t Realise You Had - URE Energy Ltd v Notting Hill Genesis [2025] EWCA Civ 1407 ................ 21 Tracing and Freezing - Tools and Strategies for Asset Recovery in China ....................... 25 Lost in the Blockchain - Practical Legal Strategies for Tracing and Recovering Digital Assets .................. 28 Interim Measures in Spain for Foreign Insolvency Proceedings - A Focus on Non-EU Cases ................... 32

| ESSAY COMPETITION | 1st - How Should Courts and Practitioners Adapt Enforcement Strategies - to Address the Challenges of Tracing and Recovering Digital Assets? ................. 42 2nd - How Should Courts and Practitioners Adapt Enforcement Strategies - to Address the Challenges of Tracing and Recovering Digital Assets? ................. 47 3rd - How Should Courts and Practitioners Adapt Enforcement Strategies - to Address the Challenges of Tracing and Recovering Digital Assets? ................. 53 How Should Courts and Practitioners Adapt Enforcement Strategies - to Address the Challenges of Tracing and Recovering Digital Assets? ................. 57

020 3997 8527 email Melody

Secure by Design, Broken by Use Why Digital Assets aren’t the Villain ............................ 61

CONTRIBUTORS Joshua Folkard - Twenty Essex Alma Mozetic - Twenty Essex Tom McKernan - PCB Byrne Andrew James - PCB Byrne Zoe Vanhegan - PCB Byrne Abigail Hall - Kingsley Napley Harvey Benjamin-Laing Kingsley Napley Katie Allard - Kingsley Napley Ananta Singh - Kingsley Napley Gary Orritt - Rahman Ravelli Karin Troiani - Payne Hicks Beach Ronghua (Andy) Liao - Han Kun Law Offices Yutong Cai - Han Kun Law Offices Ammar ElBanna - Incept Legal

CONTENTS

Nouran Abdou - Incept Legal Reem Elshazly - Incept Legal Farrah Bassem - Incept Legal Maria de Mudler - ECIJA Nataliya Yankovska - PCB Byrne Catherine Bar - Linklaters Michal Hain - Twenty Essex David Short - Sequor Law Felix Eggenburg - KNOETZL Rhys Evans - Edmonds Marshall McMahon Matthew Purcell - Saunders Law Hudson Brewer - ABC4 Georgina Sundown - ABC4 Yelda Ismail - ThoughtLeaders4 Sam Biggerstaff - ABC4 Sarah Willshee - ABC4 Lucy Burrows - ABC4

How Should Courts and Practitioners Adapt Enforcement Strategies - to Address the Challenges of Tracing and Recovering Digital Assets? ................. 65 The Future of Digital Asset Recovery and Enforcement ............................................................ 69 Closing the Gap - Enhancing Enforcement Strategies for Digital Assets . ........................................ 73

| ABC4 | AI, Automation, and You The Skills That Won’t Be Replaced .............................. 80 Your Professional Brand How to Stay Visible and Valuable ................................. 82 60 Seconds With... Sam Biggerstaff ............................. 84 Creating Environments Where Different Talents Thrive ..................................... 85 The Modern Talent Equation Skills, Culture, and Alignment . ..................................... 87

Fraud. Insolvency. Recovery. Enforcement. The global Asset Recovery community bringing together key practitioners across contentious insolvency, fraud litigation and international enforcement.

Upcoming Events: FIRE Starters: Global Summit - Dublin 25-27 February 2026 | Conrad Hotel, Dublin, Ireland FIRE & ICE Circle Europe 10-11 March 2026 | Le Mirador Resort & Spa, Vevey, Switzerland FIRE Starters: After Work @ The Pub 26 March 2026 | London, UK FIRE Starters Stroll 16 April 2026 | Chancery Lane, London, UK FIRE International: Vilamoura 19-21 May 2026 | EPIC SANA Algarve Hotel, Vilamoura, Portugal FIRE Channel Islands & Isle of Man 16-17 June 2026 | Jersey, Channel Islands Asset Recovery & Enforcement Circle 8-9 September 2026 | Cambridge, UK Women in FIRE presents: Asset Recovery in Action 30 September 2026 | London, UK FIRE Middle East 9 November 2026 | Dubai, UAE FIRE Asia Circle 23-24 November 2026 | Malaysia

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LETTER TO THE EDITOR

ThoughtLeaders4 FIRE Magazine • ISSUE 24

DEBARRING ORDERS IN ENGLISH AND BRITISH VIRGIN ISLANDS COURTS

Authored by: Joshua Folkard (Barrister) & Alma Mozetic (Barrister) - Twenty Essex

Introduction

Legal Basis in England

A debarring order is a sanction for failure to comply with a rule or court order (for example, a disclosure order) restricting a defaulting party’s right to defend the proceedings. It is likely only appropriate for “a serious and deliberate breach”1. It can be granted with immediate effect or (as is more common) following breach of an unless order, i.e. a conditional order under which the defaulting party has a specified period of time to comply with an obligation.

A debarring order forms part of an English and Welsh court’s general case management powers in Part 3 of the Civil Procedure Rules (“CPR”)2. The court has discretion which it must exercise justly and proportionately, bearing in mind factors including the seriousness of the breach, the extent if at all to which it is excusable and the consequences of the breach3. Specific factors arise in the context of debarring orders for failure to pay costs orders4.

Effect The key principles as to the effect of debarring orders are helpfully set out in Times Travel (UK) Ltd v Pakistan International Airlines Corp [2019] EWHC 3732 (Ch) at [55]5. Subject to its precise terms, a debarring order generally restricts the defendant’s right to

participate in the hearing6. This means that the defendant may not be permitted to make submissions, adduce evidence, or cross-examine witnesses7. The court retains a residual discretion, which is narrow, to permit the defendant to take some part in the trial, e.g. to permit limited submissions or cross-examination8, although the circumstances in which such discretion is warranted do not appear to be entirely settled9. The court can consider whether to exercise its discretion on an application for relief from sanctions10. Two further principles of note emerge from case law. First, rather than issuing a full debarring order the court can tailor it to the default, by debarring the defendant in relation to issues connected solely to the default

1 Byers v Samba Financial Group [2020] EWHC 853 (Ch) (“Byers”) [120], [122]-[123]. 2 See Times Travel (UK) Ltd v Pakistan International Airlines Corp [2019] EWHC 3732 (Ch) (“Times Travel”) [55(4)]. 3 Byers [123]; White Book 2024, Vol. 1 (“WB”) § 3.1.14.7. 4 WB §§ 3.1.14.8 and 44.7.1; Michael Wilson & Partners Ltd v Sinclair [2017] EWHC 2424 (Comm), [2017] 5 Costs LR 877 [29]. 5 And which have been restated since: see e.g. Al Saud v Gibbs [2023] EWHC 3111 (Comm), [2024] 4 WLR 18 (“Al Saud”) [9]. 6 Times Travel [55(1)-(2)]; WB § 29.9.2. 7 Times Travel [55(2)]; WB § 29.9.2. 8 Times Travel [55(3)-(4)]. 9 Contrast e.g. MMD Mining Machinery Developments Ltd v Lang [2021] EWHC 3264 (Comm) [9]-[13] with Financial Conduct Authority v London Property Investments [2022] EWHC 1041 (Ch) (“FCA v London Property Investments”) [44]-[52]. 10 See e.g. Times Travel [55(5)]; Al Saud [3].

ThoughtLeaders4 FIRE Magazine • ISSUE 24

(e.g. preventing submissions or crossexamination in relation to documents that have not been disclosed)11. Second, the debarred defendant does not appear to be permitted to advance positive defence(s),12 but the claimant must still prove every fact upon which their case depends13 and the court remains entitled to take into account the defence (including any admissions that the debarred defendant has made) for the purposes of understanding the particulars of claim and the statement of case as a whole14.

ebarring Orders D and Appeals

ii) Hirachand v Hirachand [2021] EWCA Civ 1498; [2022] 1 WLR 1162 & [2024] UKSC 43; [2025] 2 WLR 51 were appeals by a debarred defendant from the English Family Division, in which a debarring order had been made for failure to file an Acknowledgement of Service under CPR 8.4- 8.6:15 see [2021] EWCA Civ 1498 [8]-[18]. iii) In a decision refusing leave to appeal from the English High Court to Court of Appeal, Proudman J stated that Counsel for a debarred respondent/applicant for permission to appeal had “rightly said” that the debarring order “would not prevent [her] from pointing out a manifest error in the judgment [emphasis added]”: Hall v Elia [2016] EWHC 1697 (Ch) [26].

A. English Position It might be assumed that a defendant which is debarred from defending a claim at trial would be unable to mount a similar defence on appeal. Recently in Barclay Pharmaceuticals Limited v Antoine Mekni [2025] EWHC 1219 (Comm) Henshaw J stated (apparently obiter) at [15] that: “It seems to me that a debarring order must also preclude appeals on grounds that would, if made at first instance, have been barred”. However, such a firm view does not appear to have been taken consistently under English law: i) In Thevarajah v Riordan, an order was made stating that “the First, Second and Fourth Defendants shall be debarred from defending the Applicant’s claim and any Defence that they might have filed is struck out”: see [2013] EWHC 3179 (Ch) [17]. A subsequent first-instance decision allowing relief from sanctions in respect of the debarring order ([2013] EWHC 3179 (Ch) [61]) was successfully appealed to the English Court of Appeal by the non-debarred claimant: [2014] EWCA Civ 14; [2014] CP Rep 19. The defendants were later heard by the United Kingdom Supreme Court ([2015] UKSC 78) on an appeal from the English Court of Appeal’s decision.

LETTER TO THE EDITOR

B. British Virgin Islands Position

Tactical Considerations Debarring orders can be a powerful tool to prevent a trial going ahead on an unequal or unfair basis: for example, the trial of civil fraud claim(s) where the defendant has refused to disclose relevant documents. However, the practicalities and tactics of a trial under such conditions should be carefully considered. For example, to prevent the debarred defendant from subsequently appealing the judgment on the basis that the first-instance judge had made errors of law in relation to debarred matters, the claimant may nonetheless wish to bring to the judge’s attention certain substantive points made in the Defence (including potentially adverse authorities). This could prevent a favourable first instance win from ultimately amounting to a pyrrhic victory.

In BVIHCMAP2021/0024 Oscar Trustee Limited v MBS Software Solutions Limited an Appellant was debarred for non-payment of an interim payment on account of costs of summary judgment and forum challenge applications at first instance: see [8]. The Eastern Caribbean Court of Appeal (the “ECCA”) reasoned that the Appellant should similarly be debarred from participating in the proceedings on appeal: at [49] (Pereira CJ). In BVIHCMAP2024/0023 Carlos Ghosn v Nissan Motor Co Ltd et al (in which one of the authors was instructed as Junior Counsel), submissions were made to the ECCA that a broadly worded debarring order made at first instance itself barred any participation on an appeal; alternatively participation to the extent that would be inconsistent with the original debarring order. In the event, however, Mr Ghosn’s appeal was struck out on an additional basis relied upon.

11 Byers [128], [131]. 12 FCA v London Property Investments [48]. 13 WB § 29.9.2. 14 Times Travel [55(6)]; [64]; see also Thevarajah v Riordan [2015] EWCA Civ 41, [2015] CP Rep 19 [33]-[34]. 15 The precise sanction provided for by CPR 8.4(2) is that “[t]he defendant may attend the hearing of the claim but may not take part in the hearing unless the court gives permission”.

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ThoughtLeaders4 FIRE Magazine • ISSUE 24

FULL DISCLOSURE: THE TORT OF BRIBERY AND DISHONEST ASSISTANCE

Authored by: Tom McKernan (Partner), Andrew James (Legal Advisor), Zoe Vanhegan (Associate) - PCB Byrne

Introduction The Supreme Court’s judgment in Hopcraft v Close Brothers Ltd [2025] 3 W.L.R. 42 was awaited with no small amount of anxiety by lenders in the car finance industry. Whilst the worstcase scenario of extensive PPI-style compensation schemes anticipated in the mainstream press never came to pass, the judgment nevertheless makes essential reading for fraud practitioners. We analyse below the SC’s detailed consideration of the nature of fiduciary duties, including how and in what circumstances they arise, and the liability of payers of bribes both under the common law tort of bribery and in equity as dishonest assistants.

disclosure was only to the effect that a commission of an unidentifiable amount might be paid. Each of the three Claimants brought claims against the Defendants founded in, inter alia, the tort of bribery. Two Claimants also alleged dishonest assistance.

Background The SC heard three conjoined appeals in Hopcraft. In each case, Claimant purchasers of cars on credit had approached car dealers who arranged offers of finance from the Defendant lenders on hire purchase terms. The Claimants subsequently obtained credit from the Defendants. However, it was agreed that commissions would be paid to the dealers in recognition of the introduction of the hire purchase business. This was either undisclosed to the Claimants entirely or the

Fiduciary Duty or Disinterested Duty? It is well-established that to give rise to a claim against a payer for dishonest assistance the breach must be of a fiduciary duty, and that a claim to recover against a bribe payer is parasitic on a breach of duty owed by the recipient of the bribe to the claimant. However, what breach of duty is necessary to found the common law claim?

The SC in Hopcraft confirmed that, to engage the tort of bribery, the breach must be fiduciary in nature [288]. In so doing, it overturned the decision in Wood v Commercial First Business Ltd [2022] Ch 123 (followed in the court below) regarding the sufficiency of a “disinterested” duty. As the SC summarised, a “disinterested” duty is one falling short of being fiduciary, to perform a service in a manner independent from any personal interest [7]. Wood had led to a dissatisfactory line of authority that a “disinterested” duty was sufficient to engage the tort of bribery. As developed below, the removal of this lower bar and conceptually unclear duty must be right. The SC proceeded to find that the relationship between the dealers and the Claimants was not fiduciary, allowing the lenders’ appeal on this point. The SC noted the importance of not implying fiduciary obligations into a commercial relationship too readily, thereby distorting the parties’ bargain [102]; it dismissed suggestions that (i) trust and confidence or (ii) dependency or vulnerability were indicative of fiduciary relationships [282]-[283]. Therefore, it was relevant that the dealers had been pursuing their own commercial objectives and were “free to pursue [their] own interests at arm’s length” [277]-[280].

ThoughtLeaders4 FIRE Magazine • ISSUE 24

Breach: A Requirement of Secrecy? It is trite law that fiduciaries owe onerous duties, including to act in accordance with the no conflict and no profit rules ([210]-[211]). As the SC emphasised, the duty of loyalty and the no conflict rule is the ‘defining characteristic of a bribe’ [187]. Conflict and breach occur once a bribe is paid and received by the fiduciary. That is all; there is no requirement to demonstrate the fiduciary was induced to act differently by the payment of the bribe. The necessary corollary is therefore that where a payment is disclosed by the fiduciary to its principal there is no breach. In the words of Chitty LJ in Shipway v Broadwood [1899] 1 QB 369, 373, bribery’s

‘real evil is not the payment of money but the secrecy attending it’. The question of breach is therefore reduced to whether sufficient disclosure of the commission has been given (and consent obtained). The CA in Hurstanger Ltd v Wilson [2007] 1 WLR 2351 introduced a distinction between the disclosure required at common law and in equity. Tuckey LJ held that informed consent for the purposes of equity was “the full knowledge of all the material circumstances and of the nature and extent of the (agent’s) interest” [34]. This drew on the classic statement of Sir George Jessel MR in Dunne v English (1874) LR 18 Eq 524 that “for reasons of policy [the fiduciary] must not only put the principal on inquiry but must give him full information and make full disclosure” (p.535). However, turning to the common law tort of bribery, Tuckey LJ held that partial disclosure was sufficient to exclude liability [39]; for example, where a principal is informed that a commission may be paid but not the exact amount of that commission. This gave rise to a distinction between the secret commission actionable at both equity and common law and the half-secret commission actionable only in equity.

At first instance in Hopcraft, it was found that signing but not reading a document stating

dishonesty separately and there is an irrebuttable presumption that the agent was influenced by the bribe.

“we may receive a commission from the product provider”

In Hurstanger, the CA had justified the distinction between a secret and half-secret commission on the basis that a half-secret commission did not reach the requisite level of secrecy to attract the draconian consequences of a finding of fraud at common law [39]. It considered though that partial disclosure should not relieve the payer of the equitable consequences of their assistance in a breach of fiduciary duty. The submission that Hurstanger had created a new form of equitable liability - that was primary, based on procuration not assistance, and did not require dishonesty – was rejected in Expert Tooling v Engie Power [2025] EWCA Civ 292 [82]; Snowden LJ pointed out the different juridical bases between a claim against a fiduciary who is in essence strictly liable for receiving a half-secret commission absent consent of the principal and a claim against an accessory, which is not subject to the same strict duties and liabilities as a fiduciary [167]-[168].

[42] removed all secrecy (or halfsecrecy) [48]. The Defendant lenders, relying on Hurstanger, alleged that being told that a commission “may” be paid was sufficient to render a payment not secret, such that the tort of bribery will not bite [61]. It was not necessary for the SC to make a finding regarding informed consent. However, it stated that the tort of bribery is engaged where the principal has not given “fully informed consent” [288], i.e. where there has not been full disclosure. This effectively brings the common law tort of bribery in line with the equitable principles. Once the SC had confirmed the necessity of the agent having a fiduciary duty to give rise to a tort claim in bribery, it is perhaps unsurprising that they would also seek to align the standard of disclosure required to avoid breach of that duty at both equity and common law. This avoided there being a lesser requirement of disclosure for a commission-payer in common law than in equity (which would have been unheard of [222]). Informed consent is a long-established principle at equity and there is no justification for a different standard to apply in cases of bribery.

The Requirement for Dishonesty, a Strict Liability Tort? Hopcraft represents a significant convergence between key principles regarding the bribe payer’s primary liability under the tort of bribery and its accessory liability in equity in dishonest assistance. Both now depend on the bribe recipient owing fiduciary duties to their principal, and anything short of full disclosure of the commission will entail breach of those duties. However, important differences remain.

The effect of Hopcraft having done away with all such distinctions is that a form of strict liability is now imposed on the commission payer at common law. In some respects, the differences between common law and equitable principles may not be significant, since breach of fiduciary duty and dishonest assistance are more broadly applied concepts than the tort of bribery, and in true bribery cases there is likely to be little difficulty in proving the requisite dishonesty and loss required by equity. Given its equitable roots, long-standing existence, and strong policy reasons in favour of Claimants, perhaps it is unsurprising that the tort of bribery is being approached with such severity. However, for lenders, sellers or other payers of commissions to intermediaries the message is clear: the only defence is full disclosure.

Firstly, at common law the claimant can take advantage of the irrebuttable presumption of loss in the sum of the bribe whereas in equity loss must be proved against the dishonest assistant. Secondly, accessory liability for breach of fiduciary duty requires the claimant to show that the defendant’s conduct was dishonest and materially assisted in the breach of fiduciary duty. On the other hand, so far as primary liability in tort is concerned there is no need to prove

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ThoughtLeaders4 FIRE Magazine • ISSUE 24

ARENA TELEVISION RED FLAGS, AUTHORITY AND THE BOUNDARIES OF BANK DUTIES

Authored by: Abigail Hall (Senior Associate) & Harvey Benjamin-Laing (Trainee Solicitor) - Kingsley Napley Since the Supreme Court decision in Philipp v Barclays Bank UK PLC [2023] UKSC 25 victims of fraud involving authorised push payments or the making of fraudulent payments by directors have been grappling with issues of what claims might be available against transmitting and recipient banks. A bank’s primary obligation is to comply with its mandate to follow its customer’s instructions. However, the case of Barclays Bank plc v Quincecare [1992] 4 ALL ER indicated that there was an obligation on banks to refuse to execute any payment instruction received from an agent of its customer if there were reasonable grounds to believe that the transaction could involve a misappropriation of client funds by the agent. Where reasonable grounds exist, a bank is required to make inquiries to verify the agent’s authority to give the payment instruction and, if it fails to do so, it could be in breach of duty if the instruction was in fact made without its customer’s authority.

Development of the Doctrine The ‘Quincecare duty’, as it came to be referred to, most commonly arises in corporate situations where payment instructions come from company agents or directors. Crucially, the duty does not transform bankers into fraud investigators. A useful clarification of the duty came from the Supreme Court in Philipp v Barclays Bank UK PLC [2023] UKSC 25. The Court confirmed that the scope of the Quincecare duty is not limited to companies but covers any situation where one person is authorised to instruct the bank on behalf of another. The Court made clear, however, that the duty does not apply where the customer themselves gives a clear and valid payment instruction. The bank is not required to second guess that instruction. The Supreme Court’s decision confirmed that the Quincecare duty is simply part of the

bank’s obligation to comply with its mandate and does not operate to shield customers from authorised push payment fraud (commonly known as “APP fraud”).

Arena Television and Sentinel Broadcast The recent decision in Arena Television Ltd (in Liquidation) v Bank of Scotland Plc & Lloyds Bank Plc and Sentinel Broadcast Ltd (in Administration) v Lloyds Bank Plc [2025] EWHC 3036 (Comm) is one of the first judgments to consider the Quincecare duty following

ThoughtLeaders4 FIRE Magazine • ISSUE 24 the Supreme Court’s decision in Philipp. The Court refused applications by the banks to strike out or obtain summary judgment on the Quincecare claim brought by the liquidators of Arena Television (“Arena”) and Sentinel Broadcast (“Sentinel”) in a case said to be worth a combined total of over £1.2 billion. By way of background, Arena and its parent company, both in liquidation, allege that their former directors orchestrated a large-scale fraud involving an asset-backed lending scheme secured against broadcast equipment that never existed. Over an extended period, Arena’s directors instructed the banks to process substantial payments through the companies’ accounts allegedly to perpetuate the fraud. The directors fled abroad when the scheme collapsed and no recoveries have been made. Arena’s liquidators claimed against the banks for wrongfully executing payment instructions by the directors, and Sentinel claimed against Lloyds Bank for processing repayment instructions for payments back to Arena.

The Quincecare Arguments in this Case The claimants contend that there were a number of red flags that should have prompted a reasonably

skilful and careful banker to make inquiries into whether the transactions were authorised by their customers, particularly at crucial moments such as when fresh credit was requested or when the accounts became overdrawn. For example, the claimants say that the banks should have noticed that the manner and volume of the payments being made were inconsistent with Arena’s legitimate commercial activity, and that substantial payments were going out of Arena’s accounts for the personal benefit of the directors. The claimants argue that the payments instructions were not authorised by the company, as a director’s actual authority is limited to actions taken honestly and in pursuit of the companies’ interests. Consequently, any instructions intended to perpetrate fraud would fall outside of their actual authority. The banks applied to strike out the claim or obtain summary judgment on the basis that the majority of the payment instructions (excluding those made to the directors personally) were made with actual authority. They argue that as the claimants were companies, they could only act through human agents. If the companies’ business included making profit by defrauding third parties, then that business was in fact authorised bv the company, and therefore the payments were made with actual authority.

The Quincecare Duty Decision The judgment is clear that the purpose of the Quincecare duty is to avoid unauthorised payments. Unless a specific contract or relationship between the parties takes it outside of the norm, then the scope of the duty is limited to compliance with the banks’ mandates in terms of protecting the customer from unauthorised payments (and could potentially extend to consequential losses such as interest or overdraft fees). Notably, the Court held that the duty does not extend to protecting the customer against authorised payments out of the account, or the consequences of transactions with third parties which the customer entered into but would not have happened if the bank had suspended the account whilst it carried out inquiries. The Court concluded that the matter of whether or not the directors acted with actual authority, and whether the fraudulent scheme took them outside of that authority, were matters for trial and were not suitable for summary judgment. Further, it held that the question of whether the banks breached their Quincecare duty is arguable on the facts of the case and can proceed to trial.

Conclusion The ultimate outcome in this case will provide useful practical guidance for fraud practitioners on what kinds of red flags are sufficient to put a bank ‘on inquiry.’ The questions of compliance with the mandate, the proper exercise of authority and the extent of that authority will also be of interest to anyone acting for claimant victims and the fact sensitive nature of those questions means that this is likely to remain a highly contested area.

ThoughtLeaders4 FIRE Magazine • ISSUE 24

CREDIT SUISSE LIFE LTD VS IVANISHVILI

RELIANCE IN DECEIT WITHOUT CONSCIOUS AWARENESS Authored by: Katie Allard (Senior Associate) & Ananta Singh (Legal Apprentice) - Kingsley Napley The tort of deceit requires a claimant to establish that the defendant made a false representation knowingly or recklessly, that the claimant relied on that representation, and that the reliance caused loss. Of these elements, reliance has traditionally posed particular difficulty in cases involving implied representations arising from professional conduct or long running advisory relationships. Historically, courts have often approached reliance by asking whether the claimant was consciously aware of, and understood, the representation said to have induced the relevant decision. That approach has imposed a heavy evidential burden, particularly where the representation is implied rather than express, and where it forms part of the background within which complex financial decisions are made.

existed at all, but in treating the reconstruction of conscious awareness as a necessary legal requirement rather than an evidential question.

In such cases, claimants have been required to reconstruct their internal reasoning and identify the precise point at which an assumption was consciously formed. The difficulty lies not in accepting that such assumptions

Background

The Privy Council’s recent decision in Credit Suisse Life Ltd v Ivanishvili [2025] UKPC 53 marks a significant recalibration of this approach and clarifies how reliance is to be analysed in deceit claims. In this landmark case, the Privy Council overturned previous authorities and confirmed that a claimant need only show that the defendant’s conduct induced a belief or assumption which materially influenced their decision and resulting loss. Conscious awareness is no longer a prerequisite. The focus now falls on causation, aligning the law more closely with how commercial decision‑making operates in practice.

The proceedings were initiated in Bermuda and involved Credit Suisse Life Ltd (CS Life), a Bermudian insurance company within the

Credit Suisse group, and Mr Bidzina Ivanishvili, the former Georgian Prime Minister. In 2011 and 2012, Mr Ivanishvili was advised to restructure some investments into two substantial life insurance policies with CS Life with premiums exceeding US$750 million. However, the relationship manager at Credit Suisse, Patrice Lescaudron, misappropriated assets, transferring them at inflated values and arranging investments to generate secret commissions for himself. His misconduct was discovered in 2015, and he was later convicted in Switzerland. Mr Ivanishvili and his family members brought claims against CS Life for breach of contract, breach of fiduciary duty and fraudulent misrepresentation (deceit). They succeeded and the Chief Justice of Bermuda awarded them US$607million. On appeal, the Bermuda Court of Appeal upheld the findings on contract, fiduciary duty and quantum, but allowed CS Life’s appeal

ThoughtLeaders4 FIRE Magazine • ISSUE 24 on deceit. The Court of Appeal held that Mr Ivanishvili had failed to prove reliance because he had not shown conscious awareness of the implied representation that the assets would be managed honestly and in accordance with the relevant mandate.

Both sides appealed to the Privy Council.

The Privy Council explained that the correct focus is on causation. For a court to find reliance for the purposes of deceit, it must be satisfied that: (i) the defendant’s representation caused the claimant to adopt a false belief or assumption; and (ii) that false belief or assumption caused the claimant to act in a way which resulted in loss. The claimant’s awareness or understanding of the representation may be relevant evidence in some cases, but it is not a standalone legal requirement. Lord Leggatt noted that previous authorities mistakenly elevated the need to show understanding of a representation from an evidential issue into a rule of law. Awareness becomes relevant only where a representation is ambiguous and capable of more than one meaning, only one of which is false.

The Decision The Privy Council dismissed all but one of CS Life’s grounds of appeal and upheld the US$607 million award, subject to a re assessment of damages. In doing so, it clarified several matters of wider importance, including the proper analysis of reliance in the tort of deceit.

The Privy Council also rejected the argument that a conscious awareness requirement is needed to distinguish misrepresentation from non‑disclosure. The distinction turns on whether the defendant caused the claimant’s false belief, not on whether the claimant can identify having consciously noticed the representation.

Firstly, the Privy Council confirmed that a life insurer entrusted with managing assets pursuant to an investment mandate is directly obliged to comply with that mandate. Under the policy terms, CS Life was required to invest the policy assets in accordance with the selected mandate, and that obligation was breached when investments were made dishonestly and without proper authority. Secondly, and most significantly for deceit, the Privy Council rejected the Court of Appeal’s conclusion that Mr Ivanishvili could not establish reliance because he had not proved conscious awareness of an implied representation. The court held that, for the purposes of the tort of deceit, a claimant need not demonstrate that they consciously recognised or articulated the representation at the time of acting. It is sufficient to show that the defendant’s conduct caused the claimant to adopt a false belief or assumption which materially influenced their decision and led to loss. In this case, Mr Lescaudron’s recommendations in 2011 and 2012 carried an implied representation that the policy assets would be managed honestly and in accordance with the agreed mandate, an assurance that proved false and which induced the assumption on which Mr Ivanishvili chose to invest.

Implications of this Decision The Privy Council’s decision in Credit Suisse Life Ltd v Ivanishvili marks a major and claimant friendly shift in the law of deceit. Historically, claimants were required to prove conscious awareness and understanding of the representation said to have induced their decision, an evidential burden that was especially onerous in cases involving implied representations, professional conduct, or complex advisory relationships.

themselves in a position of undisclosed conflict. Those assumptions may be induced by conduct rather than by express statements, and they do not always crystallise into consciously articulated thoughts. The Privy Council has confirmed that it is sufficient to show that the defendant’s conduct induced a belief or assumption which materially influenced the claimant’s decisions and resulting loss. By centring the analysis on causation rather than cognition, the Privy Council has aligned the law of deceit more closely with commercial reality. For claimants, the judgment opens meaningful practical opportunities. It removes a rigid evidential barrier and allows them to frame deceit claims around clear commercial assumptions, such as the expectation that assets will be managed honestly and in accordance with an established mandate, without needing to pinpoint the exact moment those assumptions were consciously recognised. The focus now lies on demonstrating that the defendant’s behaviour caused the claimant to adopt a false belief, and that this belief drove the decision that led to loss. Nonetheless, the decision does not eliminate all challenges. Claimants must still clearly identify the alleged implied representation, the assumption it induced, and the causal link to their loss. Ambiguous representations require careful handling, including evidence of the meaning the claimant understood them to carry. Even though Privy Council rulings are not formally binding on the Courts of England and Wales, its reasoning is highly persuasive and is likely to shape the development of misrepresentation and deceit claims. For claimants, the focus now lies on evidencing how the defendant’s conduct caused them to act on a false assumption, rather than on reconstructing conscious understanding of an implied representation.

The decision recognises that, in financial and fiduciary contexts, claimants commonly proceed on assumptions such as that an adviser is complying with an agreed mandate, acting honestly, and not placing

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ThoughtLeaders4 FIRE Magazine • ISSUE 24

THE MAREVA INJUNCTION

IS IT TIME FOR REFORM? Authored by: Gary Orritt (Legal Director) - Rahman Ravelli On 20 November 2025, Lord Justice Popplewell delivered a lecture at Inner Temple entitled “The Mareva at 50: a midlife crisis?”

The objective of this speech was to explore the two key questions set out above, and what could be done. In particular:

avoid dissipation of a defendant’s assets pending final judgment. Marevas are a key part of a civil fraud litigator’s toolkit.

After describing the Mareva injunction as “a remarkable creation of the common law”, and taking the audience through its evolution over the last 50 years, Popplewell LJ poses whether:

1. Should the merits test meet a higher threshold?

Popplewell LJ emphasised that describing Marevas as ‘freezing orders’ “risk[s] confusion”. Freezing orders also encompass proprietary injunctions, to which different considerations apply.

1. they are now granted too readily; and 2. whether such orders operate unfairly on defendants. After all, they were once described by Donaldson LJ as one of the law’s two “nuclear weapons”. The speech highlighted that, at the point of their origin, Marevas targeted bank accounts in straightforward shipping cases. Now, they are not only used in ever more complex disputes across a variety of fields, but with cross-border issues and across several asset classes. Popplewell LJ asserted that they had “become far more extensive and intrusive” than was first anticipated.

2. Should ‘nefarious intent’ by a defendant be necessary when considering the risk of dissipation? 3. For asset disclosure orders, should nefarious intent cases be dealt with differently to those which lack such evidence? Should independent third party solicitors ‘police’ disclosure rather than claimants?

The speech examined three of the key requirements of the exercise of the Mareva jurisdiction: • The merits test • Risk of dissipation

What is a Mareva Injunction?

• Disclosure of assets

In general, a Mareva injunction is a type of freezing injunction which targets assets at large up to the value of the claimant’s likely claim (i.e. rather than a specific asset to which the claimant claims ownership). It is designed to

The merits test is that of a ‘good arguable case’ (the so-called Niedersachsen test). This is a case more than barely capable of serious argument, yet not necessarily one which the judge believes to have better

The Merits Test

ThoughtLeaders4 FIRE Magazine • ISSUE 24 than 50% chance of success.1 That apparently settled position was briefly thrown into recent doubt by authorities suggesting the threshold might be higher than understood. Was it in line with how the ‘good arguable case’ phrase is interpreted in jurisdiction cases (i.e. who has the better of the case)? No – the Court of Appeal cleared that up in late 2024 in Dos Santos2. Popplewell LJ suggests, as he said in Dos Santos, that the gateway test ought to align with other interim injunctions, namely a ‘serious issue to be tried’. Appreciating that this might “rarely [make] a difference to the outcome”, the speech wonders whether the test ought to be “dialled up considerably from the Niedersachsen test”.

Real Risk of Dissipation On this issue, Popplewell LJ highlights the courts’ move away from the need for “nefarious intent” when considering the risk that a defendant might dissipate their assets. He stated that it is however often overlooked that the dissipation must nevertheless be unjustified. The objective of a Mareva is not to provide security to a claimant for their prospective claim, but to avoid a defendant “dealing with, or concealing, assets otherwise than as they normally (and lawfully) would”, which is, ultimately, an evasion of justice. In this passage, Popplewell LJ gave illustrative examples (including a roundthe-world tour by a retired individual, which had already been in mind) to query whether Marevas should prevent a defendant from dealing with their assets as they had intended. In other words, in a manner that did not have its purpose grounded in evading justice. Noting that the Angel Bell carve-out for corporate defendants is construed narrowly3, that it does not apply to individuals and the burden of proof is on defendants, Popplewell LJ asks whether nefarious intent ought to be added into the criteria when considering the issue of risk of dissipation.

Popplewell LJ recognises that England and Wales is an attractive forum due to the wide availability of relief. On the other hand, if rules are oppressive towards defendants, this might mean that this jurisdiction is not chosen as the seat for governing law in contracts. Popplewell LJ suggests that it may be time to consider reform. This seems to envisage a reformulation, rather than an incremental development. As he puts it, the reform may look like a

Disclosure of Assets On asset disclosure orders, Popplewell LJ states that these can be the most onerous aspect of Marevas. They must be dealt with in short order, which is practically challenging for defendants who must scramble for legal advice, and in the face of the threat of criminal sanctions. Popplewell LJ describes undesirable side effects of this regime, whereby the disclosure requirement can be “weaponised” by claimants, and they receive information and documentation which, it may turn out, they ought not to have. Two key suggestions then, are first, whether ‘nefarious intent’ cases should be treated differently from those where there is no evidence to support such intent. Second, whether disclosure provided should be in the hands of an independent third party solicitor, rather than the claimant, alike to how search orders operate.

“more radical shot of Mounjaro rather than slow dietary trimming on a meal by meal, case by case, basis.” With that, he wonders whether now is a good time for a

“comprehensive reexamination of the Mareva jurisdiction involving widespread involvement and consultation amongst representatives from the judiciary, practitioners, academics and users”.

Reform The Mareva injunction has been described as an “ever-burgeoning forensic weapon” and it has been developed on a piecemeal basis, largely at first instance and in the Court of Appeal. There is arguably a lack of Supreme Court or Privy Council authority.

1 2 3

Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft mbH und Co KG (The Niedersachsen) [1984] 1 All E.R. 398, 404D. Dos Santos v Unitel S.A. [2024] EWCA Civ 1109 Which permits dealings in the ordinary course of business.

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ThoughtLeaders4 FIRE Magazine • ISSUE 24

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ThoughtLeaders4 FIRE Magazine • ISSUE 24

WAIVER BY ELECTION WHY “CARRYING ON” MAY NOT KILL A TERMINATION RIGHT YOU DIDN’T REALISE YOU HAD - URE ENERGY LTD V NOTTING HILL GENESIS [2025] EWCA CIV 1407

Authored by: Karin Troiani (Associate) - Payne Hicks Beach its winding up”, expressly including amalgamation, unless a solvent amalgamation had been approved in advance by URE.

In URE Energy Ltd v Notting Hill Genesis the Court of Appeal (Lord Justice Males delivering the leading judgment) dismissed NHG’s appeal and upheld URE’s entitlement to a substantial contractual termination payment, holding that a party does not waive a right to terminate if it carries on performing without realising that the contract actually gives it that termination right. The decision is a useful modern restatement of the doctrine of waiver by election and its limits. It also offers a practical warning for commercial parties: in complex agreements with multiple termination triggers, “continuing to perform” may look like affirmation, but looks can be deceiving where the decision-maker did not appreciate the legal right that had arisen.

The Dispute in Outline The dispute arose out of a four-year electricity supply agreement in the social housing sector. URE Energy Ltd (“URE”) was the supplier. Genesis Housing Association (“Genesis”) was the customer. The contract contained a number of termination rights, one of which permitted termination by URE if Genesis passed “a resolution for

In April 2018, Genesis proceeded with an amalgamation which resulted in Notting Hill Genesis (“NHG”). URE was notified and aware of the amalgamation but not that it gave it the right to terminate. For seven months, URE continued to supply. Only later, after taking legal advice, did URE give notice terminating and claiming a termination payment under the contract, which was ultimately assessed at about £3.95m. NHG defended the claim on, among other bases, the proposition that URE had waived its termination right by continuing to perform with knowledge of the amalgamation and in doing so had elected to keep the contract alive, and could not later terminate.

ThoughtLeaders4 FIRE Magazine • ISSUE 24

The Doctrinal Battleground: What Knowledge is Required? Election is a doctrine that polices a choice between inconsistent rights: broadly, once a party chooses one of two inconsistent positions (for example, to affirm rather than to terminate), the other is lost. But election has been tied to knowledge. The question in URE Energy was not whether URE knew about the amalgamation but whether, for an election to arise, URE also had to know that the amalgamation gave it a contractual right to terminate. The High Court applied the principles of waiver by election set out in Peyman v Lanjani [1985] Ch 457, which establish that a party is not deemed to have elected unless it is aware of both the relevant facts and its right to choose. On the evidence, the Court concluded that URE’s decision-maker, Mr Ensor, was unaware of the contractual right to terminate following the amalgamation, until he obtained legal advice in November 2018. On appeal, NHG was unable to overturn that finding of fact. Its challenge was instead framed as a legal one: it contended that where a termination right is expressly set out in a contract, a party should be taken to have knowledge of it. NHG argued that parties should be held to their contractual agreements; that commercial certainty requires such rights not to be obscured by assertions of ignorance; and that, in any event, the wording was clear and unequivocal.

The Court of Appeal’s Approach The Court of Appeal treated the required knowledge as a matter of principle and precedent, not instinct. It accepted that URE’s post-amalgamation conduct, viewed objectively, might have looked

like affirmation. But the trial judge had found that Mr Ensor only realised in November 2018 that the amalgamation triggered a termination right. That finding was decisive. Applying Peyman, the court held that there was no election in law before URE acquired actual awareness of the termination right. The appeal therefore failed on the principal point that waiver by election requires knowledge of the legal right, and that requirement applies even where the right arises under an express contractual clause and not just at common law. Importantly, the Court rejected the proposed rule of “deemed knowledge” for election. While parties are bound by the contracts they sign, the Court held it is a step too far to treat commercial actors as knowing every termination trigger in a sophisticated agreement. Its reasoning was both doctrinal and practical: complex contracts evolve and are administered by different people over time, so a fiction of universal awareness is not a sound basis for stripping accrued rights. That said, the Court did not suggest that pleas of ignorance will always be easy to run. It recognised that where a party has legal advice, there can be a rebuttable presumption that it is aware of its rights. But it treated that as a factual inference, not an inflexible rule, and, on the evidence, the presumption was rebutted. Likewise, the Court distinguished genuine ignorance from “blind eye” conduct, noting that the trial judge had made findings inconsistent with any deliberate avoidance. Finally, the judgment also underlines the practical distinction between election and estoppel. Election turns on knowledge and unequivocal conduct. Estoppel, by contrast, turns on representation and detrimental reliance, which NHG had not been able to prove.

Key Takeaways The judgment offers some practical lessons. When a corporate restructuring or similar event occurs, parties should identify any termination triggers promptly and not assume that continued performance amounts to a waiver; the key question is what the relevant decision-maker knew, and when. Knowledge will often turn on the evidence and internal documents such as board minutes and correspondence, and the existence and handling of legal advice (including any privilege issues), may be decisive as any presumption of knowledge can be rebutted. Finally, it is important to keep the doctrines separate: if election cannot be made out because knowledge is missing, estoppel will still require proof of detrimental reliance, which may be difficult where the counterparty’s position would have been unaffected. To many lawyers, URE Energy may feel counter-intuitive; a party that knows of an amalgamation, supplies for months, and then terminates could be perceived as opportunistic. The Court of Appeal’s message is that election is not a moral instinct; it is a structured doctrine with defined pre-conditions. If the law is to deprive a party of valuable contractual rights, it will insist on proof that the party made a knowing choice. In complex commercial agreements, that difference between “knew the facts” and “knew the right” can be worth close to £4 million. To seek advice on commercial litigation, please contact Lucas Moore or Karin Troiani, or alternatively, telephone on 020 7465 4300.

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ThoughtLeaders4 FIRE Magazine • ISSUE 24

TRACING AND FREEZING

TOOLS AND STRATEGIES FOR ASSET RECOVERY IN CHINA Authored by: Ronghua (Andy) Liao (Partner) & Yutong Cai (Associate) - Han Kun Law Offices In an era of globalized finance, the cross-border flow of capital often presents a complex challenge for creditors and victims of fraud who seek to recover their assets. China is often a critical link within these capital flows— whether as a transit point, a settlement hub, or where the asset proceeds are ultimately held. This article provides a practical analysis of the most important tools for civil asset recovery in China, outlining their procedural stages, inherent challenges, and strategic considerations for effective asset tracing and recovery, especially for foreign parties.

Property Preservation China’s property preservation system is a critical pre-emptive mechanism designed to prevent defendants and debtors from dissipating assets. 1. Pre-litigation Preservation is available before filing a lawsuit or arbitration, normally requiring 100% security (e.g., cash or insurance), and the court typically approves the application and issues a preservation order within 48 hours. In practice, applicants face a high burden to secure a prelitigation preservation order, and this burden is often impracticably high for foreign parties who would seek to obtain this relief in connection with a cross-border dispute. 2. Preservation in Litigation is applicable after case acceptance but before a judgment is issued. At present, pre-litigation and litigation preservation in China

are increasingly consolidated into a single process. In practice, plaintiff-applicants typically submit preservation applications alongside case filings, and courts synchronise these procedures so they remain aligned. However, courts ensure that preservation orders are executed before notifying the defendant-debtor of the litigation. 3. Pre-enforcement Preservation is a post-judgment but preenforcement measure to block asset dissipation. All three preservation measures across the phases of litigation may be automatically converted as the case progresses. Understanding the court’s internal workflow is essential to ensure assets are preserved and to increase the chances for recovery. China’s court structure comprises a casefiling division, a trial division and an enforcement division. Procedurally,

ThoughtLeaders4 FIRE Magazine • ISSUE 24 applicants need to file preservation applications and litigation documents with the case-filing division. The case-filing division and the trial division conducts a perfunctory review and typically issues a ruling on the preservation application within five days. Once the application is approved, the preservation order will generally be transferred to the enforcement division for execution.

3,900 banking institutions, enabling queries of 25 items across 16 asset categories (real estate, deposits, vessels, vehicles, securities, online funds, etc.). The system effectively covers the principal forms of defendantdebtors’ assets and related information. However, in practice, only a few courts proactively make property enquiries by using the system. Most courts wait until the post-judgment phase.

Security is mandatory. While an applicant can post a bond

In the absence of clear evidence or the court’s use of the online execution, enquiry, and control system, practitioners often rely on a targeted tool to obtain information: the lawyer investigation order.

(often around 30% of the assets for litigation preservation) a widely used alternative is litigation liability insurance purchased from a commercial insurer. The insurer will assess the case risk, review the facts and reasons, and generally charge a premium of 4-8 basis points depending on the amount to be preserved. For foreign parties, the main barrier to obtaining a preservation order is often the ability to file timely. For litigation preservation, the court usually takes a perfunctory review, focusing on whether the filing conditions are satisfied. Under the PRC Civil Procedure Law, these conditions include: (i) that the applicant has a direct interest in the assets to be preserved; (ii) a specific defendant is identified; (iii) the application is made based on specified claims with a factual basis and legal grounds; and (iv) the court holds jurisdiction to issue the order. In cross-border cases, a practical impediment is often precisely identifying the defendant whose identity is unknown. Furthermore, a foreign party acting as plaintiff must have its capacity and powers of attorney notarised and legalised before filing, so the filing itself requires notarisation and legalisation, which will further delay any subsequent preservation application. To execute a preservation order, the applicant typically must submit evidence that clearly identifies the location of the assets subject to the order. By law, when an applicant cannot provide clear evidence due to objective reasons, he may file an enquiry application with relevant information so that the execution court may trace and control the assets subject to preservation via the online execution, enquiry, and control system. The online execution, enquiry, and control system is established by the Supreme People’s Court, interconnecting with 16 national entities (Ministry of Public Security, PBOC, CSRC, etc.) and more than

Lawyer Investigation Orders In China, the primary method for investigating a party’s assets and evidence in civil litigation and enforcement proceedings is through the use of a lawyer’s investigation order. This legal instrument allows attorneys to collect evidence and asset information from relevant entities or individuals, subject to court approval. An investigation order is typically predicated on initiating a lawsuit or applying for enforcement.

transactions, real estate, vehicles, securities and government bonds, corporate financial records (tax filings, audit reports, invoicing details at State Taxation Bureaus), Alipay/WeChat Pay account balances and transaction histories, personal social insurance, housing provident funds, pension, medical insurance, funeral subsidies, condolence payments. While the investigation order is a vital tool for asset investigation in China, its effectiveness is sometimes hindered by inconsistent compliance from institutions and the absence of unified national legislation. However, enterprises such as banks often refuse to comply with these orders and may delay on purpose or refuse to provide requested information, citing client confidentiality concerns or lack of binding national legislation. If the party under an obligation to assist in investigation and execution refuses to cooperate with or that obstruct the investigation, the court may, in addition to ordering it to perform its assistance obligation, impose a fine. Attorneys are advised to document any refusal to cooperate, including obtaining written explanations and official stamps from the non-compliant entities, and report these instances to the court for potential enforcement actions. In conclusion, while China does not provide for broad common-law style discovery, the country’s legal system offers a distinct set of tools, procedures and judicial orders, that can provide creditors and victims of fraud with powerful leverage to seek the recovery of assets; however, these tools must understood and navigated strategically.

Currently, the investigation order is not codified in national legislation but is governed by local judicial regulations issued by various provincial and municipal high courts. As a result, specific procedures for an investigation order vary among courts and subject matters. For instance, in some cases, a single practicing lawyer can apply, while in others, two practicing lawyers are required. It is generally necessary to communicate with the court and the entity being investigated beforehand to confirm formatting, scope, and handling. Under an investigation order, attorneys can request access to various types of information, including: bank

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ThoughtLeaders4 FIRE Magazine • ISSUE 24

LOST IN THE BLOCKCHAIN

PRACTICAL LEGAL STRATEGIES FOR TRACING AND RECOVERING DIGITAL ASSETS Authored by: Ammar ElBanna (Founder & Managing Partner), Nouran Abdou (Associate), Reem Elshazly (Associate) & Farrah Bassem (Associate) - Incept Legal Digital assets have emerged as a distinct class of property, combining technological, commercial, and legal characteristics that differentiate them from conventional banked or tangible assets. They exist in electronic form, recorded on distributed ledgers or comparable systems, and are capable of being controlled, transferred, and often traced on-chain, albeit with significant legal limitations in relation to enforcement and recovery. The growing adoption of digital assets in commerce and finance brings substantial benefits, such as fractional ownership, increased liquidity, and rapid settlement. At the same time, it introduces operational and legal challenges that arise from their identity hidden nature, technological complexity, and cross-border mobility. These challenges are particularly acute in contexts involving fraud, insolvency, or enforcement, where control and recoverability may depend on access to private keys, cooperation from intermediaries, and the ability to trace value across multiple platforms. This article analyses digital assets from two complementary perspectives: • fi rst, the commercial and operational mechanisms that enable their creation, transfer, and utilisation; and • s econd, the legal and enforcement considerations that inform tracing, securing, and recovering such assets.

Many digital assets take the form of “tokens” created through tokenisation, which means representing an asset or right digitally. Tokenisation can allow things like fractional ownership, easier transfer, and increased liquidity.

1. Definition of Digital Assets A digital asset is a nonphysical asset that exists in electronic form. It is made up of digital information or data that can be identified, controlled, owned, and transferred. Its value comes from that control, or from rights connected to it. In simple terms, a digital asset is an electronic record that can be controlled by one person at a time, usually through encryption keys (private cryptographic keys). It is often recorded on a blockchain or another distributed ledger system. Whoever controls the private key generally controls the asset, including the ability to transfer it and prevent others from using it. Digital assets may represent either: • v alue in themselves, such as cryptocurrencies used for payment or investment; or • r ights or interests in an underlying asset, whether tangible (such as real estate, commodities, or artwork) or intangible (such as equity, debt claims, intellectual property, or contractual rights).

However, not every electronic record is a digital asset. The key feature is exclusive control, normally through private keys. Also, information linked to a digital asset (such as metadata, images, or content) may be separate from the asset itself and may still be governed by other laws, including intellectual property law. Due to the fact that blockchain systems use wallet addresses rather than real names, digital assets are often identity-hidden. This can make enforcement and recovery more challenging, even where the transactions can be traced on the chain.

2. Types of Digital Assets Digital assets may be classified according to their function, underlying value, and regulatory treatment into: • Crypto-assets, which are digital stores of value or mediums of exchange recorded on blockchain or other distributed ledger, and typically used for investment, payments, or project funding. • Stablecoins, which are designed to maintain price stability by linking their value to fiat currencies, commodities, or other crypto-assets, and are commonly used for payments and cross-border transfers.

ThoughtLeaders4 FIRE Magazine • ISSUE 24 • Non-Fungible Tokens, which are unique, non-interchangeable tokens representing control or ownership of specific digital or tokenised items, and are used for identity verification, access control, supply chain tracking, and ownership of virtual assets. • Utility Tokens, which grant access to services or functionalities within a digital platform and derive value from use rather than investment. • Central Bank Digital Currencies, which are state-issued digital representations of fiat currency used for domestic and cross-border payments. • Security Tokens, which are digital representations of regulated financial instruments such as equity, debt, or tokenised real-world assets, and are subject to securities laws.

3. How Digital Assets Operate in Practice

providing a transparent history that prevents double-spending or fraudulent claims of ownership. In practice, digital assets are not only stored and exchanged but can also be used across a wide ecosystem of applications. Users can interact with their assets through apps, marketplaces, decentralised finance (“DeFi”) platforms, games, and other decentralised applications. This functionality is organised in layers; the underlying blockchain (Layer 1) maintains the ledger and transaction rules, Layer 2 solutions improve transaction speed and reduce costs, and the functional layer provides tools and applications that enable viewing, trading, spending, or utilising the assets. Through these layers, digital assets can power financial operations like automated lending or insurance, enable access and ownership verification in virtual and physical spaces, and facilitate exchanges in both digital and real-world marketplaces.

Digital assets operate through a combination of blockchain technology, cryptographic keys, and digital wallets, forming a secure and decentralised ecosystem for ownership, transfer, and use. A digital asset is created or “minted” when new information is added to a blockchain, effectively recording the existence of the asset on a public, shared ledger. This ledger functions as a secure and permanent record of all digital assets and their ownership history, ensuring that every transaction can be verified without relying on a central authority. Once minted, a digital asset exists digitally and can be controlled, transferred, or exchanged by the holder of the corresponding private cryptographic key, which acts as proof of ownership and authorisation to make transactions. Control over a digital asset is maintained through these cryptographic keys, which are typically stored securely in digital wallets. The private key allows the owner to sign transactions that move or transfer the asset, while the public key serves as a unique identifier on the blockchain, allowing anyone to verify ownership without compromising security. This system ensures that the asset can be securely exchanged or used in applications without the risk of unauthorised access, as the blockchain automatically validates every transaction according to its protocol rules. Transfers are recorded immediately on the blockchain,

helps investigators group related wallets and track the likely flow of funds. Where crypto has been mixed or pooled with other funds, tracing becomes more complicated. Different tracing approaches may be used depending on the facts. A useful example is the English High Court’s 2024 decision in D’Aloia v Persons Unknown. The court made it clear that experts must identify the tracing method they rely on and apply it consistently. In that case, the expert said they were using FIFO (First In, First Out- a tracing approach that assumes the earliest funds deposited are the first funds withdrawn), but then applied it inconsistently. This weakened the tracing evidence and ultimately undermined the claim. Tracing also depends on the type of digital asset involved. Some tokens keep a clear identity as they move between wallets, which makes them easier to follow. Others are designed so that tokens are “burned” and recreated during transfers, meaning you can only trace value, not the exact token itself. In D’Aloia, the court also confirmed that stablecoins such as USDT can amount to property capable of being held on trust and traced. However, where stablecoins have been mixed with other funds, recovery often depends on equitable tracing principles and remedies.

4. Tracing Digital Assets Tracing digital assets poses distinct legal and technical difficulties arising from the hidden identity, borderless, and decentralised nature of blockchain systems. Although blockchain transactions are transparent and permanently recorded, turning that data into court tracing evidence is often difficult and is materially different from tracing traditional assets.

4.1. Tracing Methodologies Digital asset tracing usually starts with one simple exercise: following the money on the blockchain. Investigators review blockchain transaction records to understand how value moved from one wallet to another. In practice, they often use specialist blockchain analytics tools that map wallets and transactions visually (as a network). These tools also apply practical indicators to assess whether multiple wallet addresses may be controlled by the same person. This

4.2. Key Challenges in Digital Asset Tracing Several obstacles complicate enforcement efforts and effective tracing. For example, mixing services and tumblers deliberately break the link between incoming and outgoing transactions by pooling and redistributing funds. Following major sanctions against high-profile mixers, sophisticated operators increasingly use cross-chain bridges to transfer funds between unrelated blockchain networks, severing continuity of on-chain tracing. Moreover, privacy-enhanced cryptocurrencies use techniques including ring signatures and zeroknowledge proofs to obscure transaction details. Identifying fund movements within such systems often becomes speculative. Courts have therefore required investigators to terminate tracing at the point assets enter privacy tools or to explicitly qualify any further analysis as uncertain. DeFi also makes tracing harder. In many DeFi platforms, assets are pooled together and traded automatically, so

ThoughtLeaders4 FIRE Magazine • ISSUE 24 funds from many users get mixed. Even though transactions are visible on-chain, it can still be difficult to link the funds to a specific wallet or user. This becomes even more complex when funds move across different blockchains. Centralised exchanges create similar issues. They often hold customer funds in shared wallets. As a result, even if you can trace funds to an exchange wallet on-chain, confirming which customer account received the funds usually requires the exchange’s internal records, which are typically only available through cooperation or court orders. Identity attribution remains a fundamental obstacle. Blockchain addresses are identity hidden and linking them to real individuals requires Know Your Client data, exchange disclosures, IP analysis, or behavioural intelligence. Courts have responded by broadening available remedies. Singaporean courts, for instance, have issued proprietary injunctions, worldwide freezing orders, and disclosure orders against unknown persons, recognising the ease with which assets can be moved. In Cheong Jun Yoong v Three Arrows Capital Ltd, the Singapore High Court held that a cryptoasset’s “location” is the place of residence of the private key controller. In Fantom Foundation Ltd v Multichain Foundation Ltd, the court accepted flexible valuation approaches due to cryptocurrency volatility.

5. Enforcement Strategies against Digital Assets 5.1. Applying Traditional Enforcement Frameworks to Digital Assets One of the main strategies for enforcement against digital assets is to rely on existing general enforcement laws as the primary framework. Specific enforcement measures should be

introduced only in limited cases, for particular subclasses of digital assets, where the standard procedures are insufficient to address the unique characteristics of the assets. This approach ensures that enforcement remains consistent, effective, and aligned with established legal principles, while allowing for targeted adaptations when necessary.

5.2. Leveraging Debtor and Third-Party Cooperation for Effective Enforcement Securing the cooperation of debtors in disclosing information is key enforcement strategy for digital assets. It is necessary to identify, locate, and access their assets. Debtors should be compelled to provide all relevant details, including facilitating access to devices, accounts, or systems, to enable the seizure, transfer, or disposition of assets. Where the technological complexity of the assets exceeds ordinary capabilities, enforcement authorities should engage technical experts to ensure full compliance with disclosure obligations.

5.3. Cross-Border Coordination in Digital Asset Enforcement An effective enforcement strategy is to recognise and adapt to the diverse and international nature of digital assets. Given their broad spectrum, each asset type possesses unique operational features, which requires enforcement approaches to take into account these distinctions. Enforcement efforts should prioritise cross-border coordination, including the recognition of foreign orders and collaboration with international authorities. By integrating knowledge of foreign legal frameworks and harmonising procedures where possible, authorities can ensure that enforcement actions are effective, efficient, and legally enforceable across jurisdictions.

5.4. Securing Effective Access and Control Over Digital Assets Ensuring that enforcement authorities are legally empowered to obtain effective access to the assets is critical in digital asset proceedings. Such access should be reserved exclusively for enforcement agents authorised under national law and exercised only for the execution of valid and legally recognised enforcement instruments. Enforcement must adapt to the manner in which digital assets are held, enabling authorities to obtain necessary information from debtors and, where required, compel asset transfers.

6. Conclusion Digital assets sit at the crossroads of technology, business, and law. Their decentralised structure and reliance on encryption allow new ways to own and transfer value, but they also create real challenges when it comes to tracing and enforcement. Recovering digital assets usually requires a coordinated approach, combining strong forensic tracing, cooperation from the debtor and relevant intermediaries, and legal tools that are tailored to the type of asset involved. Courts in a number of jurisdictions have accepted that existing enforcement rules can also be used against digital assets. However, success often depends on getting the tracing right, showing clearly who controls the asset, and dealing with the technology and cross-border issues involved. As digital assets continue to develop, businesses and lawyers need to stay alert to the risks and keep up with new tools and best practices, so that these assets can be identified, recovered, and enforced through the courts.

Sources: • ELI Principles and Guidance for Enforcement Against Digital Assets – European Law Institute - 2025: https://www. europeanlawinstitute.eu/fileadmin/user_upload/p_eli/Projects/ Access_to_Digital_Assets/ELI_Principles_and_Guidance_for_ Enforcement_Against_Digital_Assets.pdf • The Emergence of Principles and Best Practices on Digital Assets: Proprietary Rights, and Enforcement - 2024: https:// www.cambridge.org/core/services/aop-cambridge-core/content/view/ B4DE880068B9292E7F2164715827067C/S1867299X24000552a. pdf/the-emergence-of-principles-and-best-practices-on-digital-assetsproprietary-rights-and-enforcement.pdf • D’Aloia v. Persons Unknown & Others: Victim of CryptoFraud Fails in Claim Against Crypto Exchange – 2024: https:// uklitigation.cooley.com/daloia-v-persons-unknown-others-victim-ofcrypto-fraud-fails-in-claim-against-crypto-exchange/ • D’Aloia v. Persons Unknown & Others [2024] EWHC 2342 – 2024: https://www.bailii.org/ew/cases/EWHC/Ch/2024/2342.html

• PwC, Digital Assets – an emerging trend in capital markets – 2022: https://www.pwc.com/ng/en/assets/pdf/digital-assets.pdf

• Lost in the Blockchain: Asset Tracing and Recovery of Cryptocurrency: D’Aloia v Persons Unknown Category A & Ors [2024] EWHC 2342 (Ch) (12) – 2024: https://www.edwincoe. com/blogs/lost-in-the-blockchain-asset-tracing-and-recovery-ofcryptocurrency-daloia-v-persons-unknown-category-a-ors-2024ewhc-2342-ch-12/

• Vanuatu Financial Services Commission, What are Digital Assets? – 2023: https://www.vfsc.vu/wp-content/uploads/2025/07/ Digital-Assets-Virtual-Assets.pdf

• International Fraud & Asset Tracing 2025, Singapore – 2025: https://practiceguides.chambers.com/practice-guides/internationalfraud-asset-tracing-2025/singapore/trends-and-developments

• Digital Assets and Cryptocurrency – 2022: https://www. jerseyfinance.com/wp-content/uploads/2020/09/JFL-Digital-AssetsCryptocurrency-Put-Simply.pdf

• Cheong Jun Yoong v Three Arrows Capital Ltd and Others [2024] SGHC 21 – 2024: https://www.elitigation.sg/gd/s/2024_SGHC_21

• UNIDROIT Principles on Digital Assets and Private Law – 2023: https://www.unidroit.org/wp-content/uploads/2024/01/Principles-onDigital-Assets-and-Private-Law-linked-1.pdf

• Fantom Foundation Ltd v Multichain Foundation Ltd and Another [2024] SGHC 173 – 2024: https://www.elitigation.sg/ gd/s/2024_SGHC_173 • BBVA, Definitions and Digital Assets Risk Disclosure – 2022: https://www.bbva.ch/en/content/dam/public-web/suiza/ documents/legal/spanish/terminos-y-condiciones-new-gen-/ AssetsRiskdisclosure_SP.pdf

• PwC, Demystifying cryptocurrency and digital assets: https:// www.pwc.com/us/en/tech-effect/emerging-tech/understandingcryptocurrency-digital-assets.html

ThoughtLeaders4 FIRE Magazine • ISSUE 24

INTERIM MEASURES IN SPAIN FOR FOREIGN INSOLVENCY PROCEEDINGS

A FOCUS ON NON-EU CASES Authored by: Maria de Mudler (Manager) - ECIJA When a foreign insolvency proceeding has a nexus with Spain, such as assets or key third parties located there, it is often crucial to swiftly adopt protective relief under Spanish law to preserve value and prevent frustration of the foreign main proceeding.

For EU Member State proceedings (except Denmark, where EU civil judicial cooperation regulations do not automatically apply), Regulation (EU) 2015/848 provides a predictable framework. Automatic recognition allows for swift protective measures in Spain without an exequatur, a sharp contrast to the treatment of non-EU insolvencies.

Applicable Legal Framework in Spain for Non-EU Insolvency Proceedings Mechanisms under Spanish law that support non-EU insolvencies rely on

three key sources, whose combined interpretation can be complex. First, the Civil Procedure Act of 2000 (Ley de Enjuiciamiento Civil) provides the general procedural framework for interim measures. It establishes a non-exhaustive list of measures suited to insolvency needs, such as asset and bank account attachments, prohibitions on disposing of property, judicial administration of productive units, and other asset preservation measures. It also sets the standard requirements: an appearance of a meritorious claim (fumus boni iuris), a risk of irreparable harm (periculum in mora), and a security bond. The Act also allows interim relief for foreign litigation or arbitration, enabling crossborder protection without a Spanish main proceeding. Second, the International Legal Cooperation Act of 2015 (Ley de cooperación jurídica internacional) governs the recognition and enforcement (exequatur) of foreign judgments and interim measures, including their adaptation to Spanish law. This statute is

ThoughtLeaders4 FIRE Magazine • ISSUE 24 key to determining the effects of foreign insolvency decisions in Spain. Third, the Spanish Insolvency Act of 2020 (Texto Refundido de la Ley Concursal) governs the recognition of foreign insolvency proceedings. Because this legislation is recent, there are issues on which the courts have not yet ruled, creating some interpretative uncertainty. Article 748 of the Insolvency Act outlines two scenarios for interim measures. First, a foreign court’s interim measures can be recognised and enforced in Spain through an exequatur proceeding under the International Legal Cooperation Act of 2015. Second, a foreign representative can request protective measures in Spain before the foreign proceeding is recognised, provided that the application for recognition is filed within 20 business days. The Insolvency Act adds specific measures to those in the Civil Procedure Act: (i) a stay on enforcement against Spanish assets; (ii) administration of perishable assets by the foreign insolvency administrator; and (iii) suspension of the debtor’s power to dispose of or encumber its assets. These measures can be requested inaudita altera parte (without hearing the defendant), or after an urgent hearing with the defendant where evidence can be presented.

Interim Measures against Third Parties: Incidental Recognition as a Procedural Tool Commonly, such measures are sought not against the debtor but against third parties in actions to recover funds or enforce director liability. A foreign

insolvency administrator may seek these measures in Spain before or with such claims, typically to prevent asset dissipation by related parties. However, for the insolvency administrator to do so, prior recognition of the foreign insolvency proceeding is required. This raises a central procedural question: whether Spanish courts may incidentally recognise a foreign insolvency proceeding for the sole purpose of granting protective relief and bringing actions against third parties. The issue is particularly relevant where a full exequatur proceeding would be disproportionate or too timeconsuming for the limited purpose pursued. The objective is not to obtain full (erga omnes) recognition of the foreign proceeding through exequatur, but rather an incidental form of recognition. This limited recognition is sufficient to confer standing on the foreign insolvency administrator to exercise specific powers in Spain for the purposes of the relevant proceedings, subject to Spanish public policy and without producing effects beyond those proceedings.

mechanism prior to commencing judicial proceedings, subject to certain exceptions. Accordingly, the 20-business-day period for filing the principal claim runs not from the granting of such measures, but from the conclusion of the pre-action negotiation.

Conclusion In conclusion, Spanish law provides a coherent framework for interim measures supporting non-EU foreign insolvencies. Its effectiveness depends on the careful articulation between protective relief and recognition of the foreign proceeding. Incidental recognition emerges as a functional tool for foreign representatives to act in Spain for limited purposes, subject to public policy constraints. This approach strikes a balance between procedural efficiency and legal certainty, offering a pragmatic and proportionate solution for cross-border insolvency practitioners operating in non-EU contexts.

While the Insolvency Act does not regulate incidental recognition in detail, merely providing that the court hearing the main case is competent to decide, Article 44.2 of the International Legal Cooperation Act expressly authorises such incidental recognition, provided that the statutory requirements for recognition are met. Moreover, the Explanatory Memorandum to the International Legal Cooperation Act clarifies that the incidental issue in Article 44.2 refers to a sui generis incident, distinct from the incidental proceedings governed by the Civil Procedure Act, which presuppose an already ongoing proceeding. In this case, recognition is raised together with the principal claim through a request for interim measures, or through an application for such measures prior to the filing of the principal claim, thereby allowing for a swifter and more streamlined resolution by treating recognition as a prerequisite for granting or dismissing that request. If an application for protective measures precedes a claim against third parties, the mandatory pre-action negotiation introduced in 2025 as a prerequisite for filing a claim must be taken into account. This requirement obliges the claimant to attempt an appropriate alternative dispute resolution

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ISSUE 24 - FEB 2026

STARTERS

MAGAZINE Fraud • Insolvency • Recovery • Enforcement

FUTURE THOUGHT LEADERS page by page towards tomorrow

5th Edition: Future Thought Leaders Essay Competition A FIRE Starters Global Summit Special Edition

FUTURE THOUGHT LEADERS ESSAY COMPETITION OUR STORY We at ThoughtLeaders4 are serious about providing opportunities to up-and-coming practitioners specialising in Asset Recovery, Fraud, Insolvency and Enforcement. We strongly believe that the next generation of practitioners should write, speak and attend events to build networks and further their careers. With this in mind, we proudly present the 5th Edition of our Future Thought Leaders Essay Competition. Assessed by an illustrious, highly experienced, and diverse panel of senior practitioners, this was our entrants’ chance to stand out and establish themselves as ones to watch. With the opportunity to attend and speak at the FIRE Starters Global Summit in Dublin, as well as attend FIRE International in Vilamoura, we were delighted to welcome our entrants into the FIRE Starters Community.

THE BRIEF Essay Title: How should courts and practitioners adapt enforcement strategies to address the challenges of tracing and recovering digital assets? The rise of digital assets has transformed financial markets and commercial transactions, introducing complex challenges for enforcement. From tracing cryptocurrencies across borders to recovering assets hidden in decentralised systems, courts and practitioners are confronted with questions that existing legal frameworks were never designed to answer. This essay competition invites participants to explore how enforcement strategies must evolve to meet the realities of digital assets. Essays may consider the role of courts, regulators, and practitioners in adapting established tools, as well as the potential for new remedies, crossborder cooperation, and technological innovation. Participants are encouraged to examine the legal, practical, and jurisdictional hurdles that arise in tracing and recovering digital assets, while envisioning a future enforcement landscape that can both safeguard victims and support innovation in this fast-moving area.

JUDGING PANEL Ammar El Banna Founder and Managing Partner Incept Legal (UAE) Ammar is the Founder and the Managing Partner of Incept Legal with offices in Dubai and Cairo. He brings 17 years of outstanding legal experience in the Middle East. He also worked at international firms, notably Stephenson Harwood (“SH”), and have advised and acted for multinational corporate clients and high-net-worth clients across contentious and non-contentious matters including clients in management consultancy, oil and gas, insurance, health and pharmaceutical, real estate development, government bodies, industrial, hospitality, media, entertainments, banks, payment solutions and finance. Before joining SH, Ammar worked over nine years with Hadef & Partners.

Rebecca McNulty Partner Ogier (Jersey) Rebecca is a partner and Advocate in Ogier’s Dispute Resolution team, based in Jersey. She specialises in commercial litigation and has significant experience across a broad range of commercial litigation matters, trust and estate disputes, cross border insolvency, insurance related disputes and judicial review proceedings. Combining technical excellence with a pragmatic, solutions driven approach, Rebecca provides clear guidance in even the most challenging disputes, working with domestic and international clients on sensitive, high-value matters.

William Christopher Partner Kingsley Napley William is a partner in Kingsley Napley’s Dispute Resolution team, based in London. He deals mainly with civil fraud litigation and asset recovery. William is recognised in Lexology Index as Recommended in Investigations, Recommended in Asset Recovery, and is ranked as a Thought Leader in GIR – Asset Recovery. William has specialised in commercial litigation with a particular focus on civil fraud actions since he qualified. He has extensive and wideranging litigation experience, having acted in cases involving contractual disputes, breach of fiduciary duty, breach of trust, and insolvencyrelated litigation. William is listed in the global directory Lexology Index (formerly Who’s Who Legal), and is ranked in Chambers and Partners and The Legal 500.

James Popperwell Partner Macfarlanes (UK) James specialises in the management of complex, international disputes in state courts and arbitration, often involving parallel proceedings in different jurisdictions. James has particular experience in civil fraud, corporate and shareholder disputes, insolvency and finance disputes. James’ work often involves obtaining or challenging interim relief of various kinds obtained in support of court or arbitral proceedings, including worldwide freezing orders, and dealing with jurisdiction challenges. James is a recognised leading lawyer for his work in asset recovery and enforcement. He is often instructed on disputes that intersect with criminal or regulatory investigations or proceedings. James has an intricate knowledge of litigation and legal assets financing and has advised on the structuring of some of the most innovative financing arrangements in recent years.

Joseph Rome Attorney Sequor Law (USA) Joseph Rome, a partner at Sequor Law, focuses his practice on international arbitration and litigation, judgment and arbitral award collection, asset recovery, corruption and proceeds of crime recovery, and financial fraud. Prior to joining Sequor Law, Joseph was an “A” level prosecutor for the Miami-Dade State Attorney’s Office focusing primarily on attempted murders, gun crimes, and serious sexual assaults from the investigation stage through trial. He was also a member of the Police Accountability and Integrity Task Force, Hate Crimes Unit, and Traffic Homicide Unit.

Blair Leahy KC Barrister Twenty Essex Blair has a broad commercial practice with an emphasis on complex multi-jurisdictional fraud claims and disputes with technical insolvency or company law aspects. She is ranked across all her main practice areas in the latest editions of Chambers UK Bar and The Legal 500, and prior to taking silk, won Insolvency Junior of the Year at The Legal 500 UK Bar Awards 2019. She is described in the directories as “all-round excellent” and receives particular praise for her court room skills (“her advocacy is on another level”) and “amazingly good judgment”. Blair advises and represents clients in both domestic and international court and arbitration proceedings. Her overseas practice includes Cayman, BVI, Bermuda, Hong Kong, Singapore, the Isle of Man, Gibraltar and Dubai.

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ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24

HOW SHOULD COURTS AND PRACTITIONERS ADAPT ENFORCEMENT STRATEGIES

TO ADDRESS THE CHALLENGES OF TRACING AND RECOVERING DIGITAL ASSETS? Authored by: Nataliya Yankovska (Associate) - PCB Byrne

Introduction There is no doubt that digital assets are no longer merely peripheral components of the financial ecosystem. In fact, they have become part of corporate workflows, cross-border commercial activities, and daily business operations. However, the attributes that make digital assets so attractive to individuals and businesses alike (speed, decentralisation, and pseudonymity) make it extremely difficult for victims of fraud to locate and recover misappropriated assets. In today’s digital world, where transfers are often made in seconds, wallets more often than not do not correspond to specific individuals, and most systems lack a central authority that can reverse

[1965] 1 AC 1175.

AA v Persons Unknown [2019] EWHC 3556 (Comm).

[2024] EWHC 2342 (Ch).

[2024] EWHC 1198 (Ch).

transactions, courts and practitioners are faced with a significant challenge in applying established principles of property, equitable tracing, and evidence in a landscape fundamentally different from the quintessential banking environment in which those legal principles were originally established. Nevertheless, English courts have demonstrated remarkable adaptability in handling disputes involving digital property, despite digital assets being a relatively novel concept. It is now a well-established principle that crypto assets such as Bitcoin

“meet the four criteria set out in Lord Wilberforce’s classic definition of property”

in National Provincial Bank v Ainsworth1, a principle that underpins the enforcement of proprietary claims in this area2. Further, several recent cases, including D’Aloia v Persons Unknown3 and Crypto Open Patent Alliance v Craig Steven Wright4, illustrate that familiar doctrines of equity and evidence can be readily applied to digital contexts. Having said that, these judgments also reveal the practical limitations in enforcement strategies, particularly in tracing digital transactions and dealing with evidential complexity. Consequently, this essay will address the doctrinal basis for enforcement and the practical challenges that arise, before moving on to the essay’s primary purpose: how courts and practitioners may adapt their enforcement strategies in light of these circumstances.

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24

Enforcement of Digital Assets: The Foundation It is now firmly established that cryptoassets can attract property rights under English law. As a result of AA v Persons Unknown, Bitcoin was found to meet the criteria in National Provincial Bank v Ainsworth: it is

In combination, these developments provide a coherent framework for applying orthodox proprietary principles to digital assets. As a result, the law has developed the ability to recognise digital tokens as property, to analyse them within familiar boundaries of equitable ownership, and to allow claims to be brought even when the ultimate recipient of the misappropriated asset cannot be determined. What remains challenging, however, is whether existing enforcement mechanisms can keep pace with the technological and evidential realities of digital-asset transfers. By examining the recent decisions in D’Aloia and COPA v Wright, it becomes apparent that this issue is one of the most pressing.

“definable, identifiable by third parties, capable in [its] nature of assumption by third parties, and [has] some degree of permanence.” As a result of this conclusion, practitioners are now able to exercise all of the traditional proprietary remedies, including injunctions, tracing, following, constructive trusts and unjust enrichment claims. The same reasoning was broadly applied in D’Aloia in respect of Tether (USDT). Although USDT is

“neither a chose in action nor a chose in possession, but rather a distinct form of property not premised on an underlying legal right” the Court held that it nevertheless constitutes property. Specifically, its proprietary nature stems from its “transactional functionalities”, particularly the ability of a privatekey holder to effect valid transfers through the system. Notably, the Court confirmed that this proprietary interest attaches to the token itself, not merely to the ability to control it. Therefore, proprietary claims may be brought even against unidentified wrongdoers, provided that the claimant can establish that the misappropriated asset has a sufficiently strong proprietary basis.

D’Aloia v Persons Unknown: Tracing, Evidence, and the Limits of Exchange-Based Enforcement The case of D’Aloia v Persons Unknown illustrates both the strengths and limitations of applying traditional proprietary remedies to digital assets. In this case, the claimant alleged that he had been induced by fraud to transfer substantial amounts of USDT, which were then moved through a series of 14 transactions (hops) before USDT 400,000 reached a Bitkub wallet held by Ms Hlangpan, of which USDT 46,291 was alleged to represent USDT belonging to Mr D’Aloia or “their traceable proceeds”. These funds were then transferred to Bitkub’s hot wallet, converted into fiat currency (Thai Baht) and withdrawn in violation of the daily withdrawal limit. It was held by the Court that USDT falls within the definition of property under English law, that it may be traced, and that in principle, tracing may be carried out through mixed funds. However, the claimant failed, as a matter of evidence, to demonstrate that any of his funds

in fact reached the 82e6 wallet: his expert’s methodology departed from first in, first out principle (FIFO) without a clear, properly evidenced alternative, and no trace was attempted based on Tether Ltd’s own records. A lack of evidential support was fatal to the tracing and unjust enrichment claims, since no evidence of “at the expense of the claimant” and certainty of subject matter could be properly established. The Court acknowledged that a constructive trust arose against the fraudsters when they obtained the claimant’s USDT under the fraudulent td-finan contract, and noted that, if that conclusion had been wrong, the rescission of the fraudulent agreement would have in principle given rise to a constructive trust against them from the date of rescission. Nevertheless, no constructive trust was imposed directly on Bitkub for two decisive reasons. First, the claimant’s tracing analysis was insufficient to establish that Bitkub ever received the claimant’s funds. Further, even if the receipt had been established, the USDT reported to have reached the 82e6 wallet had already been paid out, leaving no remaining asset at Bitkub on which a proprietary constructive trust could be attached. This second difficulty might not have been fatal had the claimant pleaded a knowing receipt claim, but no such claim was advanced. In this regard, D’Aloia highlights the structural reality of digital-asset enforcement: exchanges may be an appropriate enforcement target in principle, but liability relies exclusively on evidential detail and doctrinal accuracy.

COPA v Wright: Evidential Rigour and the Implications of Decentralisation While D’Aloia illustrates the evidential requirements of tracing digital assets, COPA v Wright demonstrates the judiciary’s strict forensic scrutiny of digital records. The COPA v Wright case concerned the authorship of the Bitcoin white paper. In order to determine if Dr Wright was the same person as Satoshi Nakamoto, the Court examined a large amount of digital material. Following Mellor J’s examination of metadata, file histories, and document integrity, it was determined that some documents were fabricated. The rigorous approach to digital evidence is directly relevant to

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 enforcement cases, in which parties must prove the authenticity of their electronic records (arguably to a higher degree than in conventional commercial/ financial disputes). More generally, the technical background explored in COPA v Wright suggests that Bitcoin (and likely similar cryptoassets) operates as a decentralised, peer-to-peer system with no central authority capable of reversing transactions or altering the ledger. From an enforcement perspective, this has important implications. Given that the blockchain itself cannot comply with court orders, remedies will then be typically directed at actors who can comply, such as exchanges, custodians, wallet providers or other intermediaries, rather than at the ledger as an abstract system (which somewhat contradicts D’Aloia’s limitations on who should be pursued).

records, as part of the factual narrative, that the wallet associated with 82e6 belonged to Ms Hlangpan, a Bitkub customer. Furthermore, the judgment does not explain how Bitkub identified the customer behind the 82e6 wallet. However, the fact that the Court discusses Bitkub’s KYC and AML procedures in relation to that account somewhat suggests that the identification was based on information held by the exchange rather than anything visible on the blockchain. This is an inference from the structure of the evidence rather than an express finding of the Court. However, the combination of these points illustrates the inherent difficulty of linking on-chain activities to real-world individuals: D’Aloia’s blockchain record consisted solely of wallet addresses, and any link to human actors was only possible through information outside the ledger.

2. Speed of Movement and Rapid Dissipation

Challenges in Tracing and Recovery Accordingly, it appears that the difficulties associated with enforcing rights in digital assets are not a function of gaps in legal doctrine, but instead of the technological and evidential characteristics of blockchain systems. The recent decisions in D’Aloia and COPA v Wright illustrate four interconnected challenges that courts and practitioners must address.

1. Pseudonymity and the Structure of Blockchain Transactions One challenge highlighted by the evidence structure in D’Aloia concerns how transactions are recorded on the blockchain. There were fourteen sequential “hops” by which USDT was allegedly transferred from the claimant, each described by an alphanumeric wallet address in the evidence. The judgment makes no comment on whether these addresses reveal the identities of their controllers; it simply

The second difficulty is the ease and speed with which digital assets can be transferred, exchanged, and withdrawn. In D’Aloia, once the USDT alleged to include the claimant’s property reached the 82e6 wallet on 21 February 2022, the funds were swiftly swept into a Bitkub hot wallet, converted into Thai baht and withdrawn. By the time the claimant brought proceedings, none of his property was left within the exchange. Consequently, the time window in which effective action could have been taken was reduced by the rapidity with which value was transferred through digital systems.

3. Fragility and Manipulability of Digital Evidence There is an inherent malleability to digital evidence. Documents may be altered, fabricated, or backdated in ways that may escape superficial scrutiny. A striking example can be found in COPA v Wright. Mellor J was required to analyse digital records purportedly predating the Bitcoin white paper and, through meticulous examination of metadata, file histories, and internal inconsistencies, concluded that several documents had been fabricated. It is evident from this case that courts are willing to subject digital materials to rigorous forensic analysis, and that parties cannot assume that electronic evidence will be accepted on its face.

4. Decentralisation and the Limits of Court Orders Finally, the decentralised nature of blockchain systems restricts the scope of available remedies. This means that enforcement can realistically focus only on the practical “choke points” where digital assets interact with identifiable or regulated actors, such as exchanges, custodians, and service providers. Even though this might appear to be incompatible with D’Aloia, the judgment does not actually preclude claimants from targeting exchanges. Instead, it demonstrates that liability occurs only in cases where a claimant can demonstrate, with precision, that the exchange actually received the property, or where a properly pleaded knowing receipt claim (or possibly a claim in dishonest assistance) is made. Additionally, the case illustrates the importance of timing: once assets have been transferred to pooled wallets or withdrawn into fiat currency, the proprietary basis for a claim may be lost, necessitating immediate action before dissipation occurs.

Practical Adaptations for Effective Enforcement Based on the above analysis, it can be concluded that the principles of property, evidence, and equitable tracing are sufficiently flexible to be applied to digital assets. It is, therefore, the practical implementation that poses the most significant challenge.

1. Adaptations for the Courts First of all, there needs to be a better understanding of what constitutes sufficient evidence when it comes to the tracing of digital assets. D’Aloia provides an example of how tracing can fail not because the law’s unable to accommodate digital assets, but because the methodology is inadequately explained or supported. In this context, courts can serve as a

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 source of assistance by articulating, through guidance or Practice Directions, what constitutes an acceptable tracing methodology. For example, the requirement that expert analysis be reproducible, data sources be identified, and methodology be justified in accordance with the token architecture. The scope of disclosure requested from intermediaries should also be subject to judicial adaptation. In digital asset cases, Norwich Pharmacal and Bankers Trust orders are often used to obtain information required to identify wrongdoers or trace assets. However, as D’Aloia illustrates, internal records such as sweep data, violations of withdrawal limits, and compliance team interactions can also be crucial for understanding how assets were moved and managed. Even though the judgment does not specify the form that such orders should take, it demonstrates that effective tracing may require materials that go beyond what is visible on the blockchain. These internal records can fill evidential gaps that on-chain analysis alone cannot resolve, and future procedural guidance, whether through the development of case law or the Civil Procedure Rules, could clarify the types of material that may appropriately be sought in such applications. The third recommendation is for the courts to continue to develop procedural flexibility. For example, in the case of D’Aloia, authorising service through NFT was a logical step because the defendants interacted exclusively through blockchain addresses. Lastly, there is the structural aspect to consider. There are often disputes surrounding digital assets that involve technical concepts, such as hashing, wallet clustering, metadata, and exchange architecture, that would require a certain level of judicial expertise. As with construction or competition disputes, a specialist list or designated judicial panel can assist in developing consistent jurisprudence, improving speed and enabling judges to identify evidential deficiencies early.

result in lost opportunities to preserve assets. Requesting temporary holds or flags via preservation notices can buy practitioners crucial time before obtaining formal relief. Secondly, practitioners should incorporate evidence from issuers whenever possible. In stablecoin cases, the issuer’s internal records are often the most authoritative source of information. The absence of proof from Tether Ltd in D’Aloia was a significant gap. By engaging issuers at an early stage, the tracing analysis can be corroborated, and the risk of evidential collapse reduced. Furthermore, interim relief should be drafted to account for the realities of digital movement. Where assets pass through multiple hops, orders should capture each relevant wallet, not merely the final destination. Ideally, a practitioner should be able to present a coherent narrative that explains how each wallet contributes to the overall flow. In addition, applications directed at exchanges should anticipate that assets may already have been swept into pooled wallets and request the specific records necessary to establish token movements. Fourthly, practitioners should adopt structured practices to preserve digital evidence. Given the scrutiny applied in COPA v Wright, metadata should be preserved, hash values recorded at the earliest possible stage, and all digital materials should be subject to a chain of custody. Using these techniques reduces the likelihood that evidence will be rejected or downweighted.

Conclusion While the enforcement of digital assets is based on familiar legal principles, and practitioners and judges should not be afraid to deal with these disputes, their practical application relies on both adapting judicial processes and professional practice to the realities of blockchain technology. By clarifying evidential standards, directing disclosure, enhancing procedural flexibility, and enhancing technical expertise, the courts will be better equipped to resolve disputes involving digital assets. Consequently, practitioners will be better positioned to act rapidly in developing the case against the “choke point” entities and bringing it to court before assets can no longer be found if they initiate early action (by reaching out to exchanges to establish temporary holds, etc.), integrate tracing strategies, preserve digital evidence carefully, and coordinate internationally. If these adaptations are embraced, enforcement against digital assets can evolve into a natural extension of traditional remedies, capable of meeting the speed, volatility and complexity of modern digital markets while remaining grounded in the enduring principles of English law.

Lastly, although many disputes already involve cross-border elements in their recovery and enforcement, practitioners should adopt an even more international perspective in dealing with digital assets. As digital assets are inherently crossborder in nature, mirror injunctions, disclosure applications, and preservation measures will often require coordination across multiple jurisdictions.

2. Adaptations for Practitioners Practitioners will also need to make appropriate adjustments. The first requirement is the need for parallel tracing workstreams. It is imperative to conduct both on-chain and off-chain investigations simultaneously. Waiting until blockchain analysis is completed before contacting exchanges may

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HOW SHOULD COURTS AND PRACTITIONERS ADAPT ENFORCEMENT STRATEGIES

TO ADDRESS THE CHALLENGES OF TRACING AND RECOVERING DIGITAL ASSETS? Authored by: Catherine Bar - Linklaters

Introduction Digital assets such as cryptocurrencies, tokenised securities, and non-fungible tokens (“NFTs”) have fundamentally reshaped concepts of property, ownership, and financial exchange. Since Bitcoin’s 2009 launch as a “fringe technological experiment”,1 these assets have evolved from speculative novelties into mainstream financial products attracting considerable institutional participation. Yet this proliferation has exposed acute enforcement challenges that conventional frameworks are illequipped to address.2 Traditional enforcement mechanisms presuppose assets with a fixed situs, identifiable intermediaries, and predictable dissipation risks. Digital

assets invert these assumptions: existing on decentralised ledgers, they are controlled through private keys, operate pseudonymously, and can be transferred across borders almost instantaneously. Divergent jurisdictional approaches amplify these challenges, compelling courts and practitioners to reconsider how proprietary remedies and judgment enforcement should function in the digital asset space. Common law courts and civil law legislators have reacted incrementally. Jurisprudence in the UK and abroad has recognised digital assets as property and extended proprietary remedies into cyberspace.3 These developments, while significant, remain piecemeal. Substantial doctrinal, procedural, and technological gaps persist.

This paper argues for a reconceptualisation of digital asset enforcement, moving beyond territorially anchored concepts of property and jurisdiction to a framework based on functional enforceability. Recovery mechanisms should prioritise the locus of practical control as the determinative factor for cryptoasset treatment, jurisdictional allocation, and remedial design. To that end, a tripartite framework for reform is proposed: (1) legislative and regulatory clarity concerning asset classification, custodial obligations, and enforcement powers; (2) systemic cooperation and adapted cross-border recognition tools; and (3) enhanced technological capabilities, including analyticsbased tracing and refined evidential standards.4

1 Max Wadington, ‘The Maturation of Digital Assets’ (Fidelity, 9 October 2025) <https://www.fidelitydigitalassets.com/research-and-insights/maturation-digital-assets> accessed 22 November 2025. 2 Enforcement is the practical application of a court’s ruling or judgment. 3 See, for example, AA v Persons Unknown [2019], Ion Science v Persons Unknown [2020], and Fetch.AI v Persons Unknown [2021]. 4 Methodologically, this paper adopts a doctrinal and comparative approach by analysing judicial decisions, statutory reforms, and regulatory initiatives across leading jurisdictions to

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Unique Challenges of Digital Asset Enforcement Digital assets possess structural features that destabilise traditional enforcement paradigms. Determining jurisdiction, and therefore the applicable lex situs and enforcement regime, is particularly contested.5 As decentralised ledger technology distributes tokens across a global network, digital assets effectively exist “nowhere and everywhere at the same time”.6 This decentralisation undermines asset localisation theory, which assumes property rights are territorially anchored.7 Automatically treating the private key holder’s domicile as situs risks incoherence where practical control lies elsewhere. Recent decisions, including Tai Mo Shan Ltd v Persons Unknown [2024], illustrate a functional turn in judicial

reasoning.8 As Keay (2020) warns, absent a harmonised localisation principle or functional substitute, courts risk inconsistent determinations of governing law and value distribution in cross-border disputes.9 Predictably, jurisdictions diverge when deciding on artificial situs: some locate digital assets at the private key holder’s domicile,10 others by reference to the exchange’s registration, and some treat tokens as effectively delocalised.11 This fragmentation complicates private international law remedies,12 demonstrating that recovery depends (beyond recognition) on actionable enforcement across borders.13 Blockchain’s pseudonymity compounds these difficulties. Ownership is tied to control of alphanumeric wallet addresses accessed by private keys.14 Although major cryptocurrencies such as Bitcoin and Ethereum are publicly recorded, transparency does not equate to UBO identification. Digital assets epitomise radical dematerialisation, where control, economic benefit, and legal title can exist disparately. Consequently, courts and practitioners must adopt functional or relational definitions of ownership, relying on analytics, disclosure orders, and intermediary cooperation to link wallet addresses to real-world identities.15

Other blockchain features impede recovery. Rapid settlement speeds, fungibility, and obfuscation techniques – mixers, chain hopping, or privacyfocussed cryptocurrencies – make tracing resource-intensive.16 Volatility complicates valuation, particularly in insolvency. The timing and method of recovery (liquidation or in specie) materially affect outcomes,17 and dissipation risk is high without immediate interim relief.18 Taken together, decentralisation, pseudonymity, fungibility, and volatility expose the inadequacy of territorial enforcement logic, rendering the shift to a functional approach both normatively compelling and operationally indispensable.

Recent Judicial and Regulatory Developments Recognition of cryptoassets as property capable of proprietary remedies, security interests, and insolvency rights represents a major doctrinal advance. AA v Persons Unknown [2019] confirmed that Bitcoin constitutes property under English law,19 enabling a proprietary injunction over misappropriated ransomware payments,

evaluate how legal systems are (not) adapting to challenges for digital asset enforcement and the gaps that remain. 5 Typically, the asset’s location is determinative of the law governing the proprietary rights associated with said asset. 6 UK Law Commission, Digital assets and ETDs in private international law: which court, which law? Summary of the Call for Evidence, February 2024. Digital assets lack physical instantiation and may exist simultaneously across distributed nodes. 7 Lord Collins et al., Dicey, Morris and Collins on the Conflict of Laws (16th edn with 2nd supplement, Sweet & Maxwell 2025). 8 In this case, the claimant sought to enforce a declaration in England, originally issued by the New York courts, relating to cryptocurrency ownership following a major hack. The claimant applied for, and obtained, permission to serve its claim out of England. On the question of situs, the English court held that the stolen cryptocurrency was situated in New York at the time of the hack, as the claimant’s central management and control were exercised there, notwithstanding its Cayman registration. The court further concluded that the recovered assets could now be treated as situated in England, because they were held in a wallet controlled by English solicitors. For more on the tracing-related findings of this case, see Simon Bushell and Gareth Keillor, ‘Introduction’ in Bushell (ed), International Fraud & Asset Tracing 2025 (Chambers & Partners 2025) <https://practiceguides.chambers. com/practice-guides/international-fraud-asset-tracing-2025> accessed 23 November 2025. 9 Andrew Keay, ‘Cross-Border Enforcement of Crypto Assets: Jurisdictional and Private International Law Challenges’ (2020) 28(3) International Insolvency Review 225. 10 Although the English courts in Ion Science v Persons Unknown [2020] and Fetch.ai Ltd v Persons Unknown [2021] adopted the owner’s domicile as lex situs, even the UK Jurisdiction Taskforce has observed there is “little reason to try to allocate jurisdiction to an asset which is specifically designed to have none” (UK Jurisdiction Task Force, Legal Statement on Cryptoassets and Smart Contracts, The Law Tech Delivery Panel, November 2019). 11 Fletcher and Morse, ‘Cryptoassets as Property: Enforcement Challenges’ (2020) JIBFL 321. Jurisdictional fragmentation is further complicated by divergent property taxonomies, such as the “bundle of rights” theory under US law or the distinction under English law between rights in personam (contractual rights against a particular entity) and rights in rem (rights in a thing), with the latter dependent on a court’s jurisdiction over the property itself. As digital assets are increasingly recognised as property in common law jurisdictions, they arguably exhibit in rem characteristics; yet their inherent intangibility makes determining their location highly problematic. Some legal systems have therefore conceptualised a new category of personal property tailored to digital assets, while in other jurisdictions rights over digital assets operate as rights in personam under contractual agreements with intermediaries. 12 Amy Held (2023) contends that digital assets pose an intractable problem for private international law, because these assets cannot be meaningfully situated in any jurisdiction under current situs-based rules. As a result, she argues that instead of applying an artificial situs, new property categories and rules for establishing jurisdiction should be developed internationally, based on alternative connecting factors and specifically developed to accommodate omniterritorial assets. See Held, ‘Crypto Assets and Decentralised Ledgers: Does Situs Actually Matter?’ in Andrea Bonomi, Matthias Lehmann and Shaheeza Lalani (eds), Blockchain and Private International Law (Brill Nijoff 2023), pp. 209-258. 13 Some jurisdictions, including Tunisia and Nepal, have imposed blanket prohibitions on digital assets, meaning that a claimant seeking enforcement could find their rights entirely unrecognised. Meanwhile, the People’s Bank of China banned all cryptocurrency transactions and initial coin offerings in September 2021, with the region focussed instead on advancing the Digital Currency Electronic Payment (its state-controlled digital currency). In the recent judgment of Standard Bank of South Africa v South African Reserve Bank and Others [2025], the High Court in Pretoria acknowledged the absence of a regulatory framework for cryptocurrencies in South Africa, potentially exposing market participants to significant risk in the event of loss since they are without regulatory protection; see Eversheds Sutherland, Inside South Africa’s Crypto Loophole, 8 October 2025 <https://www. eversheds-sutherland.com/en/south-africa/insights/inside-south-africas-crypto-loophole> accessed 26 November 2025. 14 Cryptoassets are usually accessed through wallets, but these can be hosted on private addresses (cold wallets) or exchanges (hot wallets). 15 Joshua Fairfield, BitProperty (2014) 88 Tulane Law Review 101. 16 Unlike fiat funds, cryptocurrencies may operate entirely outside traditional financial infrastructure. As a result, mutual legal assistance tools previously used for slower correspondent banking are unsuitable. 17 Questions regarding distribution are not yet answered under English law because cryptocurrencies do not constitute legal tender. Liquidators of Three Arrows Capital in the Cayman Islands were able to convert cryptoassets into USD, USD Coin or Tether; claims in Voyager and Celsius were intended to be distributed (at least in part) in-kind, avoiding issues related to pricing deviations or undue market influence. For more on this topic, see Sara Coelho and Alexander Wood, ‘Chimeras: what happens when novel intangible assets meet ancient, abstract legal frameworks in insolvency’ (Shearman & Sterling LLP, 16 November 2022) <https://www.shearman.com/en/perspectives/2022/11/sara-coelhoand-alexander-wood-on-what-happens-when-crypto-meets-legal-frameworks> accessed 19 November 2025. 18 For example, in the liquidation of Canadian cryptocurrency exchange Quadriga, c.$190m of inventory “turned into digital dust” when transferred to cold wallets which could not be accessed; see Norton Rose Fulbright, Quadriga bankruptcy: c$190 million may have turned into digital dust, July 2019 <https://www.nortonrosefulbright.com/en/knowledge/ publications/168bc350/quadriga-bankruptcy> accessed 25 November 2025. 19 The AA judgment was made by applying Lord Wilberforce’s criteria for property in National Provincial Bank v Ainsworth [1965], although that definition of property has been soundly criticised by Gray and Gray (Kevin Gray and Susan Francis Gray, Elements of Land Law (5th edn, Oxford University Press 2009) 97. Subsequent cases and the UKJT’s 2019 Legal Statement reinforced the AA precedent; see Ion Science v Persons Unknown [2020], Wang v Darby [2021], Fetch.AI Ltd v Persons Unknown [2021], Tulip Trading v Bitcoin Association [2023], and the UK Jurisdiction Task Force, Legal Statement on Cryptoassets and Smart Contracts, The Law Tech Delivery Panel, November 2019. Additionally, the status of cryptoassets as property is set to be confirmed in the (draft) Property (Digital Assets etc) Bill.

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 notwithstanding the asset’s uneasy fit within the binary categories of choses in possession and choses in action.20 Comparable recognition has emerged in New Zealand,21 Singapore,22 and Hong Kong.23 Such recognition is critical, determinative of whether courts can deploy proprietary remedies including freezing injunctions, disclosure orders, constructive trusts, and tracing claims.24 Common law courts have extended proprietary remedies into pseudonymous contexts. Ex parte freezing injunctions against persons unknown have become commonplace,25 in addition to disclosure orders directed at exchanges and marketplaces.26 Procedural innovation has followed, with service via email, exchangeregistered contact points, or NFT airdrops permitted in the UK, Hong Kong, and New York.27 US courts have leveraged amendments to the Uniform Commercial Code and civil procedure rules to support freezing and turnover orders in crypto-related fraud proceedings.28 More contentious is the suggestion in English jurisprudence that blockchain developers may owe fiduciary duties to assist recovery,29 given their unique capacity to implement restitutionary orders on-chain.30 While innovative, this kind of functional reasoning risks judicial overreach by recasting private actors as quasi-regulatory

enforcers without legislative mandate. Arguably, governance duties are more appropriately addressed through statute or regulation, with courts acting as adjudicators rather than de facto system architects. Civil law jurisdictions have pursued more structured legislative reforms focussed on ex ante enforceability measures rather than property classification.31 The EU’s Markets in Crypto-Assets Regulation (2023) (“MiCAR”) mandates enhanced recordkeeping, operational transparency, and custodial obligations on cryptoasset service providers, facilitating traceability across the single market.32 In response to the Mt. Gox collapse and subsequent FATF guidance,33 Japan’s Payment Services Act (2014) and South Korea’s Act on Reporting and Use of Certain Financial Transaction Information (2021) embed traceability into exchange regulation by requiring real-name verification, custody segregation, cold wallet custody, and real-time AML monitoring.34 These frameworks reflect functional enforcement by reducing anonymity and segregating custody at the point of control, rather than relying on reactive remedial proceedings.35 Despite domestic progress, digital assets routinely cross borders, underscoring the imperative for crossborder solutions grounded in practical enforceability.

Adapting Enforcement Strategies 1. Legal Reform Patchwork doctrinal developments cannot keep pace with digital asset innovation. Coordinated global reform is necessary to clarify asset status and enforcement mechanisms. The US exemplifies the risk of fragmented oversight: although federal courts recognise cryptocurrencies as property, inconsistent token classifications by the SEC and CFTC produce uneven enforcement outcomes.36 In the UK, the Law Commission has recommended the creation of a third category of personal property (“data objects”) to accommodate the idiosyncrasies of digital assets.37 Consistent with this paper’s functionality thesis, the Commission also proposes a novel concept of control based on factual ability to determine use rather than an asset’s associated legal rights.38 Equivalent statutory scaffolding abroad could clarify

20 i.e., because digital assets lack (i) physical form as intangibles and (ii) the conventional rights capable of being enforced by action (Bryan J, paragraph 55). The embrace of cryptoassets as a distinct form of enforceable personal property reflects an emergent jurisprudence that responds to the dematerialisation of financial value. 21 Ruscoe v Cryptopia [2020]. 22 Quoine v B2C2 [2020]; ByBit Fintech Ltd v Ho Kai Xin and others [2023] SGHC 199. 23 Re Gatecoin Ltd [2019]. 24 Analogously, Singapore’s Insolvency, Restructuring and Dissolution Act 2018 expressly includes cryptoassets within liquidation estates, with cases like Algorand Foundation v Three Arrows Capital [2022] demonstrating the practical success of practitioner tracing playbooks targeted at urgent wallet access and private key management. 25 Ion Science Ltd v Persons Unknown [2020]. 26 Fetch.AI v Persons Unknown [2021]; Jones v Persons Unknown [2022]; Osbourne v Persons Unknown [2022]; Re Samtrade [Hong Kong, 2022–23]; CLM v CLN [2022]. Disclosure relief has often been made under Norwich Pharmacal and Bankers Trust orders, with courts recognising that exchanges are uniquely positioned to bridge the gap between pseudonymous user activity and real identities. 27 OsomeTech v Persons Unknown [2023]; D’Aloia v Binance Holdings & Ors [2023]; LCX AG v John Doe [2022]. 28 2022 amendments to the Uniform Commercial Code include: (i) a revised Article 9 which clarifies perfection, priority, and enforcement rules for security interests over digital assets; and (ii) a new Article 12 on “Controllable Electronic Records”, providing a standardised security and transfer framework for digital assets. 29 Tulip Trading Ltd v van der Laan [2023]. If such duties are recognised, restoration could be required even if private keys are lost, funds misappropriated, or defendants unidentified. 30 e.g., via a fork. 31 Low and Hara contend that common law systems have accommodated cryptoassets more easily due to their vaguer conceptions of property, in contrast to the stricter definitions employed in most civil law systems (Kelvin F.K. Low and Megumi Hara, ‘Cryptoassets and Property’ in Sjef van Erp & Katja Zimmermann (eds), Edward Elgar Research Handbook on EU Property Law (2024) 146, <http://dx.doi.org/10.2139/ssrn.4103870> accessed 24 November 2025). 32 MiCAR briefly defines cryptoassets as “digital representation[s] of value or rights which may be transferred and stored electronically, using distributed ledger technology or similar technology”, delineating them into three types: asset-referenced tokens, electronic money tokens, and other cryptoassets (Article 3). 33 The Tokyo District Court in the first Mt. Gox (a Bitcoin exchange) case concluded that cryptoassets could not be an object of ownership, because ownership under Article 85 of the Japanese Civil Code is strictly limited to corporeal things. However, the inevitable necessity to recognise some kind of proprietary nature of digital assets (in order to protect consumers in the event of crypto-exchange insolvency) resulted in the regulatory reform vis-à-vis the Payment Services Act, without altering the definitions of ownership in the Civil Code. See Tokyo District Court, Reference number 25541521, Case claiming the bitcoin transfer etc., Heisei 26 (Year of 2014), (Wa)33320, Judgement of Civil Division 28. 34 Legislative amendment in the UK has been more gradual and selective, introduced primarily in relation to fraud. For example, the Money Laundering and Terrorist Financing (Amendment) (No 2) Regulations 2022, a more limited version of the regulation in Japan and South Korea, requires UK cryptoasset businesses to collect, verify, and share information about cryptoasset transfers in line with the “travel rule” under FATF guidelines (involving the exchange of originator and beneficiary identifying information). Additionally, the Economic Crime and Corporate Transparency Act 2023 amended the Proceeds of Crime Act 2002 to insert provisions relating to cryptoassets; s303Z29 provides that an enforcement officer may seize cryptoassets if there are reasonable grounds for suspecting that the cryptoassets were obtained through unlawful conduct, or intended for use in unlawful conduct. While the Property (Digital Assets etc) Bill is pending parliamentary approval, the FCA has published a crypto roadmap setting out high level proposals for cryptoasset regulation not expected to be in place until 2026. 35 As a common law-based counterpoint, the Monetary Authority of Singapore regulates digital payment token services through the Payment Services Act 2019, which classifies digital assets either as property or securities. Looking to emerging markets (and in a similar vein to Japan and South Korea), Banco Central do Brasil published three resolutions in November 2025 that operationalise Brazil’s 2022 Virtual Assets Law. Key elements include a new authorisation pathway, minimum capital requirements, transparency obligations, and AML monitoring for cryptoasset intermediaries; see Chainalysis, Breaking Down Brazil’s New Crypto Framework: What You Need to Know by 2026, 18 November 2025 <https://www.chainalysis.com/blog/brazil-crypto-asset-regulatory-framework-2025/> accessed 27 November 2025. 36 i.e., tokens are treated as securities or commodities depending on the regulator involved. 37 UK Law Commission, Digital Assets: Final Report (Law Com No 412, 2023); UK Law Commission, Digital Assets as Personal Property: Supplemental Report and Draft Bill (Law Com No 416, 2024). 38 The Commission notes that further analysis is required to determine how this control approach could apply to complex collateral and custody arrangements; see UK Law Commission, Digital Assets: Final Report (Law Com No 412, 2023); CMS, Blockchain & Cryptocurrency Regulation 2023: UK & EU Update (5th ed.), <https://cms.law/en/media/ local/cms-cmno/files/publications/publications/blockchain-cryptocurrency-regulation-2023> accessed 22 November 2025, p564.

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 digital asset taxonomy,39 though doctrinal, political and jurisdictional constraints will likely complicate alignment.40 Regulatory reform must also address the pivotal role of intermediaries. Enhanced KYC/AML/CTF duties, obligations to freeze assets upon court order, cooperation with law enforcement, and sanctions for noncompliance would strengthen recovery efforts considerably, even if purists argue that over-standardisation jeopardises innovation and compliance obligations disproportionately burden smaller market participants.41 MiCAR and UK proposals move in this direction, although international alignment remains frustratingly limited because many exchanges are nominally domiciled offshore. 42 Furthermore, crypto exchanges and custodians increasingly feature in insolvency processes.43 Digital asset volatility and economic complexity generate issues that demand bespoke rules: status determination (property, trust assets, unsecured claims);44 valuation methodology; treatment of post-acquisition asset generation (forks, staking rewards, airdrops); and administration of commingled wallet holdings. Large insolvencies such as Celsius and Voyager illustrate the pitfalls of reactive judicial solutions, which can result in unexpected distributive outcomes.45

2. Systemic Development Legislative clarity alone cannot resolve cross-border enforcement obstacles. Transnational regimes must be updated or overhauled to align enforceability with digital asset practicalities. Most frameworks, including the UNCITRAL Model Law on Cross-Border Insolvency, were not crafted for instantaneous, multi-jurisdictional asset mobility. Recent soft law interventions – the Global Code of Digital Enforcement, UNDROIT Principles on Digital Assets and Private Law, and UNCITRAL Toolkit and Background Notes on Asset Tracing and Recovery in Insolvency Proceedings – represent substantive progress, but their impact is contingent on state adoption.46 Given the international nature of cryptorelated misconduct, rapid recognition of foreign orders is essential. Instruments such as the Hague Judgments Convention (2019)47 and commercial court comity offer partial solutions,48 but enforcement may fail where domestic policy intervenes.49 When treaty frameworks are incomplete or insufficiently ratified, informal cooperation between courts, regulators, intelligence platforms, and exchanges can prove decisive. The Silk Road marketplace dismantling demonstrates the potential of such coordination,50 though successes of this kind remain exceptional.

Institutional capacity is both central to systemic reform and a potential limiting factor. Specialist commercial courts (Singapore’s ICC, London Commercial Court), judicial blockchain training, and modernised curricula are vital for evaluating blockchain-related proceedings,51 yet uneven resource distribution threatens forum shopping and inconsistency. Even if regulated tokenised instruments or CBDCs reduce enforcement friction in mainstream markets, illicit activity will continue on unregulated ecosystems.52 While global harmonisation would ideally address decentralisation challenges, geopolitical realities make absolute synchronisation unrealistic.53 Phased alignment – shared definitions, reciprocal assistance, and interoperable procedures – offers a more feasible path to functional cross-border enforcement, even if sovereignty and comity concerns must be carefully managed.

3. Technological Innovation Enforcement increasingly relies on blockchain analytics to cluster wallet addresses, map transaction paths, and attribute activity to exchanges or individuals. Firms like Chainalysis, Elliptic, and TRM Labs routinely support injunctions, proprietary claims, and disclosure applications. Not all assets are equally traceable: besides a token’s specific rights and properties, privacy-

39 Such legislative clarification would presumably bolster investor confidence and consumer protection. 40 The absence of codified principles means that courts are routinely forced into first principles reasoning around digital assets, determining status, asset flows, and participant rights without legislative support – a dynamic which increases litigation cost, undermines predictability, and exposes similarly situated parties to divergent results based on forum, judicial philosophy, or evidential sophistication. 41 i.e., highlighting a potential compromise between regulatory effectiveness and market dynamism. 42 Existing jurisdictional hurdles in cryptoasset recovery, particularly when dealing with intermediaries operating abroad, are illustrated by the different outcomes of two English cases: Piroozzadeh v Persons Unknown and Others [2023] and Joseph Keen Shing Law v Persons Unknown and Huobi Global Ltd (unreported). In Piroozzadeh, the English court discharged a freezing injunction against Binance because it found that the court lacked jurisdiction over the Cayman registered company, whereas in Huobi, the exchange was ordered to transfer frozen assets into England and Wales to facilitate enforcement. 43 For example, Mt. Gox, Three Arrows Capital, Voyager, FTX and Alameda, BlockFi, Genesis, Bittrex Inc. and Celsius. 44 In an insolvency context, cryptoasset ownership is further complicated when assets are held by an intermediary (exchange or platform). Ownership can be dictated by (i) the intermediary’s T&Cs and (ii) the jurisdiction’s insolvency framework. 45 Celsius and Voyager found that cryptocurrency deposits were held under a debtor/creditor rather than custodial relationship (in which the customer retains ownership), such that most customers were classed as unsecured creditors. 46 Published in November 2021, October 2023 and July 2025 respectively. The Global Code of Digital Enforcement was developed and adopted by the International Union of Judicial Officers. It considers innovative approaches for the use of both dematerialised enforcement procedures and adjusted enforcement procedures for digital assets, including dematerialised seizures, electronic auctions, use of AI to assess appropriate enforcement measures, automated enforcement via smart contracts, and the creation of cryptoasset registers. 47 This instrument, which entered into force in the UK on 1 July 2025, promises to improve cross-border recognition and enforcement of monetary judgments among its contracting states. For a judgment to be recognised and enforced under the Hague Convention, it must satisfy at least one of the “indirect jurisdiction” grounds set out in Article 5. These grounds include that a judgment concerning contractual obligations must be ruled in the place of obligation performance, the defendant’s habitual residence or principal place of business in that state, consent to jurisdiction, or defending on the merits. Reliance on indirect jurisdiction grounds appears, at first glance, to reinforce traditional territorial anchors – habitual residence, place of performance, or the defendant’s submission to a particular forum. Yet its logic aligns with this paper’s functional approach in two respects. Firstly, the Convention’s purpose is to supply a minimum threshold of legitimacy that enables courts in other states to give effect to a judgment where enforcement is practically feasible. In this sense, Article 5’s jurisdictional filters operate as procedural gateways rather than metaphysical rules of asset location. Secondly, functional enforceability emphasises the locus of practical control over assets. The Convention complements this by ensuring that once a judgment is obtained from a court with recognised jurisdiction, other states must facilitate enforcement wherever the defendant or the relevant assets are effectively reachable. Accordingly, although the Convention employs traditional jurisdictional concepts (and may have to be re-evaluated in depth for the digital asset context), its enforcement mechanism is functionally oriented. 48 Jurisdictions participating in such comity include England, Singapore, BVI, and the Cayman Islands. 49 Payward Inc v Chechetkin [2023]. In this case, a San Francisco arbitral award in favour of a US cryptocurrency exchange was refused enforcement in England due to consumer protection concerns. Exchanges are starting to include mandatory confidential arbitration clauses in their T&Cs to avoid such precedent setting litigation; see Weightmans LLP, Navigating the rapids: the current state of the English law of cryptoassets, 27 February 2025 <https://www.weightmans.com/media-centre/news/navigating-the-rapids-the-currentstate-of-the-english-law-of-crypto-assets> accessed 25 November 2025. 50 The online black market Silk Road used Bitcoin to conduct transactions. The investigation to shut down the marketplace, conducted by the FBI in partnership with various international agencies, resulted in the arrest of Ross Ulbricht (Silk Road’s inventor) and seizure of approximately 170,000 Bitcoins. 51 i.e., regarding assessment of analytics evidence, tracing applications, and remedy requests. 52 CMS recently identified 118 High Court claims involving cryptoassets, of which 50% relate to fraud; CMS, Cryptoasset disputes on the rise – what to expect in 2024, 29 May 2024 <https://cms.law/en/gbr/publication/crypto-disputes-report-2024> accessed 22 November 2025. 53 Krysa (2023) argues that an all-encompassing taxonomy of cryptoassets would not be possible or feasible. To be beneficial for any conflict-of-laws analysis, any harmonising taxonomy must be “oriented towards those properties that are of relevance under conflict-of-laws rules and be limited to a few distinguishing criteria”. See Felix Krysa, ‘Taxonomy and Characterisation of Crypto Assets in Private International Law’ in Andrea Bonomi, Matthias Lehmann and Shaheeza Lalani (eds), Blockchain and Private International Law (Brill Nijoff 2023), pp. 157-208.

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 enhancing cryptocurrencies,54 mixing services, and cross-chain protocols can obscure flows, rendering tracing probabilistic. Practitioners must therefore act swiftly to preserve evidence, assess recovery likelihood, and engage exchanges before assets dissipate.55 Technological dependencies necessitate parallel evidential reform. Courts must refine admissibility standards for blockchain analytics, cognisant of the methodological assumptions and epistemic limits underpinning such evidence.56 Echoing early DNA or geolocation jurisprudence, appellate guidance is required to demarcate scope, reliability, and proportionality of expert testimony.57 Innovations such as Bonomi et al.’s blockchain-based chain of custody (B-CoC) may strengthen evidential integrity.58 Beyond tracing, blockchain may itself serve as an enforcement tool. Smart contracts could automate freezing orders or judgments on-chain, reducing latency and bypassing jurisdictional barriers.59 Realising this potential, however, presupposes clear legal frameworks, robust dispute resolution pathways, and standardised technical protocols. If the deterministic logic of code supersedes legal reasoning without appropriate protections, law could be distorted by diminished judicial discretion and excessive rigidity.60 Without legislative grounding or contractual consent, automated enforcement remains more aspirational than operational, yet it represents a promising mechanism for reconciling legal authority with technological infrastructure.

Conclusion Digital assets expose structural weaknesses in traditional enforcement strategies. While courts and regulators have responded creatively – extending proprietary remedies to pseudonymous contexts and adopting novel service procedures – incremental judicial and domestic legislative developments remain insufficient to guarantee reliable recovery.

A paradigm shift from territorial to functional reasoning is required. As digital assets disrupt assumptions about jurisdiction, identification, and stability, enforcement strategies must reorientate practical control as their organising principle. In the blockchain context, this approach better safeguards property rights, improves recovery feasibility, and aligns legal authority with technological capabilities. Prioritising functional enforceability over territorial logic represents not just a pragmatic solution for cross-border recovery, but also a normative recalibration of property rights for the digital age. This paper advances a three-limb framework to implement this shift: (1) legislative and regulatory clarity; (2) systemic cooperation supporting crossborder recognition, interim relief, and institutional capacity-building; and (3) technological capabilities leveraging analytics, navigating probabilistic evidence, and exploring smart-contractenabled enforcement. Reform must remain sensitive to privacy, proportionality, and fairness considerations.61 Expensive analytics and compelled disclosures risk data protection and inequality-of-arms concerns, while divergent regimes could incentivise forum shopping. Adaptations should enable effective responses to fraud and insolvency without facilitating surveillance creep. Ultimately, a synthesis of doctrinal clarity, systemic cooperation, and technological innovation is required to ensure robust tracing and recovery. Each reform limb carries risks – market strangulation, patchy adoption, epistemic (un)reliability – yet these trade-offs are preferable to an enforcement vacuum. Looking forward, emerging harmonisation and automated enforcement initiatives offer opportunities for a more resilient model of digital asset enforcement.

BIBLIOGRAPHY Primary Sources Table of Cases England & Wales AA v Persons Unknown [2019] EWHC 3556 (Comm) Bankers Trust Co v Shapira [1980] 1 WLR 1275 Fetch.ai Ltd v Persons Unknown and others [2021] EWHC 2254 (Comm) Ion Science Ltd v Persons Unknown [2020] (Commercial Court) (unreported) Jones v Persons Unknown [2022] EWHC 2103 (Comm) Joseph Keen Shing Law v Persons Unknown and Huobi Global Ltd [2023] (Commercial Court) (unreported) National Provincial Bank v Ainsworth [1965] AC 1175 Norwich Pharmacal Co. v. Customs and Excise Commissioners [1974] AC 133 Osbourne v Persons Unknown [2022] EWHC 1021 (Comm) OsomeTech v Persons Unknown [2023] EWHC 1204 (Comm) Payward Inc and Others v Chechetkin [2023] EWHC 1780 (Comm) Piroozzadeh v Persons Unknown and Others [2023] EWHC 1024 (Ch) Tai Mo Shan Ltd v Persons Unknown [2024] EWHC 1514 (Comm) Tulip Trading Ltd v Bitcoin Association [2023] EWHC 1421 (Comm) Tulip Trading Ltd v van der Laan [2023] EWHC 1011 (Comm) Wang v Darby [2021] EWHC 3054 (Comm) Hong Kong D’Aloia v Binance Holdings & Ors [2023] HKCFI 234 Re Gatecoin Ltd [2019] HKCFI 2345 Re Samtrade [2022–23] HKCFI 1012 Japan Tokyo District Court, Reference number 25541521, Case claiming the bitcoin transfer etc., Heisei 26 (Year of 2014), (Wa)33320, Judgement of Civil Division 28 New Zealand Ruscoe v Cryptopia Ltd [2020] NZHC 728 Singapore Algorand Foundation v Three Arrows Capital Pte Ltd [2022] (HC/CWU 246) ByBit Fintech Ltd v Ho Kai Xin and others [2023] SGHC 199 CLM v CLN [2022] SGHC 46 Quoine Pte Ltd v B2C2 Ltd [2020] SGHC 272 South Africa Standard Bank of South Africa v South African Reserve Bank and Others (047643/2023) [2025] ZAGPPHC 481 US In Re Celsius Network LLC, 22-10964 (MG), (Bankr. S.D.N.Y. 2023) In The Matter of Voyager Digital Ltd., 2022 ONSC 4553 LCX AG v John Doe [2022] NY Sup Ct 4512

54 e.g., Monero, Zcash. 55 Centralised stablecoin issuers (e.g., Tether, Circle, Paxos, Gemini) can freeze or burn tokens associated with illicit activity, whereas exchanges can restrict withdrawals or transfers from accounts flagged as high risk. 56 Reliance on probabilistic analytics raises jurisprudential and epistemic concerns. The attribution of wallet ownership or control is inherently inferential, relying on heuristic clustering, transaction pattern recognition, and off-chain intelligence. Courts must recognise the limits of certainty: a high-probability link between a wallet and an individual does not equate to legal proof, and overreliance risks miscarriages of justice or overbroad remedies. For more on this topic, see Michael Fröwis, Thilo Gottschalk, Bernard Haslhofer and Paulina Pesch, ‘Safeguarding the Evidential Value of Forensic Cryptocurrency Investigations’ (2019) arXiv:1906.12221 <https://arxiv.org/abs/1906.12221> accessed 23 November 2025. 57 Judicial familiarity with blockchain analytics should ultimately improve consistency and predictability in enforcement outcomes. 58 Silvia Bonomi, Marco Casini, and Claudia Ciccotelli, ‘B-CoC: A Blockchain-Based Chain of Custody for Evidence Management’ (2018) arXiv:1807.10359 <https://arxiv.org/ abs/1807.10359> accessed 23 November 2025. 59 Introduced by Nick Szabo in 1994, smart contracts refer to computerised code or protocols deployed on the blockchain network. The smart contract’s USP is its self-executing nature. Constructed by the ‘if-then’ principle, the smart contract is automatically executed and enforced once certain conditions are satisfied. 60 Primavera De Filippi and Samer Hassan, ‘Blockchain technology as a regulatory technology: from code is law to law is code’ (2016) 21(12) First Monday <https://doi.org/10.5210/ fm.v21i12.7113> accessed 20 November 2025; Lawrence Lessig, ‘Code is law: on liberty in cyberspace’ (Harvard Magazine, 1 January 2000) <https://www.harvardmagazine. com/2000/01/code-is-law-html> accessed 20 November 2025. 61 As procedural theorists argue, the legitimacy of procedural innovation depends not solely on effectiveness but also on maintaining fairness, notice, and contestability. In the digital asset context, this means balancing investigatory urgency and dissipation risk against the danger of overreach.

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 Table of Legislation

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Fröwis M., Gottschalk T., Haslhofer B., and Pesch R., ‘Safeguarding the Evidential Value of Forensic Cryptocurrency Investigations’ (2019) arXiv:1906.12221 <https://arxiv.org/ abs/1906.12221> accessed 23 November 2025

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Remolina N., Gurrea-Martínez A., and Liu D., ‘The Treatment of Digital Assets in Insolvency’ (2024) Singapore Management University School of Law, Working Paper 35/2024, <http:// dx.doi.org/10.2139/ssrn.4915592> accessed 22 November 2025 World Economic Forum, ‘The Future of Financial Infrastructure: An ambitious look at how blockchain can reshape financial services’ (World Economic Forum, August 2016) <www3. weforum.org/docs/WEF_The_future_ of_financial_ infrastructure.pdf> accessed 20 November 2025 Websites, Blogs and Newspaper Articles Basel Institute of Governance, Challenges in prosecuting crypto-related crimes – Q&A with Shenaz Muzaffer, 8 October 2024 < https://baselgovernance.org/blog/challengesprosecuting-crypto-related-crimes-qa-shenaz-muzaffer> accessed 23 November 2025 Blank Rome LLP, Understanding Cryptocurrency Forfeiture: A Guide to Digital Asset Seizure, 26 June 2025 <https://www. blankrome.com/publications/understanding-cryptocurrencyforfeiture-guide-digital-asset-seizure> accessed 22 November 2025 Chainalysis, Breaking Down Brazil’s New Crypto Framework: What You Need to Know by 2026, 18 November 2025 <https:// www.chainalysis.com/blog/brazil-crypto-asset-regulatoryframework-2025/> accessed 27 November 2025

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ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24

HOW SHOULD COURTS AND PRACTITIONERS ADAPT ENFORCEMENT STRATEGIES

TO ADDRESS THE CHALLENGES OF TRACING AND RECOVERING DIGITAL ASSETS? Authored by: Michal Hain (Barrister) - Twenty Essex

Introduction If possession is nine-tenths of the law, enforcement is nine-tenths of litigation. Securing a judgment may be futile if, in the end, it cannot be enforced. These issues now arise in the context of digital assets, as they account for a growing portion of wealth: In July 2025, the value of all Bitcoin in existence exceeded $2.5 trillion, which is also roughly the market cap of the companies that constitute the FTSE100 stock index. As a result, an increasing number of cases involve claimants suffering losses of digital assets or debtors holding digital assets against which creditors want to enforce. Sometimes both: where the digital assets held by the defendant are (a substitute for) those lost by the claimant.

fungible tokens - as choses in action. English law should follow Australian jurisprudence, which has rejected the idea that a chose in action must involve an ability to sue another. This characterisation matters because it allows principles that apply to choses in action to be adapted instead of having to come up with new rules for a new, third category of property right.

Courts and practitioners can adapt by recognising rivalrous crypto tokens - such as cryptocurrencies and non1

Digital Assets: Final Report Law Com No 412, 2023, Glossary.

Ibid at [1.3].

Defining ‘Digital Assets’ The Law Commission defined a ‘digital asset’ as “[a]ny asset that is represented digitally or electronically”.1 This

“captures a huge variety of things including digital files, digital records, email accounts, domain names, in-game digital assets, digital carbon credits, crypto-tokens and NFTs”.2 The problem with this (lack of) definition is that the group is heterogeneous. For example, a domain name is registered with the registrar and thus gives rise to a contractual relationship. Digital files and email accounts store information when devices on which that information

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 is stored are physically manipulated. But information, howsoever stored, can be held by any number of persons simultaneously and, when transferred (usually by copying), both transferor and transferee hold the same information. By contrast, a crypto token (unlike information) is rivalrous:3 where a unit of Bitcoin is transferred, the transferee obtains it while the transferor loses it. In being rivalrous, crypto tokens share a critical characteristic with property rights. It is this characteristic that enables such tokens to serve as stores of value, at least in the eyes of those who buy them. It is also why they present challenges in the context of asset recovery.

Characterising Crypto Tokens As a legal term of art, property represents a relationship between a subject (a natural or legal person) and an object (the thing). The legal relationship is often said to be a ‘bundle of rights’, and the High Court of Australia called it “a legally endorsed concentration of power over things and resources”.4 The common law recognises property rights in relation to choses in possession and choses in action. Although it has been suggested that “[t]he law knows no tertium quid [third thing] between the two”,5 this is wrong as a matter of statute. Section 30(1) of the Patents Act provides that “[a] ny patent or application for a patent is personal property (without being a thing in action)”.

The main difference between the English and Australian common law is that English courts have recognised a third thing but maintained a narrow definition of choses in action, whilst Australian courts have expanded the choses in action category instead of resorting to a tertium quid.

maintained through private keys that cryptographically prove control without revealing the key itself. In the hearing of an ex parte application in AA v Persons Unknown, Bryan J said that Bitcoins “are not choses in action because they do not embody any right capable of being enforced by action”.8

Some cryptocurrencies, such as Bitcoin, exist without representing a claim to anything else apart from themselves: they have been called native, naked or endogenous.6 However, there are tokens – stablecoins being the best example - that do represent a claim to something other than themselves.

This reflects the view that the term “chose in action” is “used to describe all personal rights of property which can only be claimed or enforced by action, and not by taking physical possession”.9 The second half of this must be right; the first half less obviously so.

Where a private company issues a stablecoin that is anchored to a fiat currency, the token may be said to evidence a contractual claim against the issuer for the corresponding asset. Thus, Jeyaretnam J said in ByBit Fintech v Ho and others that the ability of a ‘verified customer’ of Tether to redeem USDT (a tokenised form of USD) pursuant to the BVI-governed terms of service “may constitute an additional thing in action that the holder of USDT may have, but its presence is not necessary to my conclusion that the right represented by the USDT is itself a thing in action”. The short point is that such an issuer is not unlike a bank who owes its customer a debt denominated in a currency. However, Richard Farnhill sitting as a deputy High Court judge in D’Aloia v Persons Unknown considered that USDT was not a chose in action because it

“does not confer Hohfeldian claim-rights, powers, privileges or immunities” but a third class of asset to which property rights could attach.7 However, he did not seem to consider whether USDT did confer such rights as against Tether. Bitcoin provides for no claim against a counterparty. Control over Bitcoin is

A proprietary interest does not depend on being able to make a claim. Examples include (i) government bonds that, until the Crown Proceedings Act 1947, could not be enforced in English courts, (ii) foreign government securities that may not be enforceable by suits, and (iii) the proprietary interest of the owner of a chattel who is not in possession and whose claim has become statute-barred. In the 19th century, Jessel MR accepted that “there can be no doubt that […] foreign bonds, both in common language and in the language of lawyers, are ‘property’” and that “[t]he mere fact that you cannot sue for the thing does not make it not ‘property’.

“Nevertheless, he also said that “[s]uch bonds are non choses in action in the ordinary sense”.10 The better view may be that a chose in action is a thing that can be subject to a proprietary interest, without being capable of being possessed. In the 1950s, the High Court of Australia held in Cain’s Case11 that a sheep farmer’s statutory entitlement to be paid by the Commonwealth Government for wool it had acquired from him during the Second World War was property for the purposes of estate tax in circumstances where (i) he had died after the enactment of the statute but before notification that any sum was available

3 Ibid at [2.57] fn 82 (“A thing is rivalrous if the use or consumption of the thing by one person, or a specific group of persons, necessarily prejudices the use or consumption of that thing by one or more other persons.”). 4 Yanner v Eaton (1999) 201 CLR 351 at [18] per Gleeson CJ, Gaudron, Kirby and Hayne JJ. See also UK Jurisdiction Taskforce, Legal Statement on cryptoassets and smart contracts at [35]. 5

Colonial Bank v Whinney (1885) 30 Ch D 261 (CA) at 285 per Fry LJ.

Law of Personal Property (3rd ed) at [8-043].

[2024] EWHC 2342 (Ch), [2025] 1 WLR 821 at [155].

[2019] EWHC 3556 (Comm), [2020] 4 WLR 35 at [55] (emphasis added).

Torkington v Magee [1902] 2 KB 428 (KBD) at 430 per Channell J (with whom Lord Alverston CJ and Darling J agreed).

In re Huggins (1882) 21 Ch D 85 at 90-91.

(1954) 91 CLR 540.

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 for distribution, (ii) the statute provided that no action or proceedings shall lie against the government; and (iii) the statute also provided that a share in a distribution under it was inalienable prior to actual receipt. In that case, Kitto J (with whom Dixon CJ and Fullagar J agreed) held that if the proposition that all personal property must consist either of choses in possession or choses in action is to be accepted, choses in action must comprise “a heterogeneous group of rights which … have only one common characteristic, viz. that they do not confer the present possession of a tangible object”.12 In November 2024, Attiwill J in the Supreme Court of Victoria13 followed Kitto J’s analysis holding that

“a person’s interest in Bitcoin … is a chose in action”.14 Even more recently, in November 2025, the Court of Appeal of Victoria15 held that, for the purposes of the statutory definition of “property” in the context of theft, Bitcoin units constituted at least “other intangible property” so that it was unnecessary to determine whether it was a “thing in action”.16 English courts should recognise crypto tokens as choses in action, even if they do not represent a claim to something other than themselves. This is because a conception of choses in action as things in respect of which a claim can be made is unduly narrow. In any event, at least those crypto tokens that do represent such a claim should be considered choses in action.

Conclusion Asset recovery involves the processes of following, tracing or both. An asset that moves from one person to another is followed. Where a new asset is identified as a substitute for the old, it is traced.17 Units of Bitcoin (and other cryptocurrencies using the same technology) are not transferred on the blockchain. Instead, a transfer creates a new unit with a new private key, and the old unit is spent. The unit will thus need to be traced (rather than followed). This presents no difficulties if rules developed for choses of action are adapted. Where money moves between banks, “[t]he new debt is a different chose in action from the original debt and is therefore not property which was transferred to the payee from the payor”.18 Nevertheless, those debts are substitutes for another for tracing purposes. The banking analogy is particularly apt where crypto tokens move between different exchanges, at least some of which function analogously to banks.19 This parallel also provides a solid justification for the grant of proprietary freezing orders, which will assist the recovery of assets. It also serves as a relevant framework for addressing conflicts of law issues. Whilst there are some problems the law cannot solve (e.g. services to ‘mix’ or ‘tumble’ transactions or ‘privacy coins’ used to obscure transactions), accommodating crypto tokens within the chose in action category may help with at least some challenges.

12 Ibid at 584. McTiernan and Taylor JJ, in the minority, accepted that the statutory bar to making a claim was not fatal but disagreed with the majority over the logically prior question of whether the entitlement in and of itself gave rise to anything more than an expectation: see 566-567. 13

This is the (first instance) superior court in the state of Victoria.

Re Blockchain Tech Pty Ltd [2024] VSC 690 at [389].

This is the (only) appellate court in the state of Victoria. An appeal against its judgment lies to the High Court of Australia.

[2025] VSCA 288 at [120].

Byers v Saudi National Bank [2024] AC 1191 at [68].

BTA Bank v Ablyazov [2018] EWCA Civ 1176 at [57] per Leggatt LJ (with whom Coulson and Gloster LJJ agreed).

19 In Proozzadeh v Persons Unknown and others [2023] EWHC 1024 (Ch) at [8], Trower J accepted Binance’s unchallenged evidence that “the user’s account is credited with the amount of the deposit and they are then permitted to draw against any credit balance as in a conventional banking arrangement”.

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ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24

HOW SHOULD COURTS AND PRACTITIONERS ADAPT ENFORCEMENT STRATEGIES

TO ADDRESS THE CHALLENGES OF TRACING AND RECOVERING DIGITAL ASSETS? Authored by: David Short (Counsel) - Sequor Law

Cryptocurrency’s Older and Nerdier Brother should not be Ignored.

You have almost certainly heard of these digital assets, and likely before bitcoin (2008) even existed. Some of you have even used these digital assets for their intended purpose.

The challenges that digital assets pose to both public (regulators, courts) and private (lawyers, investigators) are largely not unique to cryptocurrencies or other blockchain technologies – nor are the solutions. As an example, take a class of digital asset that has been used to launder billions of dollars and has been played a role in a range of illicit activity, including gambling rings, credit card fraud, and various cybercrimes – despite predating blockchain technology by decades. Like cryptocurrency, it is loosely regulated at best, and the regulations that exist do even less to account for these illicit uses. Also like (hypothetically) cryptocurrency, the utility of this class of digital asset comes from its licit uses – it is part of an industry valued in the hundreds of billions, and the demand from those licit uses enables the illicit ones. This class of digital asset even includes “currencies” that can be traded for other digital assets in this class.

Reader, have you played World of Warcraft (2004)? Runescape (2001)? Neopets (1999?) Ultima Online (1998)? These online games all have in-game currencies that can be used for various in-game purposes, whether World of Warcraft’s “Gold,” Neopets’ “Neopoints,” or Eve Online’s “ISK,” and not everyone wants to “work” in-game to obtain them. Sometimes, they can be purchased with fiat currency from the company themselves. But any popular multiplayer game with persistent, tradeable assets or currencies may also develop third-party markets willing to provide those in-game assets in exchange for real-world currencies, whether fiat or cryptocurrency. This practice is known within the videogame industry as “realmoney trading,” frequently abbreviated to RMT. Through RMT, videogame currencies and related assets present many of the same money-laundering risks as more modern digital assets such as

cryptocurrencies, and those risks have gone largely unaddressed. Solutions will require regulatory expansion to address this significant blind spot. But regulatory efforts can be accompanied with technical enforcement mechanisms in concert with the videogame industry, which has already implemented similar tools for many games.

History of RMT in Videogames. The first documented instances of RMT occurred in the late 1980s in what were (and are) known as MultiUser Dungeons (“MUDs”). To grossly simplify them, MUDs can be thought of as something like online Dungeons & Dragons campaigns in which ingame personas are empowered over

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 time with spells, levels, and equipment discovered through the exploration of the game. Of course, some people want to skip this grind, and so purchase items or personas from another. One documented sale in 1989 was for $2000 USD. The practice boomed with the advent of “Massively Multiplayer Online Role-Playing Games” (“MMORPGs”), which could see thousands of playercharacters interacting for months or years on a particular server. At its peak, World of Warcraft had more than 12 million unique subscribers, and still has millions. It saw the rise of “gold farming” – players that played the game to obtain in-game digital currencies that they would sell for cash. By 2008, the virtual currency gold-farming trade in China alone was estimated at $300,000,000 USD annually.1 At one point, approximately one-in-ten Runescape accounts appeared to be goldfarmers.2 By that point, gold farming had become embedded in other illicit activity. Goldfarming accounts have been closely and repeatedly linked to credit card fraud and identity theft.3 In 2011, the Guardian reported that officials at a particular prison in China had been operating a gold-farming operation using prison labor.4 The social problem became pervasive enough that, in 2009, China passed a law prohibiting the exchange of digital currencies for realworld goods, but the problem persisted.5 Gambling has also been a significant problem. Counterstrike is a popular team-based first-person shooter that has existed in various forms for a quarter-century. Around 2012, the developer introduced persistent ingame aesthetic items known as “skins” that could be used to customise the appearance of an in-game character. Players began trading and selling skins to each other – particularly valuable skins could and do sell for thousands of dollars each.6 It was also possible to bet them on in-game matches. This exploded, and the equivalent of $5

billion USD in Counterstrike skins were wagered in 2016.7 Some of these were in online matches, but by that point, the majority of gambling activity was occurring in virtual casinos that were unrelated to the game except in that they accepted skins as a wager.8 These gambling practices illustrate the broader issue: when in-game assets acquire real-world value, they become conduits for illicit finance. And, of course, video-game currencies and other assets are a great tool for money laundering. They can easily be traded across borders and, so long as the game remains active, people will happily pay real money for them. They can be “decentralised” between dozens of accounts, or between different game servers, or even different games entirely. This circumscribes the already limited existing tools for record-keeping, tracking, and detection of illicit activity. The pseudo-anonymity of accounts, combined with the use of stolen information to create those accounts, creates another layer of protection for bad conduct. All that is needed is an easy way to convert cash into the digital asset, and then the digital asset into cash. The resulting scheme is relatively simple: stolen credit card information is used to purchase a virtual currency, which is then transferred to a new in-game account, and then sold at a discounted rate. Fortnite, a popular multiplayer game, sees tens of thousands of these transactions monthly.9 This scheme is not limited to in-game currencies. Valve, the developer and publisher of Counterstrike, limited skingambling with some success around 2017, but discovered another problem shortly after. Skins remained popular for trade and as an in-game status symbol, and they were unlocked with ingame tools called “keys” – which were available to purchase from an in-game store for approximately $2.50 USD and could be obtained in no other way. And a game with millions of players meant that there was constant, massive

demand. This standardised price and costs in transferring them between accounts made them an attractive tool for money-laundering. A classic money-laundering scheme developed – keys were purchased with “dirty” money – often using stolen credit card information – and then resold to other players at slightly lower than the official rate. In 2019, Valve concluded an investigation that found that almost all resold “keys” were “fraud-sourced” and were being used to facilitate moneylaundering.10 It banned transfers of keys between accounts, massively reducing the number of transactions in question.11 In any case, the analogies to cryptocurrencies are clear. Neither bitcoin nor the Counterstrike Ruby Doppler Karmabit ($2400) knows borders, to say nothing of World of Warcraft gold. Transfers may be traceable between accounts but tying them to real individuals and to the correct bank accounts can be challenging.

Regulatory Gaps. The attempts to address moneylaundering in videogames have been even more limited than for other digital assets. The Financial Action Task Force (“FATF”) has recognised this issue, but has focused exclusively on “convertible virtual currencies” – those for which the videogame developer itself provides a mechanism to exchange for fiat currencies. To explain by way of example, Linden Lab has a game called SecondLife, which has an in-game economy that uses an in-game currency called “Linden Dollars.” Linden Lab allows Linden Dollars to be purchased and sold for fiat currency through an exchange it operated. In 2013, FinCEN issued guidance on convertible in-game currencies, and Linden Lab registered as an MSB that would be subject to AML and KYC registration that year.12 It subsequently spun off its exchange into a separate entity with which players would be required to register.

https://web.archive.org/web/20221003103111/https://www.eurogamer.net/world-of-warcraft-and-the-battle-against-black-market-gold

https://www.eurogamer.net/gold-trading-exposed-the-developers-article

https://web.archive.org/web/20221003103111/https://www.eurogamer.net/world-of-warcraft-and-the-battle-against-black-market-gold

https://www.theguardian.com/world/2011/may/25/china-prisoners-internet-gaming-scam

https://www.engadget.com/2009-06-29-new-legislation-in-china-outlaws-gold-farming.html

https://csgoskins.gg/types/knife?query=&price_min=2000

https://www.espn.com/espn/feature/story/_/id/18510975/how-counter-strike-turned-teenager-compulsive-gambler

Id.

https://comicbook.com/gaming/2019/01/18/fortnite-v-bucks-money-laundering/.

10 See Philip Conneller, CS:GO Money Laundering Shut Down by Game Publisher Valve Corp, CASINO.ORG (Nov. 5, 2019), https://www.casino.org/news/csgo-moneylaunderingshut-down-by-game-publisher-valve-corp/. 11

Key Change, COUNTER STRIKE (Oct. 28, 2019), https://blog.counterstrike.net/index.php/2019/10/26113/.

https://pideeco.be/articles/aml-money-laundering-and-video-games/

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 Linden Lab is unusual among videogame developers for registering as an MSB, and other videogame developers, even those with complex virtual economies and convertible virtual currencies such as Roblox’s Roblux, have largely resisted doing so. Of course, even this measure is incomplete, because it fails to account for third-party methods for converting ingame assets into real-world currencies. Even if the game developer does not provide centralised on-ramps and offramps, the ability to trade purchasable digital assets through third-party markets enables money laundering.

What are Some Solutions? The starting point requires a broader regulatory approach to digital assets. It is not sufficient to focus exclusively on discrete types of digital assets – such as cryptocurrencies, or to address them only to the degree that they already fit neatly into pre-existing frameworks for regulation and enforcement. Despite the dominance of traditional cryptocurrencies, other digital assets still exist in many billions of dollars and carry a commensurate potential for harm. And they do so in ways that defy strict definitions and categories. To the extent that videogame currencies have been identified as a vector for activities such as money-laundering, they need to be addressed in a comparable fashion. Currently, only convertible virtual currencies have been addressed, and even that in a limited, somewhat voluntary fashion. Regulators need to turn their eyes to games that derive significant revenue from the sale of transferable digital products, such as “keys,” since the in-game purchase provides a simple on-ramp, and the transferability creates a simple off-ramp, whether through a centralised exchange or through third-party markets. Terminology needs to be updated and standardized to acknowledge this broader scope, or, where appropriate, to address the differences. Game servers and their marketplaces are analogous to exchanges, but not necessarily identical, nor can player-to-player transactions be treated the same as wallet-to-wallet transfers, given the significant role the former play in nonmonetary in-game behaviors.

The second question is whether measures should be focused on digital assets specifically, or to update and educate already existing policies, regulatory bodies, and enforcement strategies to address the novel challenges provided by digital assets. Should the challenges presented by digital assets in money-laundering, credit-card fraud, or gambling be addressed by expanding the remit of the entities that already handle those issues, and updating their policies and practices accordingly, or the creation of new digital-focused entities? Fundamentally, the issues presented in each of these fields are similar – the technology has changed, not the crime. Gambling rings organised around cryptocurrency, or dollars, or Counterstrike skins are still gambling rings, at their root. Digital assets and digital casinos just allow for a broader reach. But that is one that requires much more cross-border cooperation to address.

One advantage here is that videogames do offer a more centralised target for enforcement than do cryptocurrencies. Videogame developers can be required to implement anomaly detection tools that identify large-scale coordinated behavior across accounts, or unusual volumes of transactions through particular accounts that indicate illicit activity. Many of these tools already exist because the activities in question overlap with other forms of antisocial behavior (such as cheating) that videogame developers are incentivised to voluntarily address. A framework for cooperation between videogame should be developed so that bad-actors can be tracked across multiple platforms – analogous structures have been proposed and implemented for certain forms of cheating in videogames, with accounts and IP addresses being flagged across entire digital platforms. Extending these practices to money-laundering regulations, and across competing platforms, would be of significant benefit to detecting illicit activity decentralised across a variety of videogames.

At the same time, practices can be scaled to the size of the game in question – and the level of risk created by how that game structures its internal markets. As noted, the utility of digital assets for illicit uses is dependent on the underlying licit demand for those same digital assets, and that is especially true for videogame currencies. In other words, the only videogame currencies that are particularly useful for moneylaundering and other illicit behavior are the ones that are popular enough to support solutions to those same bad actors. Exceptions can be made for smaller, less successful franchises, and requirements can be tiered based on the potential for abuse presented by a particular digital asset. Voluntary measures – such as limiting trading of a particular asset in game such that third-market off-ramps are less functional – would reduce the need for mandatory requirements. And highrisk activity, such as directly offering means to exchange a digital currency for cash, should result in higher levels of mandatory regulation. In the end, and as with cryptocurrency, there is no definite solution to the problems posed by videogame-related digital assets, but there are steps that can be taken. The first is to classify different videogame-related virtual assets and economic structures by risk and by scale, an effort that some have already begun.13 These tiers of risk and scale can be paired with a menu of regulatory options, with full-blown AML and KYC measures at one end and basic cooperation and informationsharing within the industry at the other. Existing international AML frameworks aimed at cryptocurrencies should be updated to encompass other digital assets, tying videogame assets into frameworks. Money laundering in videogames predates cryptocurrency by years. Anti-money laundering measures in videogames should start to catch up.

See, e.g., https://lawreview.syr.edu/wp-content/uploads/2022/01/1487-1512-Kelly.pdf.

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24

SECURE BY DESIGN, BROKEN BY USE

WHY DIGITAL ASSETS AREN’T THE VILLAIN Authored by: Felix Eggenburg (Senior Associate) - KNOETZL

I ntroduction: Austria on “New Rails” As an early MiCA implementer with the MiCA Enforcement Act (MiCA – VVG) and a proactive Financial Market Authority (FMA), Austria can become an EU hub for “enforcement ready” digital asset markets. The framework pulls digital asset service providers into a fully regulated environment, while the FMA’s supervisory practice creates a dense layer of oversight, reporting and technical resilience. As a result, the missing link for digital assets circulating through Austriansupervised intermediaries is not so much legislation, but rather the initiative to build technical literacy. If courts, regulators and practitioners understand that digital assets are not inherently opaque or untraceable; instead, gaps in legal understanding, a deficit in technical capacity and coordination are what turns a technically transparent system into a practical black box.

“I think I Deleted My Money on the Internet” “URGENT: Suspicious Bitcoin activity on your account – Action needed.” When an e-mail pops up on Granny Helga’s computer, she panics. Although unaware of any Bitcoin in her passion, Granny Helga panics, when an e-mail pops up on her computer. The link looks right, the logo resembles her bank logo,

and the agent operating the costumer service appears trustworthy. The agent introduces himself as a dedicated “fraud agent” and explains that hackers are “about to move all of Granny Helga’s savings out of her account” and that the only way to saver her money is to transfer it, as soon as possible, into a secure, bank operated account. An account the bank allegedly uses for fraudulent incidents. Step by step, he walks her through her real online banking: she enters her passcode, a TAN code and confirms several transfers to an account held by a foreign partner, thereby watching her balance drop to almost zero. An hour later, the agent has vanished, the e-mail address bounces and Granny Helga is left puzzled. She calls her daughter: “I think I deleted my money on the internet.” In legal terms, Granny Helga is not a colourful anecdote but a stress test the system is currently failing. Faced with Granny Helga’s case, the current thread of action is that each institutional actor

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 will react within its familiar analogue script. The bank will most likely point to the fact that all transfers were duly authorised and therefore fall within the customer’s sphere of risk. The local police will dutifully record a statement, however, explain that it is not possible to simply reverse blockchain transactions within the means at their disposal. Her trusted lawyer will most likely not be familiar with the technicalities of Bitcoin transactions and unable to duly advice on the matter. The irony is brutal: every Euro that Granny Helga has sent is meticulously documented in the banking system and in return every Bitcoin transaction is traceable on-chain. What functions as a black box is not the blockchain; it is the institutional “usererror” of courts and practitioners who are still at the “I deleted the internet” stage of crypto literacy, with no standard playbook, no technical toolbox and no clear cross-border channels to turn radical transparency into realworld recovery. The real punchline is therefore not that Granny Helga does not understand Bitcoin, but that the institutions are only half a step ahead. As long as the (legal) system itself does not acquire a sufficient level of crypto literacy, enforcement will continue to blame the digital assets for what is, at its core, a “user-error” of the system itself.

In order to recover related damages, claims can be based either on criminal offences or on civil fraud and consequently filed with the Austrian criminal and civil courts.

Old Tools, New Asset Class The Austrian legal system has developed into a sophisticated and increasingly modern framework to respond to fraud as well as associated money-laundering, both in a traditional sense and in the digital asset space. New laws and regulations are regularly established to prevent fraudulent acts. At present, Austrian criminal law comprehensively criminalises, among others, acts of criminal fraud, breach of trust, fraudulent insolvency and untenable representation of fundamental information concerning certain corporations, often accompanied by money laundering.

Classic enforcement mechanisms under Austrian law apply, in principle, to digital assets. However, to ensure effectiveness, the framework requires careful reinterpretation in regard to these new forms of property, where the subject is not a physical property but rather a digital wallet or tokenised claim recorded on a blockchain. Recent reforms of the Austrian Code of Criminal Procedure (StPO), which facilitate seizure, freezing and access to electronic data, provide a useful doctrinal bridge by recognising that relevant value and evidence may primarily exist in digital form and on remote servers. However, enforcement practice suffers from the absence of specialised “digital asset chambers” or designated judges with mandatory training in blockchain terminology, custody models and transaction analysis. As long as judges treat wallets and transaction hashes as opaque technical curiosities rather than standard objects of enforcement, the gap between the formal applicability of classic remedies and their effective use in digital asset cases will persist.

Problem: Hard Math, Soft Skills: The Human Factor Blockchains are not fragile, mystical machines but “hard math”. They are transparent, rule based systems where every transaction is recorded, and can, in principle, be reconstructed and traced. The real vulnerabilities lie in “soft skills”. The most significant losses in the digital asset space stem from human behaviour. They typically arise from social-engineering schemes that deliberately target people with little to no knowledge about the digital asset space and manipulate users into disclosing private keys or authorising transfers, leaving accounts unprotected and from deficient compliance systems that fail to detect and identify suspicious transaction patterns. In addition, crossborder fragmentation of supervision creates gaps, that become opportunities for fraudsters to exploit jurisdictional inconsistencies.

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 Against this backdrop, the widespread perception that crypto is inherently opaque or anonymous is misleading: what presents itself to many as a black box, is in fact, a radically transparent system, but one that appears intransparent because the relevant actors often lack the necessary technical and conceptual knowledge. Closing this gap requires sustained investment in education and training, including basic blockchain literacy for judges and enforcement officers, improved investor education on common scam patterns as well as clear professional standards for lawyers and advisors who structure, hold or move digital assets on behalf of clients.

In addition, law firms should develop dedicated digital asset practice groups that pool experience instead of treating each crypto mandate as an isolated curiosity – handled individually. Where in-house understanding is limited, law firms ought to establish dedicated internal technical teams that combine legally trained staff with IT specialists and data analysts, who specialise on block explorers, wallet structures and who are equipped to interact with blockchain analytics tools. Alternatively, a structured outsourcing strategy, involving specialised external service providers such as cyber-crime consultants or blockchain forensics specialists should be adapted.

Conclusion Digital assets are secure, transparent and fully traceable at their core. What lags behind is the institutional system responsible for enforcing the rules that govern them. The main challenges lie in insufficient technical expertise, slow and fragmented procedures and a lack of effective institutional cooperation. As long as courts, regulators and practitioners continue to treat blockchain technology as an exception rather than an established part of the modern financial infrastructure, enforcement will continue to fall short of its potential. The technology already provides clarity by permanently recording transactions in a transparent and traceable manner — legal and institutional practice must now consistently put that clarity to work.

“Don’t Get Lost in the Tech” Regulators and Practitioners: Closing the Skills Gap Enforcement against digital assets ultimately depends on authorities. Namely authorities that are both willing and able to implement digital regulatory measures – combining legal powers with technical skills as well as forensic tools and clear procedures.

All of this ultimately ties back to the “user error” thesis. Many (failed) enforcement attempts do not reveal or reflect inherent limits of blockchain technology but rather expose professional blind spots. The problem is compounded where courts and practitioners lack a common language with technical experts and crucial forensic insight gets lost in translation, all while operating in a world where the transaction trail is there, but only visible to those who know how to operate the digital asset space.

It is no longer sufficient for courts, prosecutors or enforcement officers to merely be aware that the MiCAVVG exists. It is essential to develop the necessary know-how in order to operationalise the provisions at hand when confronted with cases involving digital assets. In this respect, it is crucial to actively engage and cooperate with the FMA, which can be achieved through standardised templates and channels for information requests to crypto-asset service providers, joint guidance on fraud and money laundering cases, and protocols that allow courts and prosecutors to identify, freeze or otherwise secure digital assets within hours rather than weeks, in order to ensure that the MiCA-VVG becomes a living enforcement framework rather than a legislative showpiece.

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ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24

HOW SHOULD COURTS AND PRACTITIONERS ADAPT ENFORCEMENT STRATEGIES

TO ADDRESS THE CHALLENGES OF TRACING AND RECOVERING DIGITAL ASSETS? Authored by: Rhys Evans (Associate) - Edmonds Marshall McMahon

Introduction “We live in a world where borders are ceasing to exist.” The Rt Hon Sir John Mummery PC KC, former Lord Justice of Appeal and President of the Intelligence Services Tribunal1. The prominence of crypto assets and currencies has burgeoned an ever-borderless world, with litigation being no exception. Disputes of this nature invariably involve defendants, custodians and other third parties located outside the jurisdiction of England and Wales. This, in conjunction with the nuance and complexity of the underlying technology, has seen a net result of current enforcement remedies

struggling to keep pace and offer the requisite protection for successful claimants in litigation. The courts of England and Wales have proven to be malleable in meeting the needs of crypto disputes. However, at the date of this essay, very few disputes of this nature have proceeded to trial. Consequently, it can be argued that enforcement options have lagged behind due to the lack of contested trials. Furthermore, enforcement against crypto assets where there is no access to the private key remains largely inaccessible. Traditional enforcement processes were not designed with the peculiarity of crypto assets in mind, and so now run the risk of no longer being ﬁt for purpose in the context of crypto disputes.

Friday 5th September 2025, 42nd Cambridge International Symposium on Economic Crime.

CJC Report on Civil Enforcement (April 2025)

Current Enforcement Option and their Failings The enforcement landscape in England and Wales has been subject to criticism. The Civil Justice Council (“CJC”) published its ﬁnal report2 (the “CJC Report”) concerning the shortfalls of the current enforcement regime.

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 Although, the CJC Report makes clear3 that it does not consider enforcement relating to property and its recovery, nor the ability to carry out enforcement of judgments in other jurisdictions. Nevertheless, in my view, the findings of the CJC Report are informative of the novel challenges claimants/victims (and practitioners) face when seeking enforcement against crypto assets. The CJC recommends (inter alia): 1. g reater emphasis on pre-action protocol and early engagement with debtors; 2. identification of the defendant to ensure proceedings have been served; and 3. early engagement with the defendant. These recommendations necessarily require the identification of a defendant or debtor. The decentralised ecosphere is synonymous with pseudonymity, which can stifle efforts to identify a defendant or debtor. There are also issues when seeking the engagement of a debtor or third party. When dealing with crypto asset custodians, such as exchanges, it is common for such entities to be resident in offshore and/ or secrecy jurisdictions. When dealing with less reputable entities, there is the risk (if not likelihood), that they will fail to engage in proceedings, even where no allegations of wrongdoing are leveled against them. There are powers under CPR Part 71 to examine a judgment debtor post judgment. However, an obvious prerequisite of this will be to have an identifiable debtor located in the jurisdiction. Notwithstanding this, there remains an arsenal of tools at the disposal of those seeking to enforce a monetary judgment4. However, for the reasons set out below, these may not be wholly adequate when dealing with crypto assets5:

CJC Report on Civil Enforcement, para. 1.1.

CPR Practice Direction 70A1.1 to 1.2

Writ or warrant of control –it remains unclear whether a High Court enforcement officer of County Court bailiff can (i) take actual control over the crypto; and (ii) whether such assets are capable of being sold at auction. Irrespective of the foregoing, in circumstances where the crypto assets are held at a centralised exchange, such exchanges will often operate on the basis of sweeping assets into its central, unsegregated ‘hot wallet’. Therefore, the ‘owner’ of the crypto assets does not retain legal title of the asset, but is rather owed a credit in the equivalent amount deposited (as established in Piroozzadeh6). If the judgment debtor does not retain title in the asset, then that asset is incapable of being subject to a writ or warrant of control. Third party debt order – this may be more attractive where assets are held with a custodian (i.e., an exchange) which retains the legal title in the crypto asset7. Orders of this kind can only attach to money judgments, which does not sit harmoniously with the characteristics of cryptocurrency (for completeness, third party debt orders have been obtained in the context of crypto assets previously8). Furthermore, there may also be jurisdictional issues in enforcing the order absent recognition in the custodian’s local jurisdiction. Charging orders – such orders are only capable of being granted against land, securities or other, limited types of assets9, but not crypto assets. Attachment of earnings orders – this requires there to be an identiﬁable debtor, who is employed, which presents obvious constraints in the context of crypto fraud disputes.

Solution It is clear that there are sizeable hurdles to overcome when seeking to deploy an effective enforcement strategy. However, that is not to say it cannot be done.

What Practitioners Can Do The responsibility of a robust legal strategy lies at the feet of legal practitioners. Given the speed at which crypto assets can be moved, to any corner of the world, all at the click of a mouse, it is trite to say that time will ordinarily be of the essence. Practitioners must be equipped to move at speed, both at the interim stage, and at enforcement, given the imminent, ongoing risk of dissipation. Practitioners will need to have a grasp of the technicalities of the crypto assets they are dealing with. In turn, this will likely be a factor in deciding the appropriate enforcement strategy. An analogous scenario would be when dealing with a centralised token issuer, such as Tether (USDT)10, and where the funds a claimant seek to enforce against are held in a private, noncustodial wallet. In these circumstances, it may be possible to utilise Tether’s burn and remint functionality whereby, broadly speaking, Tether can ‘burn’ the tokens from the non-custodial wallet, and ‘remint’ them into a different, secure wallet which a claimant can then recover the funds from. However, this functionality is at Tether’s sole discretion, and previous instances of this being deployed have, for the most part, been limited to Tether aiding public body law enforcement agencies as part of criminal investigations11. A successful enforcement strategy will be heavily dependent on the groundwork undertaken at an interim remedy stage. This invariably takes the form of Norwich Pharmacal12 and/ or Bankers Trust13 relief, as well as freezing orders. The preservation of assets is a crucial component to a successful recovery strategy. To state the obvious, enforcement against crypto assets simply cannot occur unless there remain assets against which to enforce. The importance of the information gathering and asset preservation stage, therefore, cannot be understated. The fast pace nature of crypto disputes

5 The enforcement options granted under CPR PD 70A relate only to monetary judgments. There is presently no legislative or regulatory framework that deﬁnes crypto assets or crypto currencies as money, nor would its technical functionality lend itself to such a deﬁnition. 6

Jahangir Piroozzadeh v Persons Unknown et al [2023] EWHC 1024 (Ch)

This will be dependent upon the terms and conditions of its user/customer agreement.

Ion Science v Persons Unknown & others (2020) (unreported).

Section 2 of Charging Order Act 1979.

See also Circle coin (USDC).

See the DOJ civil forfeiture complain for $225mn

Norwich Pharmacal Co. & Others v Customs and Excise Commissioners [1974] AC 133

Bankers Trust v Shapira [1980] 1 WLR 1274 (CA)

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 mean that failing to achieve adequate interim relief to preserve assets will frustrate enforcement efforts. The evolving and nuanced practicalities of crypto asset disputes will often require novel approaches to be adopted by legal practitioners if one is to be successful on the enforcement front. An example could be, following service of a delivery up order, the custodian / exchange provider (or even possibly a blockchain network developer) fails to adhere to or otherwise comply with the terms of the order and facilitate the return of the assets. In these circumstances, a claim may arise for dishonest assistance against an exchange and/or a network or blockchain developer for failing to assist in returning crypto assets. In principle, this could extend to claims of unjust enrichment on the part of the exchange or custodian. Pressure can also be applied by the mere threat of contempt or committal proceedings. However, there remains the principal issue that these entities are likely to be located outside of the jurisdiction, and therefore are not bound by any order of a court in England and Wales (absent reciprocal enforcement or recognition in their local jurisdiction). Claims in conversion may be levied at an uncooperative exchange, where such an exchange has denied a victim’s legal right to the cryptoasset14. These claims are unlikely to be successful at present given the common law position15 that intangible objects are incapable of being possessed, so the tort of conversion will not bite. Reform may be forthcoming in the Property (Digital Assets etc) Bill16, as well as the Law Commission’s view17 that there is a good arguable case that non-tangible property is capable of being converted.

Clerk & Lindsell on Torts (24th ed 2025), chapter16.

OBG Ltd v Allan [2007] UKHL

What the Courts Can Do For some time now, it has been the Law Commission’s view that the judiciary is the best placed forum for developing the legal landscape in respect of crypto disputes18. This must surely extend to enforcement. The courts may consider being more amenable to granting in rem judgments, as opposed in personam judgments. Judgments in rem are, in principle, capable of being binding and enforced against respondents in foreign jurisdictions19. Furthermore, foreign judgments in rem are more likely to be reciprocally recognised and enforced by the courts of England and Wales20. This theory proved to hold true in Tai Mo Shan Limited v Persons Unknown21. Developing this point further, the court should be open to novel remedies in aid of enforcement efforts. D’Aloia v Persons Unknown22 saw the court grant an order for service by means of an NFT. Therefore, in principle, there is nothing limiting the court from deploying such methods in aid of enforcing judgments. Jurisdiction remains a hurdle for effective recovery and enforcement strategies. There has been much commentary within common law jurisprudence as regards to lex situs of cryptocurrency, for the purpose of establishing a court’s jurisdiction23. A common theme running through such commentary, however, is that the courts are willing to adopt a pragmatic, purposive approach for determining that the courts of England and Wales have jurisdiction to deal with such disputes. I would say this approach is vitally important to allow for effective enforcement strategies for crypto related disputes. The Law Commission has recently proposed introducing a free standing information order24. This would operate independently of any underlying proceedings. However, this has been met with criticism. It is already possible to obtain information orders effciently,

and is routinely done so in the context of digital asset disputes. Furthermore, this does not address the present issue of needing such orders to be recognised or enforced in foreign jurisdictions. The CJC Report advances a proposal of a “single uniﬁed digital court”25. However, a more ambitious proposal would be to establish a specialist digital asset court, with powers extending to enforcement issues. The Dubai International Financial Centre Courts have seen great success since their inception in 2006. The speed and surety these courts offer is a lacking characteristic as regards enforcement generally within this jurisdiction. Moreover, a specialist court of this nature opens the opportunity for a bespoke, specialist judiciary who are attuned to the nuances that crypto asset enforcement matters present.

What Regulators/ Public Bodies Can Do Practitioners and claimants that have found themselves embroiled in recovery and enforcement of crypto will know all too well the reliance placed on centralised custodians and exchanges. In the vast majority of circumstances, these custodians will be the gatekeeper to repatriating the sought after assets. Their assistance in providing information and assistance, as well as the practical functionality of returning assets, is a facet that typically cannot be circumvented. Exactly how to bring the exchanges to the table to cooperate has failed many commentators to date. The ‘low hanging fruit’ argument is that regulators play a key role in ensuring compliance and cooperation. The imposition of ﬁnes and sanctions, even extending to blocking operations within the jurisdiction, appear to be the attractive (or practical) option presently. However, in circumstances where most exchanges are based abroad, much skepticism remains as to how effective this will be in reality.

16 Which will apply property rights to digital assets, even if not considered neither a thing in possession nor a thing in action, once enacted. At the date of this essay, this Bill is awaiting royal ascent. 17

Law Commission ‘Digital Asset: Final Report’ 27 June 2023, para 9.61.

Law Commission ‘Digital Asset: Final Report’ 27 June 2023, para 2.3(1).

Bridge et al, The Law of Personal Property (3rd Ed 2022), para 1-056.

As argued by Dicey et al, Conﬂict of Laws (16th Ed 2025), para 14R-108.

[2024] EWHC 1514 (Comm).

[2024] EWHC 2342 (Ch)

23 Ion Science v Persons Unknown (Unreported, 21 December 2020), Fetch.ai Ltd v Persons Unknown [2021] EWHC 2254 (Comm), D’Aloia v Persons Unknown [2022] EWHC and Tulip Trading Ltd v Bitcoin Association BSV [2022] EWHC 667 (amongst others). 24

Law Commission, Digital assets and (electronic) trade documents in private international law (5 June 2025)

CJC Report, para 5.4

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 The Economic Crime and Corporate Transparency Act 2023 enshrined new powers to law enforcement under Part 5 of the Proceeds of Crime Act 2002. Law enforcement agencies now have powers to freeze and forfeit cryptoassets. This has resulted in a stark increase in law enforcement agencies’ capabilities to recover crypto assets for the victims of crime. The SFO has already seen success in deploying these powers26. Custodians and exchanges are often reluctant to acquiesce requests from private body practitioners. The same isn’t necessarily the case for cooperation with law enforcement. This willingness to cooperate should be leveraged and deployed to its fullest utility. The case of Tulip Trading27 brought a novel proposal into focus; namely, should network software developers be compelled to aid in the enforcement or recovery of crypto assets. Granted, this is a fairly exotic approach, that is only likely to be successful in a limited set of circumstances28. Notwithstanding the common law developments in this regard, regulatory intervention may prove pivotal in garnering greater assistance on this front.

Admittedly, the Ethereum example was a result of a hack of a decentralised autonomous organisation (DAO) to the tune of 3.9 million ETH29, and required the intervention of a number of key investors, including the co-founder of Ethereum, Vitalik Buterin. Still, this principal action remains a possibility that could be deployed in particularly extreme circumstances.

Lastly, a common theme throughout all of the foregoing is that the law and remedies required for successful enforcement are already there; one only needs to adopt a novel application in crypto disputes. Lawyers must be prepared to undertake a bold approach and bend the legal framework to the beneﬁt of claimants.

Further to the foregoing comments as regard the critical issue of jurisdictional challenges, the question arises whether enforcement strategies would beneﬁt from a streamlined, reciprocal recognition treaty. This may take inspiration from the likes of the Hague Convention and, more pertinently, the New York Convention. This affords an opportunity for a tailored recognition regime that accounts for prominent issues relating to crypto disputes, including lex situs and contravening local laws.

Wider Picture & Novel Enforcement Methods A more unorthodox approach may also be worth more thought. Historically (and perhaps infamously) where crypto assets have been misappropriated, the consequential remedy has been a “fork” in the blockchain network. This includes the present iteration of Ethereum, the second largest cryptoasset network on the planet. This predicates a split of the network, leading to two branches, or iterations, of the blockchain network, such that one chain will exist whereby the misappropriated assets remain in the control of the bad actor, and the other whereby the assets are placed back into the control of their original owner.

Conclusion Omniterritoriality and wider cooperation present themselves as seminal hurdles to effective enforcement strategies. The courts and public bodies are well placed to tackle this issue. It is the courts’ cross to bear to leverage the powers available to them to circumvent jurisdictional concerns, and deliver judgments that are capable of being enforced in other jurisdiction. Regulators have the unenviable (but nonetheless crucial) task of ensuring cooperation on the part of custodians and exchanges. Regrettably, the incentive of tackling transnational fraud and repatriating victims of fraud is seldom enough to garner cooperation. Greater cooperation between practitioners, public sector bodies and custodians is vitally important if one is to see meaningful progression in combating these crimes.

SFO freezes over 10K in crypto assets from Arena TV’s CEO - GOV.UK

Tulip Trading Ltd v Bitcoin Association for BSV & ors [2022] EWHC 667 (Comm)

Most likely where the purported beneﬁciary of the cryptoassets does not have access to the private key(s).

The present value as at the date of this essay being equivalent to approximately £8,566,000,000.

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24

THE FUTURE OF DIGITAL ASSET RECOVERY AND ENFORCEMENT

Authored by: Matthew Purcell (Partner) - Saunders Law

Summary • D igital assets replace intermediaries with code and anonymity, making tracing and recovery difficult. • T raditional enforcement tools must evolve to adapt to this new environment. • B lockchain analytics, real-time monitoring, and open-source intelligence now form the backbone of digital asset tracing. • G lobal coordination and harmonised procedures are essential to recover assets across borders. • L egal innovation and reform will define the next phase of effective, technology-driven asset recovery. Cryptocurrencies, tokenised securities, and decentralised finance (DeFi)

projects now move trillions of pounds across borders in seconds. In the UK, YouGov research commissioned by the Financial Conduct Authority found that as of August 2024, 12% of UK adults owned cryptoassets. Regarding the criminal use of cryptoassets, this has been increasing for years; however, it has now moved beyond the boundaries of cybercrime activities and now relates to all types of crime that require the transmission of monetary value. Traditional asset tracing and recovery enforcement frameworks were built for bank accounts and intermediaries, not for blockchain networks that rely on anonymity and code. Tracing and recovering stolen or hidden digital assets requires courts and legal professionals to grasp the fundamentals of digital assets, especially cryptocurrency, the tracing and analytical tools available, and the crossborder regulations that affect recovery.

What Are the Challenges When Tracing and Recovering Digital Assets? Digital assets exist outside the structures that have long anchored asset recovery enforcement. Their decentralised design means there is no single authority to target or investigate,

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 no straightforward trail to follow, and assets often pass through jurisdictions in the blink of an eye, leaving little or no trace. Pseudonymity compounds the difficulty. Blockchain transactions are public, but users are identified only by alphanumeric wallet addresses. Offenders exploit mixers, tumblers, privacy coins, and cross-chain bridges to obscure ownership. The use of decentralised exchanges allows assets to be transferred across multiple tokens and protocols, far faster than court orders can be served. The Silk Road, Hydra (now shut down), and other darknet marketplaces provide a route for billions in cryptocurrency to move through complex laundering networks before recovery is possible. Even with international cooperation, unpicking these digital trails can take years.

How Are the Courts Dealing with Enforcement? Courts, like other bodies dealing with digital asset recovery and enforcement, are responding with technology, especially Artificial Intelligence (AI). Established remedies such as freezing injunctions, proprietary injunctions, and disclosure orders have been reinterpreted to fit the realities of cryptoasset recovery. The English courts were among the first to recognise that cryptocurrencies are property, as confirmed in AA v Persons Unknown [2019] EWHC 3556 (Comm). Following this decision, the long-standing legal rule that allows a Claimant to enforce their ownership rights through a constructive trust, when stolen or fraudulently obtained property can be traced in equity, can now also be applied to cases involving cryptocurrency assets. Case management has also adapted. A recent case demonstrated how coordinated action between UK and US courts can overcome the challenges of tracing stolen cryptocurrency. In February 2022, the Wormhole Portal, a blockchain bridge, was hacked, and 120,000 wrapped Ether tokens, worth over US $320 million, were stolen. To protect users and stabilise the platform, Tao Mao Shan Limited (TMSL), a Cayman Islands company, replaced the stolen tokens with its own funds 1

and began legal action to recover the assets.

through a Norwich Pharmacal Order or Bankers Trust Order.

TMSL obtained an injunction from the English High Court against Oazo Apps Limited (Oasis), a UK-based decentralised finance developer. Oasis’s app was adapted to seize the stolen assets from the hacker’s wallet and transfer them into a secure wallet beyond the hacker’s reach.

Real-time monitoring is becoming essential. Automated alerts can track ongoing wallet activity, giving practitioners a better chance of intercepting transfers before assets vanish into privacy networks or offshore jurisdictions.

At the same time, TMSL brought proceedings in the Supreme Court of the State of New York. The hacker was served via non-fungible tokens (NFTs) sent to their known wallet addresses. In March 2024, the New York court ruled that TMSL had a proprietary right to the stolen crypto. The English High Court later recognised and enforced1 the New York judgment, allowing the recovered tokens, by then worth over $US400 million, to be transferred to TMSL on 19 July 2024.

Continuing Challenges Despite progress, significant obstacles remain. The existing anti-money laundering and counter-financing of terrorism (AML/CFT) regimes were not designed for decentralised systems. Some privacy-focused networks operate entirely beyond regulators’ reach. Cross-border judicial cooperation remains slow. Mutual legal assistance treaties (MLATs) and informationsharing mechanisms lag behind the speed of digital transactions. Jurisdictional conflicts also arise when courts assert authority over assets that cross multiple states in seconds. Practical challenges compound these legal limits. Vast data volumes can overwhelm investigators, while anonymity tools frustrate disclosure efforts. Defunct exchanges and insolvent custodians further complicate recovery, leaving victims without a central party to pursue.

Tools for Lawyers Working on Digital Asset Recovery Matters For lawyers, digital asset recovery requires new methods. Blockchain analytics platforms provide visual transaction mapping, pattern recognition, and risk scoring. These tools reveal links between wallet addresses and exchanges, helping lawyers identify where assets have been converted or withdrawn. Open-source intelligence (OSINT) complements blockchain data by connecting digital identities with social media profiles, online activity, and leaked databases. Used responsibly, OSINT can bridge the gap between pseudonymous wallet data and realworld suspects. Practitioners now collaborate closely with virtual asset service providers (VASPs). Exchanges holding customer data may be compelled to disclose Know Your Customer (KYC) information

International Cooperation and Regulatory Innovation Digital asset recovery can only succeed through coordinated global action. The Financial Action Task Force (FATF) continues to refine its guidance on virtual assets and service providers, urging consistent enforcement of the ‘travel rule’ to track transfers between jurisdictions.

Tai Mo Shan Ltd v Persons Unknown [2024] EWHC 1514 (Comm)

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 In the EU, the Markets in CryptoAssets (MiCA) Regulation establishes uniform rules for crypto issuers and exchanges, supporting transparency and accountability. Interpol and Europol have created specialist task forces to trace crypto flows linked to organised crime and ransomware. Successful recoveries increasingly rely on collaboration. International teams combining law enforcement, forensic experts, and civil litigators have recovered hundreds of millions in stolen cryptoassets. Reform proposals in the UK and US reflect this momentum. The Law Commission’s 2025 recommendations aim to clarify proprietary rights in digital assets and expand judicial remedies, while the US GENIUS Act proposes enhanced seizure and management powers for digital property.

To effectively address cryptoasset tracing and recovery, the judiciary, enforcement agencies, and legal professionals must understand blockchain concepts, from token standards to DeFi protocols. Investment in technical expertise and collaboration between courts, regulators, and the legal profession, both domestically and internationally, will determine whether future recovery actions succeed or stall.

What future reforms could enhance digital asset recovery? Clearer statutory definitions of crypto property, international enforcement standards, AI-driven tracing tools, and specialist training for courts and lawyers will all strengthen recovery mechanisms in the years ahead.

FAQs What digital tools help practitioners trace and recover digital assets? Blockchain analytics platforms map transactions, identify linked wallets, and detect suspicious patterns. Combined with open-source intelligence and forensic expertise, they help reveal asset movements and clues to ownership.

How can courts adapt legal remedies to the crypto context? Courts are expanding the use of freezing and proprietary injunctions, accepting digital service methods, and recognising forensic blockchain data as valid evidence. These adaptations make enforcement practical in the digital space.

Emerging Remedies and Future Pathways Civil remedies are evolving alongside technology. English courts have expanded the use of interim remedies, including worldwide freezing injunctions against unknown persons2 and disclosure orders against exchanges located abroad. Future reforms could include new asset preservation categories specifically designed for crypto. Automation and artificial intelligence are likely to play growing roles in tracing and prediction, as well as in identifying transaction clusters and potential obfuscation patterns across multiple blockchains.

Why is international cooperation vital for digital asset recovery? Because cryptocurrencies can be transferred instantly across borders, no single jurisdiction can recover them on its own. Coordinated investigations, harmonised laws, and rapid information sharing are essential to track and seize assets.

Which legal hurdles most hinder effective enforcement? Jurisdictional conflicts, slow mutual assistance processes, privacy-focused technologies, and insolvent exchanges all complicate recovery. Each requires procedural innovation and cooperation to overcome.

Cross-chain analytics already enable investigators to trace funds across Ethereum, Bitcoin, and other ecosystems, providing a clearer view of laundering structures. 2

CMOC v Persons Unknown [2018] EWHC 2230 (Comm)

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ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24

CLOSING THE GAP

ENHANCING ENFORCEMENT STRATEGIES FOR DIGITAL ASSETS Authored by: Ismail Mert Sanli (Founding Partner) - Vadar Salni

Introduction Digital assets are defined as assets created, stored and accessed in digital environments and possessing economic value.1 Blockchain based digital assets initially entered the global economic environment with the emergence of Bitcoin in 2009. Since then, the concept of digital assets has evolved considerably beyond Bitcoin and expanded to encompass several types of digital assets such as tokenized securities, stablecoins, DeFi (the decentralised finance) protocols, cross-chain transfer mechanisms, and NFTs (non-fungible token). Owing to the rapid development and diversification of digital assets, they have created various advantages, such as enabling transactions to be conducted in a decentralised manner, enabling fast and low-cost transfers, and providing open market structures for market participants. However, these developments also create an ideal environment for fraud, money laundering, cyber-attacks and crosschain asset diversion. 1 2

In this context, one of the most crucial drawbacks of the digital assets is enforcement gap in the legal and regulatory mechanisms. This gap stems from the fact that investigation methods, court measures, and law enforcement capacities shaped by the traditional financial world are inadequate in the face of digital assets’ decentralised structure, anonymous / pseudonymous character, global and cross-border access, mixers, bridges, privacy coins, flash-loans, chain-hopping, and the 24/7, highvolume, fast-paced nature of financial transactions.2 While many countries are still working to establish judicial, institutional, and technical standards for tracing, freezing, and recovering digital assets, criminal organisations and malicious actors continue to exploit technological capabilities in creative and complex ways. Accordingly, this article will analyse the enforcement gap, discussing the problems in the process of tracing and recovering digital assets and offering solutions to these problems for courts and practitioners.

https://www.fatf-gafi.org/content/dam/fatf-gafi/guidance/RBA-VA-VASPs.pdf.coredownload.inline.pdf https://journal.unnes.ac.id/journals/ijcls/article/view/28795/6740

Challenges in Tracing Digital Assets The tracing of digital assets presents a series of challenges that are significantly different from those encountered in traditional financial systems. These challenges can generally be grouped into three dimensions: institutional and technical knowledge gaps, limitations in national and international cooperation mechanisms, and the use of sophisticated obfuscation techniques by criminal actors. The combined effect of these factors often leads to delays, loss of evidence, and in some cases, investigations becoming completely deadlocked.

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24

i. Institutional and Technical Capacity Gaps One of the most fundamental structural problems encountered in investigations and enforcement processes related to digital assets is the lack of technical knowledge seen in traditionally organised judicial bodies and criminal investigation units. While judges and prosecutors in many countries have experience with traditional financial systems, banking transactions, or traditional money laundering methods, Web3-based crime types require a completely different area of expertise.3 For instance, the movement of an asset through hundreds of wallets within a matter of seconds via a flash-loan attack, or the complete disruption of traceability through the use of privacy coins, requires technical expertise and advanced analytical capabilities that go far beyond the logic of traditional investigation methods. The lack of sufficient mastery over the fundamental operating logic of blockchain technology, consensus mechanisms, the technical infrastructure of DeFi protocols, stablecoin architecture, or the obfuscation capabilities offered by tools such as mixers and cross-chain bridges not only creates a theoretical knowledge gap but also leads to problems in practice, such as delays in evidence collection processes, incorrect, incomplete, or ineffective application of protective measures, and the court’s inability to correctly evaluate technical reports obtained from experts.

ii. Limited National and International Cooperation The cross-border nature of digital asset crimes requires strong coordination between national and international authorities for an effective investigation and enforcement process. However, existing international cooperation mechanisms are largely inadequate in the face of the speed and technical complexity offered by the Web3 ecosystem. First and foremost, there is a marked lack of regulatory standards between countries.4 Legislation that differs, particularly in terms of AML (Anti Money Laundering) and KYC (Know Your Customer) obligations, complicates the detection and identification processes at the heart of investigations; while digital asset providers are subject to strict oversight in some countries, in others there are virtually no regulations governing these institutions. This regulatory fragmentation allows criminals to quickly move their assets to low-regulation or unregulated areas. 3 4 5

In addition, information sharing between countries is often limited, slow, and lacking in operational capacity. The processing of mutual legal assistance requests can take months or even a year; during this time, suspicious assets change hands, their traces are erased through mixers, or they are transferred to an entirely new blockchain network. These delays lead to losses that are practically irreparable when considering the ability of digital assets to move within seconds.

iii. Obfuscation Techniques Used by Criminal Actors These cooperation and structural challenges are further compounded by the deliberate use of obfuscation mechanisms in digital asset transactions. For instance, coin mixers are services that aim to hide the source and ultimate owner of funds by fragmenting and restructuring the data flow of blockchain transactions by pooling and mixing crypto assets from multiple users. Structurally, coin mixers are based on anonymity, allowing users to exchange or redirect their coins to different addresses without being linked to their transaction history. However, due to the level of anonymity they provide, these mechanisms are characterised as high-risk tools for the use of commingled Bitcoin and other crypto asset transactions to launder the proceeds of crime, disguise fraudulent funds, and cover up multi-layered regulatory violations.5 Indeed, there are frequent examples of criminal actors using coin mixers to disguise the source of illicit funds, such as hacking proceeds, drug trafficking profits, ransomware payments, and similar illicit funds; in addition to money laundering, these mechanisms are also used in fraud cases to hide the traces of unauthorised transfers. In this respect, coin mixers have evolved from being innocent privacy-enhancing tools to becoming one of the primary methods used by criminal organisations and malicious actors to conceal fund flows and evade AML controls.

https://www.iosco.org/library/pubdocs/pdf/IOSCOPD699.pdf?utm https://www.jbs.cam.ac.uk/wp-content/uploads/2024/10/2024-2nd-global-cryptoasset-regulatory-landscape-study.pdf?utm https://fiaumalta.org/app/uploads/2021/11/FATF_Updated-guidance-VAsVASPs.pdf?utm

Technological Adaptation: Building Advanced Tracing and Monitoring Models In light of these structural and cooperation-related challenges, technological adaptation emerges as a central element in closing the enforcement gap. In addition to legal and institutional reforms, courts and law enforcement agencies need to integrate new tools and models into their daily practice in order to keep pace with Web3-based crime. This section focuses on two key components of such adaptation: court-approved wallet flagging systems and the systematic use of advanced blockchain analytics, including AI-powered tools.

i. Court Approved Wallet Flagging Systems Given the current challenges in tracing digital assets, it is inevitable that courts and enforcement agencies adopt a more proactive approach. In this context, one of the most effective methods is the development of systems that enable the marking of criminal wallets by court order. Tagging enables real-time tracing of all asset movements on the chain, significantly hindering the rapid loss of criminal assets through methods such as mixers, bridges, or chain-hopping. However, for this mechanism to be functional, it is not sufficient to label only the first address; the use of analysis software at the institutional level that automatically labels new addresses that appear as assets are transferred must be made mandatory. Such a system creates a proactive monitoring model, unlike traditional seizure or precautionary mechanisms. The assets involved in the crime can be tracked instantly by the investigating authorities with every movement. Thus, the chain of evidence is preserved, the risk of funds becoming untraceable is reduced, and the effectiveness of investigations increases significantly. The adoption of this technology by courts as a standard precautionary measure is one of the most critical steps in adapting to the digital asset ecosystem. One of the key advantages of the wallet flagging system is that the AML and compliance units of financial institutions will also be able to identify these wallets and take immediate action, such as freezing or suspending transactions.

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 Therefore, the implementation of such a system will not only support the blockchain-based mapping of illicit funds but will also enable financial institutions to prevent money laundering activities on their platforms.

ii. Adoption of Advanced Blockchain Analytics Tools Another key recommendation is the institutional and systematic use of advanced blockchain analysis tools by courts and law enforcement agencies. Platforms such as Chainalysis, TRM Labs, and Elliptic not only display transaction movements on the chain; but they also perform risk scoring, group transaction clusters, reveal suspicious behaviour patterns, and offer the ability to trace fund flows in detail. This capability has become an indispensable tool, particularly in analysing attacks using multiple chains, fast transfers, or funds passing through mixers. The effectiveness of these tools can be further enhanced by AI-powered pattern-recognition models. Artificial intelligence can uncover anomalies that are nearly impossible to detect with the human eye or classical analysis methods; for example, it can automatically identify ultra-fast transfer sequences in flash-loan attacks, mixer input-output correlations, or DEX-based atomic swap chains. Furthermore, classifying large-volume transaction clusters and categorizing suspicious asset movements based on risk scores increases both the speed and accuracy of the investigation process. Therefore, these analytical tools should not merely be considered an auxiliary element for courts and law enforcement agencies but rather should become a standard component of digital asset investigations. Such an approach will provide an effective technological response to increasingly complex criminal methods within the digital asset ecosystem and play a critical role in reducing the enforcement gap.

I nstitutional Capacity Building for Digital Asset Enforcement The technological compliance mechanisms outlined above are critical for accelerating existing investigation and enforcement processes, but they are not sufficient on their own. The effectiveness of advanced analytical

6 7 8

tools or wallet tagging systems only materialises when supported by a well-equipped institutional structure, specialised personnel, and rapid decision-making processes capable of utilising these tools. Therefore, alongside technological solutions, it is necessary to strengthen the institutional capacity specific to digital asset investigations. The issues discussed below constitute the fundamental components of the structural transformation required for existing judicial and law enforcement structures to adapt to the digital asset ecosystem.

i. Specialised Judicial Bodies for Digital Assets The technical complexity and specific detail intensity arising from the inclusion of digital assets in legal proceedings makes it difficult for existing court structures to effectively resolve such disputes. Therefore, the fundamental reform required is the establishment of digital asset-specific judicial units or specialised courts. These units should consist solely of specialised judges and prosecutors who will handle digital asset disputes, and this personnel’s blockchain literacy and mastery of advanced technical issues such as DeFi, multisig, and stablecoins should be ensured through mandatory training. This structural specialisation will not only expedite litigation processes but also prevent victimisation and loss of rights stemming from technical knowledge gaps. An example of a pioneering approach in this field is the Digital Economy Court established by the Dubai International Financial Centre (the “DIFC”) Courts in December 20216. Similarly, in the United Kingdom, as part of the Salisbury Square Justice Quarter project funded by the City of London Corporation, 18 courtrooms in the new centre, scheduled to open in 2026, will be dedicated solely to fraud, financial crime, and cybercrime cases7. Such specialised centres aim to provide victims with faster results by swiftly addressing crypto asset fraud and cyber financial crimes. This specialisation will enable the accurate interpretation of on-chain evidence, the establishment of consistent case law for new legal concepts, and the provision of legal predictability conducive to international cooperation.

ii. Hybrid Multi-Agency Task Forces The investigation of digital assets has a much more complex and layered structure compared to traditional crime

investigations. This situation has led to the traditional disciplinary divisions within law enforcement agencies (the distinction between cybercrime and financial crime units) proving inadequate in digital asset-focused processes. Since digital assets can be involved in international transactions within seconds, it is imperative that investigation teams consist of competent experts in both cybersecurity and financial tracing. This requirement can be met through the widespread adoption of the “Fusion Teams” model internationally, which brings together different areas of expertise under a single operational umbrella. Thanks to this model, cyber experts analysing the technical source of an attack and financial investigators tracing the escape route of funds on the blockchain can work simultaneously without delay. The United States, one of the legal systems adopting this strategy, has taken a significant step towards centralising expertise in this field: The Federal Bureau of Investigation (the “FBI”) established the “Virtual Assets Unit” in 2022, bringing all cryptocurrency expertise under one team, thereby enhancing its capacity to support agents with advanced analytical tools and technical procedures. Taking a similar approach, law enforcement agencies in the United Kingdom have also formed specialised teams; for example, the Metropolitan Police Service established a 40-person specialist cryptocurrency investigation team in 2023, thereby increasing its competence in this area.8 Consequently, the creation of such interdisciplinary and specialised law enforcement units plays a vital role in effectively resolving the complex transfer transactions encountered in digital asset crimes and ensuring legal predictability in judicial processes.

iii. Compulsory Professional Development Programs The rapid transformation of technologies within the digital asset ecosystem and their frequent involvement in legal relationships not only highlight the inadequacy of existing judicial systems, but also clearly demonstrate that members of these systems lack sufficient technical knowledge on the subject. In this sense, financial literacy regarding digital assets has become a necessity that directly affects legal processes for members of the judiciary and law enforcement involved in these processes. In this context, judicial

https://www.difccourts.ae/about/difc-courts https://news.cityoflondon.gov.uk/city-marks-major-milestone-for-new-justice-quarter-fighting-fraud-cyber-and-economic-crime/ https://coinmarketcap.com/academy/article/london-police-deploys-a-specialized-squad-to-hunt-crypto-criminals

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 personnel involved in the processes having technical knowledge about the elements of the ecosystem will ensure that the processes of seizure and freezing of digital assets function as required and prevent criminal acts involving the use of digital assets in all investigation and trial processes. It is of great importance that training programmes established to enable members of the judiciary and law enforcement officers to acquire the necessary technical qualifications include practical case studies based on real cases. Such examples will significantly contribute to strengthening technical competence by ensuring that theoretical knowledge is integrated with practical application. Indeed, one of the most notable examples of this is the Digital Asset Coordinators Network (the “DAC Network”) established by the US Department of Justice9. Through this network, the aim is to increase expertise in digital assets nationwide; comprehensive training programmes are organised for prosecutors, members of the judiciary and law enforcement units. In addition, in the UK, the Economic and Cyber Crime Academy within the City of London Police has been providing training to law enforcement agencies and private sector officials since 201210. Therefore, the key point here is not so much the creation of such programmes from scratch, but rather their widespread implementation in a manner that strengthens international cooperation.

Adaptation of Applicable Legislation and Existing Obligations The effective implementation of sanctions and enforcement processes relating to digital assets is not limited solely to technological and institutional transformation, as explained above. It is also imperative that national and international legislation applicable to digital assets be aligned with the nature of these assets and the legal transactions associated with them. In this context, two fundamental strategies must be implemented: (i) the establishment of comprehensive blacklist mechanisms at national and international level for suspicious transactions and wallets, and (ii) the introduction of more comprehensive and binding obligations for critical actors in the digital asset ecosystem.

9 10 11

i. Blacklists at Both National and International Levels

ii. Additional Obligations for Key Ecosystem Actors

The primary objective of this strategy is to record wallets and transaction movements related to digital asset transactions identified as suspicious as a result of legal proceedings conducted by law enforcement agencies and judicial authorities on both national and international blacklists. The simultaneous sharing of these lists through international platforms such as the Financial Action Task Force (the “FATF”) will significantly facilitate the identification and tracing of digital assets used in cross-border transactions in violation of the law and the accounts associated with them. Thus, for example, the transfer of funds created through the laundering of proceeds of crime to other countries can be prevented at the outset.

Although stablecoin issuers, exchanges, liquidity providers, and other technical service providers directly involved in the digital asset ecosystem have a better grasp of the situation than judicial and law enforcement officials, who constitute the other side of the issue, as explained above, in order to prevent digital assets from being used in illegal activities that constitute criminal offences, these key actors must also be subject to certain additional obligations that are compatible with current technological developments and conducive to international cooperation.

Although national regulations impose an obligation on the CEX (centralised exchanges) to comply with specific instructions regarding suspicious transactions, the main challenges arise with regard to decentralised finance structures. Therefore, the primary regulatory intervention should be to mandate compliance with national and international blacklists designed for the DeFi ecosystem and to require that DeFi protocols be created and developed in accordance with these standards. In parallel, a clear and binding framework of obligations should be established for the authorities of organisations providing infrastructure to publicly accessible decentralised exchanges, thereby creating legal liability; this would ensure effective compliance with the relevant regulations. The fact that a wallet classified as high-risk in one country is considered reliable in another creates a loophole that effectively encourages the use of digital assets in illegal activities. Therefore, in addition to the blacklists that will be created, a risk scoring mechanism should be developed that assigns scores to suspicious wallets and user accounts, similar to credit scoring systems in banks, and that is internationally recognised. Such a system will play an important role in preventing the misuse of digital assets by establishing a common global assessment standard.

One of the most recent examples in this regard is the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the “GENIUS Act”)11, which came into force in the United States on July 18, 2025. The most noteworthy aspect of this law internationally is that it imposes an obligation on stablecoin issuers to have a technical infrastructure capable of freezing digital assets upon request by official authorities and to make this a standard feature. Violation of these and similar obligations may result in a wide range of sanctions, from restrictions on the issuer’s activities to mandatory compliance with regulations and even licence revocation. In this context, as in the aforementioned pioneering regulation, compliance with blacklists created by the competent authorities should be strictly regulated as an obligation for actors in the digital asset ecosystem; and serious sanctions should be envisaged for small and new generation actors who fail to properly fulfil their KYC and AML obligations, including the technical infrastructure for implementing freezing procedures, which is already found in many national legislations. Furthermore, in order to facilitate the adoption of the new regulations by the parties concerned, care should be taken to inform the public about these issues as transparently as possible.

Redefining the Enforcement Framework for Digital Assets As legal processes involving digital assets are largely not confined to a single country, any step taken in this area that is expected to be truly functional must necessarily be

https://www.justice.gov/archives/opa/pr/justice-department-announces-report-digital-assets-and-launches-nationwide-network https://academy.cityoflondon.police.uk/about-us/ https://www.congress.gov/bill/119th-congress/senate-bill/1582/text

ThoughtLeaders4 FIRE Magazine FUTURE THOUGHT LEADERS ESSAY COMPETITION • ISSUE 24 international in nature. Otherwise, no matter how effective the work carried out at the national level may be, a regulation limited to a single country or jurisdiction cannot be functional in this area, which involves cross-border transfers and transactions. For these reasons, in large-scale cases involving digital assets, such as fraud and money laundering, it has become imperative to establish common standards, real-time communication networks, and joint operational teams between countries in order to trace the proceeds of crime.

i. Interoperable Legal Frameworks One of the priority strategies for ensuring international cooperation is the adoption of common rules that will standardise and regulate in greater detail the AML and KYC obligations imposed on service providers at the local level. This will make it possible to prevent suspects from exploiting differences between local regulations as loopholes and circumventing sanctions by conducting illegal transactions through cross-border transfers. In addition to the common legal framework, another significant problem is that decisions requiring the fastest possible execution, such as freezing orders issued by official authorities, cannot fulfil their intended function due to the many time-consuming procedures involved in traditional diplomatic channels, such as certification and translation. Therefore, it is imperative to adopt faster and more effective approaches that produce immediate results. To achieve this efficiency, international consensus must be reached on mutual recognition principles for cross-border transactions involving digital assets, enabling action without waiting for lengthy diplomatic processes. This system should operate through mutual recognition processes supported by technical infrastructure, based solely on instructions transmitted between specialist units designated by countries, and should likewise be valid in terms of requests that comply with accepted common standards.

ii. Mechanisms for Rapid Cross-Border Action In addition to the mutual recognition processes and shared responsibilities mentioned above, one of the most important points is the establishment of mechanisms that will create the fastest possible response to crossborder transactions. In this regard, local authorities, such as law enforcement fusion teams or digital asset unit

coordinators, should be registered with central units connected to international communication systems and enabled to communicate in a manner that allows them to issue direct instructions. This will enable units to share suspicious transactions and wallets simultaneously, 24 hours a day, via secure communication channels, allowing for swift action. However, for these instructions to be effective, their reliability must be ensured through two-way verification, and they must be designed to be sent only through the communication channels of the relevant regulatory authorities. Additionally, for such cooperation to function properly, certain international standards must be established. These should include the procedures for submitting freezing, suspension, or similar requests in a format compliant with these standards; the temporary execution of such measures; and the requirement to initiate formal legal proceedings within a specific timeframe in the jurisdiction where the freezing or similar order is ultimately enforced. Through such regulations, it would be possible to create a fast and effective mechanism for international cooperation without infringing upon property rights.

iii. Joint Task Forces for Complex Cases A significant proportion of fraud, organised crime and money laundering cases involving digital assets are far too complex to be resolved by a single country acting alone. Therefore, in large-scale investigations with crossborder implications, the establishment of joint task forces comprising specialist units from the relevant countries is no longer an option but a necessity. The purpose of these units is to accelerate the flow of information between different jurisdictions, conduct evidence collection processes simultaneously, and minimise time loss by taking critical operational decisions in a coordinated manner. The creation of such joint teams requires not only technical capacity but also enhanced legal compliance. Authorities included in the task force are expected to act uniformly in processes such as monitoring digital asset wallets, detecting suspicious asset flows, and implementing emergency freezing decisions, in accordance with joint investigation protocols, parallel to their own national procedures. Thus, delays or information gaps in a single country will not weaken the impact of the entire operation.

The effectiveness of joint task forces becomes critical, particularly in situations where suspicious transfers can be dispersed across different countries within minutes or even seconds. This structure enables relevant countries to collaborate in real time and to conduct joint analysis and assessment processes more robustly, thereby enhancing the success of operations. This approach becomes one of the most effective tools in combating increasingly complex criminal structures within the digital asset ecosystem.

Conclusion In conclusion, the rapidly evolving nature of digital assets and the ease with which cross-border transactions can be carried out clearly demonstrate that traditional investigation and prosecution mechanisms are inadequate in adapting to this field. Cross-chain transfers, tools that enhance anonymity, and high-volume transactions require both technological solutions and organisational transformation. In this context, four fundamental needs emerge throughout the article: i) the integration of technological tools such as advanced analytics and wallet-flagging systems into standard investigative practice, ii) the strengthening of institutional capacity through specialised courts, multi-agency investigation teams and mandatory technical training, iii) the harmonisation of AML and KYC standards and blacklist mechanisms at the international level to ensure effective cross-border enforcement and iv) the establishment of a redefined global enforcement framework built upon interoperable legal standards, rapid mutual-recognition mechanisms, real-time cross-border communication systems, and joint operational task forces capable of responding swiftly to complex multi-jurisdictional cases. Adopting this holistic approach will enable the creation of a faster more effective, and predictable enforcement framework against increasingly complex criminal structures within the digital asset ecosystem.

TL4 Magazine Supplement: Skills, Culture & Alignment

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About ABC4

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ThoughtLeaders4 (TL4) and ABC Chambers Solutions are pleased to announce the launch of ABC Legal Talent. This collaboration brings together shared values and complementary strengths, a commitment to trust and long-term relationships, underpinned by a deep insider understanding of the legal profession. Built on over a decade of trusted experience in chambers recruitment and further enhanced through TL4, ABC Legal Talent offers an integrity-led, people-centred approach to recruitment for niche, boutique, and high-value law firms, particularly in HNW and Asset Recovery practices. As specialists rather than generalists, ABC Legal Talent’s ethos complements TL4’s commitment to high-quality discussion and meaningful professional connections. Together, the organisations combine TL4’s sector visibility and networks with ABC Chambers Solutions’ expertise in people strategy, market positioning, and workforce planning. This includes light-touch guidance on succession planning, future skills, growth priorities, and retention risks — helping firms plan ahead rather than react. Grounded in clarity and integrity, this collaboration supports firms and individuals as they navigate team growth, culture, and long-term success. This supplement explores the human foundations of legal practice: the skills, environments, and cultures that enable exceptional teams to thrive in an increasingly complex and competitive market. Here, the ABC Legal Talent team share practical insight shaped by years within chambers, law firms, and specialist professional environments. Together, they examine what truly differentiates firms that attract, retain, and empower outstanding people.

Georgina Sundown

Hudson Brewer

georgina@abclegaltalent.com

hudson@abclegaltalent.com

Lucy Burrows

Rachael Argent

lucy@abclegaltalent.com

rachael@abclegaltalent.com

Sam Biggerstaff

Sarah Willshee

sam@abclegaltalent.com

sarah@abclegaltalent.com

Senior Talent Consultant

Talent Consultant

Senior Talent Consultant

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AI, AUTOMATION, AND YOU

THE SKILLS THAT WON’T BE REPLACED Authored by: Hudson Brewer (Senior Talent Consultant) - ABC4 Artificial intelligence is far from a distant concept for the legal profession. It is already present in document review, research, disclosure exercises, knowledge management, and increasingly in drafting and analysis. For lawyers, solicitors, in-house counsel, barristers, clerks, and practice managers, the real question is how we adapt our skills around it.

of meaningful employment. It was recognised as progress. Today, we are at an equivalent moment - but with mental labour.

AI excels at precisely these activities. This reflects Moravec’s Paradox: computers find easy what humans find hard (processing enormous volumes of data), and find hard what humans find easy (judgment, intuition, persuasion).

Last year, I attended an AI talk hosted by Stephen Fry, who framed AI not as a threat to human intelligence, but as a continuation of a long pattern of technological progress. Stephen spoke about the Industrial Revolution, where Britain’s cities were transformed by steam-powered industry. But extraordinary innovation depended on mundane, exhausting labour. Canals had to be dug by hand by thousands of men, spades in the earth, performing relentless physical work simply to move goods. When the steam shovel arrived, no one described this as the destruction

intellectually distinctive: sorting, filing, searching, cross-referencing, chronology building, and document comparison. In commercial disputes, asset recovery, and High Net Worth matters, these tasks are often vast in scale. They consume time, energy, and cost - without necessarily adding proportional strategic value.

AI as the Steam Shovel for the Mind Much of modern legal work still relies on tasks that are necessary but not

Why should highly trained legal professionals spend decades performing the cognitive equivalent of canal digging when machines can do this faster and more reliably - under appropriate supervision? AI is not replacing legal thinking; it is clearing the ground so that legal thinking can matter more.

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• Ethical reasoning and professional responsibility remain central. Legal professionals operate within frameworks of confidentiality, privilege, fiduciary duty, and regulatory obligation. Understanding where automation supports these duties and where it threatens them requires human judgment informed by experience and professional values. • Client relationship management is another area where automation falls short. High Net Worth individuals, corporates, and institutions do not instruct lawyers simply for information. They seek reassurance, discretion, strategic partnership, and confidence. Building trust, managing expectations, and navigating emotionally or financially sensitive situations are deeply human skills.

AI Is a Tool, Not a Replacement

The Skills That Won’t Be Replaced

There is understandable anxiety that AI might “replace” lawyers or barristers. In reality, this misunderstands both AI and the nature of legal work.

As AI becomes embedded in legal workflows, the skills that endure - and increase in value - are becoming clearer:

AI does not understand clients. It does not exercise judgment. It does not read a room, assess credibility, weigh ethical consequences, or persuade a tribunal. What it does is assist - by managing complexity, accelerating access to information, and testing patterns at scale.

• Judgment and strategic thinking sit at the top. In High Net Worth disputes, asset recovery, and commercial litigation, success depends on knowing where to focus attention. AI can surface possibilities, but it cannot prioritise with wisdom. Determining which argument advances a client’s objectives, which risk is acceptable, or which concession is commercially sensible remains a human responsibility.

Advocacy, judgment, negotiation, ethical reasoning, and client trust are not computational problems. A barrister cross-examining a witness, a partner advising a family on asset protection, or a clerk managing sensitive client relationships is drawing on skills that are deeply human: perception, intuition, empathy, and credibility. Advocacy, whether in court, arbitration, negotiation, or advisory work, remains fundamentally human. AI can surface facts, but it cannot decide which facts matter. It can generate arguments, but it cannot stand behind them. The human professional remains accountable. What AI can do is support these human skills. It can surface facts faster, test arguments, identify gaps in evidence, and manage complexity at scale. Used properly, AI strengthens human judgment. The real competitive risk is not that AI will replace advocates, but that practitioners who understand and use AI well will significantly outperform those who do not.

• Advocacy and persuasion are equally irreplaceable. Whether addressing a court, negotiating a settlement, or advising a client behind closed doors, persuasion depends on credibility, clarity, and narrative. Advocacy is not simply the recitation of facts; it is the art of shaping them into a compelling case. AI can assist preparation, but it cannot replace presence, authority, or trust. • Critical thinking and scepticism become more important, not less. AI outputs must be interrogated, tested, and verified. Lawyers who blindly accept machine-generated answers will expose themselves and their clients to risk. The enduring skill is not speed, but discernment: knowing when something “sounds right” but is wrong, incomplete, or misleading.

• Commercial awareness and context also endure. AI may analyse data, but it does not understand reputational risk, political context, family dynamics, or market sentiment in the way an experienced adviser does. Translating legal advice into practical, real-world decision-making remains a human art. • Leadership and judgment under uncertainty will define the next generation of legal professionals. As tools evolve rapidly, those who can guide teams, set standards, and make confident decisions without perfect information will be indispensable -whether as partners, heads of Chambers, senior clerks, or in-house leaders.

Choosing Progress, Not Fear Just as the steam shovel did not eliminate human contribution but freed it for higher-value work, AI offers the legal profession an opportunity to focus more sharply on what it does best. The skills that matter most - judgment, advocacy, ethics, persuasion, and trust - are not threatened by automation. They are amplified by it. The real challenge is not whether AI will change legal practice, but whether legal professionals will consciously shape that change. AI is a powerful tool. Used thoughtfully, it will not diminish the profession - it will sharpen it.

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YOUR PROFESSIONAL BRAND

HOW TO STAY VISIBLE AND VALUABLE Authored by: Georgina Sundown (Senior Talent Consultant) - ABC4 & Yelda Ismail (Group Marketing Lead) ThoughtLeaders4 In the commercial and high net worth legal world, excellence is assumed. Technical skill, long hours, and strong outcomes are table stakes. What increasingly differentiates lawyers, barristers and advisers at the top of the market is not how hard they work, but how clearly their value is understood by the people who matter. Professional visibility is no longer optional. Yet for those juggling court, transactions, clients and billable targets, the idea of “building a brand” can feel vague, indulgent or simply unrealistic. The good news is that effective visibility does not require constant posting, forced personal marketing or hours you do not have. It requires clarity, focus and smart use of the moments you are already showing up. This article explores how senior legal professionals can stay visible and valuable in a competitive market - in ways that are succinct, credible and commercially intelligent.

Visibility is not Self-Promotion it is Signal Clarity

• The strengths that consistently show up in your work

In elite legal markets, reputation travels fast, but often imprecisely. You may be known as “very good”, “safe hands” or “solid in court”, but those descriptions rarely drive instruction on their own. Decision-makers look for specialists who solve their specific problems, not generalists who do everything well.

• The situations in which your judgement is most valuable

Professional brand, at its core, is about signal clarity. It answers a simple question for your audience:

why should I come to you, specifically? That clarity matters internally (to partners, chambers, referrers and peers) as much as externally (to clients). And it can be developed without social media saturation or performative thought leadership.

Start with Clarity: What Makes You Distinct? The strongest professional brands are built on a clear understanding of three things:

• The problems you are repeatedly asked to solve

This is not about inventing a niche for the sake of it. It is about articulating patterns that already exist in your practice. For example: • Are you particularly effective in highpressure disputes where reputational risk is acute? • Do you have a track record of simplifying complex commercial issues for non-legal decisionmakers? • Are you known for being commercially pragmatic where others default to caution? Clarity allows others to describe you accurately when you are not in the room - which is where most opportunities originate.

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Know your Audience (and Stop Trying to Speak to Everyone) Time-poor professionals often fall into the trap of generic visibility: broad LinkedIn updates, unfocused networking, or attending events without a clear purpose. The result is activity without impact. Effective visibility starts with understanding who you are trying to be visible to. That might include: • In-house counsel in a particular sector • Family offices and private client advisers

The key question is not “where can I be seen?” but “where does my audience already gather, and how can I contribute value there?”

These moments compound. Over time, they shape how others perceive your judgement, confidence and commercial awareness.

This is where structured, professionally curated events, such as those run by TL4, play a critical role. They create spaces where credibility is assumed and visibility feels natural rather than forced.

Why Events and Peer Networks Still Matter

Well-designed professional events: • Accelerate relationship-building

Define the End Goal Before you Show Up Too often, lawyers attend events, accept speaking invitations or engage in networking without a clear objective. The result is pleasant conversation that goes nowhere. Before committing time, ask: • What do I want this visibility to lead to?

• Partners at complementary firms

• New instructions?

• Instructing solicitors or referrers in adjacent practice areas

• Stronger peer relationships?

Once you define your audience, your messaging sharpens naturally. You stop talking about everything you do and start speaking to the issues they care about. This focus is what makes your presence memorable rather than noisy.

Choose Key Channels Fewer, Better, Intentional Visibility does not require being everywhere. It requires choosing the right platforms and moments to show up. For many lawyers and barristers, the highest-impact channels are: • Curated industry events • Peer-led roundtables • Panels and speaking engagements • Targeted networking with professionals at a similar level These environments allow for depth rather than breadth. A single well-placed panel contribution can generate more meaningful opportunities than months of passive online activity.

In an increasingly digital profession, in-person connection remains one of the most effective ways to build trust quickly. Events offer something that online visibility cannot: context, nuance and chemistry.

• Provide social proof through association • Allow your expertise to be experienced, not just described For time-poor professionals, this efficiency matters. One evening of highquality conversation can achieve what months of cold outreach cannot. Such events are designed with this reality in mind - bringing together commercially astute professionals in environments that respect their time, intelligence, and ambition.

• Increased profile in a specific market? • Positioning for future leadership or progression? When the end goal is clear, your choices become more strategic: which events you attend, who you prioritise speaking to, and how you follow up. Visibility without intention is just activity. Visibility with intention builds momentum.

Purposeful Contribution Beats Volume One of the biggest misconceptions about professional branding is that it requires constant output. In reality, senior legal audiences value signal over volume. Succinct, well-judged contributions carry more weight than frequent, generic ones. That might look like: • Making one incisive point on a panel rather than dominating it • Publishing a short, thoughtful insight rather than a long article no one finishes

The Quiet Advantage of Being Intentional The most visible professionals are rarely the loudest. They are the clearest. They know: • What they are known for • Who they want to be known by • Where to show up - and where not to In a competitive legal market, that intentionality becomes a quiet advantage. It allows you to stay present, relevant and top-of-mind without distraction or dilution. Your professional brand is already forming, whether you engage with it or not. The question is whether you choose to shape it - succinctly, intelligently and on your own terms.

• Having a clear, confident answer to “what do you focus on?” at a networking event

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60 SECONDS WITH... SAM BIGGERSTAFF SENIOR TALENT CONSULTANT

ABC4

hat inspired the name of your W recruitment firm ABC, and how does it reflect your approach to talent?

ABC takes its name from the initials of our

founder, Bill Conner - Ask Bill Conner. Bill was a highly respected Senior Clerk in leading barristers’ chambers, where he often acted as a trusted sounding board and off-the-record advisor to fellow clerks and barristers. When ABC was established, he continued this advisory role in a professional capacity, bringing the same insight, discretion, and expertise to a wider client base. All of us at ABC remain true to Bill’s honesty, discretion, and overriding wish to help people and add value, ensuring that his values continue to guide everything we do.

ow do you define “a great match” H between a candidate and a firm today

A great match ensures that a candidate’s

practice aligns with a firm’s strategic growth areas, not just its current caseload. Equally important is cultural alignment. Even an exceptional lawyer with a strong practice can struggle, if their working style, values, or expectations don’t align with the firm’s environment. Pace, flexibility, decision-making, and day-to-day ways of working all matter. When a lawyer joins a firm where the culture doesn’t support how they perform at their best, a role that looks perfect on paper can quickly become the wrong fit. Misalignment whether strategic or cultural - remains one of the leading causes of lateral hire failure.

hat’s one small thing you do for W clients or candidates that makes a big difference?

One small thing I do is invest time upfront in

understanding what really matters to clients and candidates beyond the brief. That allows me to give honest advice and make better, more sustainable matches. It’s a simple step, but it builds trust and leads to better outcomes on both sides.

hat’s one misconception about W recruitment you wish more people understood?

One common misconception - perhaps

shaped by parts of the wider market - is that recruitment is simply about matching CVs to job descriptions. At ABC, we take a very

different approach. We are people-focused and relationship-led, placing real value on integrity, care, and long-term outcomes rather than short-term placements. We invest time in truly understanding both our clients and candidates: their culture, strategy, motivations, and what success genuinely looks like for them. Rather than sending volume CVs, we produce carefully curated candidate packs made up of fully vetted individuals, alongside clear, honest insight into why each person is well suited to the role and the firm. We are deliberate and transparent in our advice - even when that means challenging assumptions or saying a role or candidate isn’t quite right. This depth of understanding allows us to work in a more considered, holistic way, helping clients make informed decisions and candidates move into environments where they can thrive and stay. Trust, alignment, and integrity are at the heart of what we do, and we believe that is what ultimately drives successful, lasting placements.

hat’s one question you always ask W candidates that reveals the most?

One question I always ask is, ‘What would

make this move a success for you in two to three years?’ It reveals what really motivates them, how strategic they are about their career, and whether their expectations align with what the firm can offer.

hat’s your favourite part of the job W that people wouldn’t expect?

This may not be unexpected, but I

particularly enjoy helping young people launch their careers. Supporting them through those first steps, giving guidance, and seeing them grow in the right role is incredibly rewarding and it’s a side of recruitment people don’t always see.

I f you could give one piece of advice to professionals considering a move in 2026, what would it be?

If I could give one piece of advice to

professionals considering a move in 2026, it would be to pause and think strategically rather than making a reactive decision. A role or firm can look fantastic on paper, but culture is everything. Take the time to understand how a firm operates, what its long-term strategy and vision are, and

whether those genuinely align with your own values and career goals. Looking beyond lucrative packages and titles to consider where you will truly thrive, grow, and feel supported is paramount. Use your personal networks to do this research properly speak to people, build connections, and ask honest questions. Get yourself out there by attending industry events, joining discussions, and speaking at talks. Often, the right opportunity comes from visibility and relationships, and the right firm may come knocking before you’ve even decided to make a move.

hat’s a principle you think will W matter even more in 2026?

For candidates, adaptability will matter even more in 2026. Candidates who embrace change, keep learning, and step confidently into new challenges will thrive in a rapidly evolving market

For firms, culture and values will be key, firms that create environments where people want to stay will thrive in 2026.

hat’s one trait you think every W great recruiter needs — and why does it matter to you?

Integrity. At its core, recruitment is built on

trust - candidates are making life-changing career decisions and clients are shaping the future of their teams. Acting with integrity means being honest, giving clear advice even when it’s not the easiest option, and always putting long-term outcomes ahead of quick wins. When people trust that you genuinely care about their best interests, relationships last, decisions improve, and everyone ends up in a place where they can truly thrive.

hat’s one thing your colleagues W would say you’re known for?

I would hope my colleagues would say I’m

known for being approachable. I believe people feel comfortable asking me questions or for advice, and I try to be supportive while also learning from them. It’s a two-way approach that works well for the team.

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CREATING ENVIRONMENTS

WHERE DIFFERENT TALENTS THRIVE Authored by: Sarah Willshee (Senior Talent Consultant) - ABC4

Inclusive Cultures Are a Competitive Advantage Inclusive cultures are not a “nice to have”. They are a competitive advantage. Diverse teams bring a broader range of perspectives, lived experience and cognitive approaches. That diversity fuels innovation: more ideas are surfaced, tested and refined; blind spots are reduced; and better decisions are made faster. Innovation, in turn, strengthens performance - through stronger client service, lower attrition, more resilient teams and better commercial outcomes. In short, inclusion is good for culture and community, and it is good for business.

the rules of the game. Progression can reward visibility over impact. Networks can become self-reinforcing. In chambers, clerking and pupil supervision models can unintentionally privilege certain communication styles or working patterns. Meanwhile, clients’ expectations have evolved. Asset recovery and litigation increasingly involve complex digital evidence, multi-jurisdictional enforcement and fast-moving fraud typologies. High-net-worth and international clients expect advisers who understand nuance - including cultural context, trauma-informed approaches and different ways of communicating. To meet those expectations, firms and chambers need more than “top talent”. They need environments where different talents can genuinely thrive.

branding exercise. It is a practical message to colleagues, candidates and clients that discrimination has no place, and that people can succeed without hiding who they are. Visibility creates psychological safety - and psychological safety is a prerequisite for high performance. When individuals are not using energy to code-switch, mask or self-edit, they can direct that energy towards building cases, advising decisively and collaborating effectively. But inclusion cannot be seasonal. Allyship must be consistent - reflected in how work is allocated, how leaders respond when bias shows up, and how recruitment and progression decisions are made. Effective allyship combines listening with action: learning inclusive language, challenging bias when it appears, and using influence to create space for others.

Why Neurodiversity Belongs in Every Talent Strategy The Legal Sector’s Innovation Challenge Legal practice is a profession built on excellence and tradition - but that can also make it vulnerable to “how we’ve always done it”. Recruitment processes can favour those who already know

Inclusion You Can See, Feel and Measure Visible signals matter. Pride Month, for example, is not simply a logo or

Neurodiversity is an area of significant untapped potential within legal workplaces. Many of the strengths associated with neurodivergent thinking - pattern recognition, deep focus, originality, analytical rigour and alternative problem-solving approaches - are highly relevant to asset tracing, document-heavy litigation and complex advisory work.

ABC4 SUPPLEMENT

ThoughtLeaders4 FIRE Magazine Yet traditional recruitment and working practices can inadvertently screen neurodivergent people out. A core principle matters here: adjustments and personalised approaches do not benefit only neurodivergent individuals. Everyone works differently. We all have different strengths, energy levels and communication styles. Environments that support neurodivergent barristers, solicitors, clerks, professional support staff and pupils tend to improve flexibility, collaboration, wellbeing and client service for everyone.

4) O ffer Choice Wherever Possible Legal professionals communicate in different ways day-to-day - recruitment should reflect that reality. Offering interview format options (in-person, virtual or asynchronous), written responses for some questions, or breaks during longer assessments can materially improve fairness without reducing rigour.

5) Consider Skills-Based Assessment For some roles, work samples or trials provide a clearer picture of capability than high-pressure interviews alone. They can also highlight what adjustments enable candidates to do their best work.

Recruitment that Widens the Funnel (Without Lowering The Bar) Inclusive recruitment is not about compromising standards. It is about removing noise from the system so capability is easier to see.

1) W rite Role Profiles that Reflect the Real Job Avoid vague wish-lists unless qualities are genuinely essential and clearly defined. Be specific about what success looks like in practice - for example, drafting clear witness statements, reviewing large volumes of material accurately, or presenting complex advice orally.

2) Make the Process Transparent Share selection stages, who candidates will meet, what preparation is expected and how success will be assessed. Reducing uncertainty improves performance and levels the playing field.

3) Prioritise Evidence over Impression Use structured questions aligned to job requirements and objective scoring systems. Train interviewers to focus on substance rather than non-verbal cues such as eye contact, tone or small talk, which can introduce bias.

As part of our wider ESG commitment, we actively encourage Chambers to provide the London Living Wage (or regional equivalent) for starter and entry-level roles wherever possible. Fair access to the profession must include fair financial foundations.

ABC’s Approach to Inclusive Recruitment and ESG At ABC, Equality, Diversity and Inclusion is not a box-ticking exercise - it is a core value and a cornerstone of how we work. We are committed to fair, bias-free recruitment through structured, standardised and objective processes. We define clear job requirements, use consistent application and interview questions, and apply scoring systems to interviews and assessments to minimise subjectivity. Interviews are conducted by two members of our team as standard, reducing unconscious bias and ensuring balanced decision-making. We actively encourage applications from diverse and underrepresented candidates and work with individuals to help them overcome barriers to securing roles and progressing in their careers. Accessibility is embedded into our recruitment approach. We offer reasonable adjustments for all candidates, provide accommodations for disabled applicants, adapt interview styles for neurodivergent candidates, and consider multiple interview formats, including in-person, virtual and asynchronous options.

Designing Inclusion that Improves Performance Inclusion becomes tangible in everyday working practices: clarity of expectations, flexibility in how work is done, and environments that accommodate different ways of thinking and communicating. These adjustments are particularly valuable for neurodivergent colleagues - but they improve collaboration, resilience and client service across the board.

A Practical Closing Thought If you want a simple test of whether your environment allows different talents to thrive, ask: • Do we design our processes for inclusion, or add it on only after problems appear? • Do people feel safe to be themselves - in identity, communication style and working pattern? • Do we measure what we value, and value what we measure? Inclusive culture is not a statement. It is a set of habits. When those habits are embedded, the results follow: stronger teams, better client outcomes, and a profession that is not only more representative - but more effective.

Our team undertakes regular training in Anti-Racism, Fair Recruitment and EDI, ensuring best practice remains current and embedded. We also collect and analyse recruitment data to identify potential disparities in hiring outcomes, progression and retention, allowing us to review and improve processes on an evidence-led basis.

ABC4 SUPPLEMENT

ThoughtLeaders4 FIRE Magazine

THE MODERN TALENT EQUATION

SKILLS, CULTURE, AND ALIGNMENT Authored by: Lucy Burrows (Senior Talent Consultant) & Rachael Argent (Talent Consultant) - ABC4 For much of the legal profession’s history, talent decisions have been driven primarily by one factor: technical excellence. Academic achievement, intellectual rigour and specialist expertise remain fundamental, and always will. But the modern legal market has changed. Mobility is higher, expectations are shifting, and competition for experienced professionals is intense. In this environment, organisations that focus on skills alone increasingly find themselves asking a difficult question: why are talented people still leaving? Between us, through years working inside chambers, law firms and expert professional environments and, now through recruitment, coaching and organisational advisory roles, a consistent pattern emerges. People rarely leave simply because of pay or workload. More often, they leave because they no longer feel supported, valued, or confident that their environment will allow them to build a sustainable and rewarding career. This is where the modern talent equation comes into play: skills, culture and alignment.

supervision, flexibility, wellbeing and progression. These questions are not peripheral; they are central to decisionmaking. Organisations that cannot answer them clearly often struggle to convert interest into long-term commitment.

Skills: Essential but No Longer Enough Technical competence remains the foundation of credibility in legal practice. Clients expect excellence, and reputations are hard won and easily lost. Yet skills alone do not sustain careers. Even the most capable lawyers struggle if expectations are unclear, feedback is inconsistent, or pressure is allowed to accumulate unchecked. High performers are often the least likely to ask for help, and the most vulnerable to burnout when support is absent. From a recruitment perspective, this shift is increasingly visible. Candidates now probe deeply on leadership style,

Culture: Where Careers are Shaped Day by Day Culture is often spoken about in abstract terms, but in practice it is experienced in very concrete ways. It shows up in how work is allocated and reviewed. In whether supervisors make time for junior colleagues. In how returners are welcomed back. In whether people feel able to say they are struggling without fear of judgement or consequence.

ABC4 SUPPLEMENT

ThoughtLeaders4 FIRE Magazine Our own involvement in profession-wide work examining behaviour and culture, combined with day-to-day recruitment insight, has reinforced just how powerful these everyday dynamics are. Issues rarely arise because organisations lack good intentions. More often, they develop through pressure, silence, or misaligned incentives that go unexamined over time.

Later, life transitions; parental leave, illness, caring responsibilities or periods of burnout become defining junctures. While administrative processes are usually in place, the human and professional recalibration that follows is often underestimated. Confidence may dip, momentum can stall, and people may quietly question whether they still belong.

The cumulative effect matters. Culture shapes who stays, who progresses, and who quietly decides to leave.

Handled thoughtfully, these moments strengthen loyalty and trust. Handled poorly, they become exit points.

Recruitment as a Strategic Function

Alignment: The Missing Link in Many Talent Decisions Alignment is often the least examined element of the talent equation, yet it is frequently the most decisive. Two people can be equally capable on paper, yet thrive very differently depending on the environment. Alignment encompasses far more than practice area or seniority. It includes expectations around autonomy, collaboration, pace, flexibility, communication and how success is defined. When alignment is poor, even technically brilliant hires can falter. When it is strong, people are more resilient, engaged and committed, even during challenging periods. This requires honest conversations, both at the point of recruitment and throughout a career. Organisations that invest time in understanding what motivates their people, and how their environments are experienced in practice, are far better placed to retain them.

Where Talent is Most Vulnerable Across firms, chambers and expert professional settings, certain moments consistently pose higher retention risk. The early years of practice can be exhilarating but destabilising. Junior professionals are learning the craft, building reputations and navigating unspoken norms, often while grappling with imposter syndrome or uncertainty about expectations.

Modern recruitment is no longer a transactional exercise. It sits at the intersection of culture, leadership and long-term strategy.

Bringing the Equation Together Skills, culture and alignment are not competing priorities. They reinforce one another. When people feel supported, when expectations are clear, and when organisational values align with individual motivations, technical excellence has room to flourish. Engagement deepens. Careers lengthen. Performance improves. Those organisations that invest deliberately in all three elements of the modern talent equation are not simply retaining talent, they are building resilient, future-proof institutions.

Organisations that can articulate who they are, how they work and what they value attract candidates who are more likely to thrive and stay. Those that cannot often experience repeated churn, despite strong technical talent. Reputation travels quickly in the legal market. How an organisation treats its people, particularly at moments of vulnerability, is now inseparable from its ability to attract future talent.

The Value of External Perspective and Coaching Internal leaders, HR teams, clerks and practice managers do extraordinary work supporting their people. But even the most conscientious organisations have blind spots. An external perspective, whether through recruitment, coaching or organisational advisory work, can provide a valuable mirror. People often feel safer articulating concerns, ambitions or pressures to someone outside their reporting line, particularly when that person understands the realities of professional life.

Looking Ahead The legal profession continues to evolve, shaped by generational change, shifting expectations around work and a growing focus on sustainability in practice. The organisations that succeed will be those that treat talent strategy holistically - recognising that excellence is not created solely through hiring the right people, but through creating environments in which those people can grow, stay and succeed. In a competitive market, that may be the most important equation of all.

One-to-one coaching at key career stages can be especially effective. It provides space to rebuild confidence, clarify direction and establish sustainable ways of working. From an organisational standpoint, this is increasingly recognised not as a perk, but as a practical retention strategy.

ThoughtLeaders4 FIRE Magazine • ISSUE 24

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