CYK and Outer Temple successfully obtain crypto s.303Z51 POCA Order in one of the first cases of its kind

In what is believed to be one of the first cases of its kind, CYK worked alongside Outer Temple Chambers, blockchain tracing experts and law enforcement to secure a full recovery under s.303Z51 of the Proceeds of Crime Act 2002 (POCA) for their client, who was the subject of a sophisticated and carefully orchestrated theft of a significant sum of cryptoassets.

Of the cryptoassets stolen, a sum of ETH was traceable to a wallet held by an overseas exchange and belonging to one of the alleged perpetrators of the theft. Due to swift collaboration with law enforcement, the wallet in question was swiftly frozen by a Crypto Wallet Freezing Order (CWFO) that was obtained by law enforcement just days after the theft took place.

CYK’s client had the right (as the owner of the stolen ETH) under s.303Z51 of POCA to apply for the return of his assets. To apply successfully our client needed to establish he met a series of criteria including that:

  1. he was deprived of the cryptoassets to which the application relates by unlawful conduct;
  2. the cryptoassets he was deprived of were not, immediately before he was deprived of them, recoverable property (defined in POCA as assets obtained through unlawful conduct); and
  3. the cryptoassets belonged to our client.

CYK and Helen Pugh (Outer Temple) successfully demonstrated to the court that all three limbs were satisfied in our client’s case. With the further support of blockchain tracing experts and law enforcement it was also established that (i) the user balance of the crypto wallet subject to the CWFO belonged to CYK’s client and derived (exclusively) from the theft; and (ii) after our client’s ETH was transferred to the alleged perpetrator’s account, there was a subsequent swap transaction which converted the ETH into USDT – the full value of the USDT remaining in the account due to the CWFO obtained by law enforcement.

Having satisfied the s.303Z51 POCA test and after demonstrating that the USDT in the frozen account was, in fact, the converted ETH that was stolen from our client during the theft, the court ordered that the full amount of the frozen USDT be transferred by the overseas exchange to an account controlled by CYK’s client.

The s.303Z51 POCA Order in this case represents vindication and justice for CYK’s client, and emphasises the importance of close collaboration between lawyers, experts and law enforcement in s.303Z51 POCA cases.

The CYK team comprised Sam Roberts and Andrew Woolsey, who worked alongside Helen Pugh  of Outer Temple.