Bitcoin held to be a form of property capable of being the subject of proprietary injunctions.
C, a UK insurance company, is a provider of cyber insurance. It provided cover to a Canadian insurance company (Insured) which suffered a malware attack resulting in the encryption of all of its computer systems. The Insured subsequently began receiving demands for payment (in Bitcoin) in exchange for a decryption tool. After some negotiation, a ransom was paid.
The Bitcoin payment was tracked by a blockchain investigations firm. It found that a small proportion of the Bitcoin had been transferred into a fiat currency, but that a substantial amount had been transferred to a specific address linked to the cyrptocurrency exchange, Bitfinex.
C sought (amongst other relief) an interim proprietary and/or freezing injunction over the Bitcoin, and consequential orders in respect of the same.
Key legal points
The central question for the Court to consider was whether Bitcoin could be considered to be property at all. The traditional legal view is that the law only recognises two kinds of property: choses in possession, and choses in action (Colonial Bank v. Whinney  30 Ch.D 261). Cryptocurrencies are neither: they are not capable of being possessed, nor do they embody a right capable of being enforced by action.
This question has been the subject of recent detailed analysis by the UK Jurisdictional Task Force in its legal statement on Cryptoassets and Smart Contracts (Legal Statement). Whilst conceding that the Legal Statement is not an authoritative statement of the law, Bryan J considered the Legal Statement’s analysis in respect of the proprietary status of cryptoassets to be compelling and that its reasoning ought to be adopted. It was considered to be “fallacious to proceed on the basis that the English law of property recognises no forms of property other than choses in possession and choses in action”.
For the reasons set out in the Legal Statement, it was held that Bitcoin is property (at least for the purposes of granting an interim proprietary injunction). Bitcoin (and other cryptoassets) satisfy the four criteria set out in the classic definition of “property” in National Provincial Bank v. Ainsworth  1 AC 1175: they are definable, identifiable by third parties, capable in their nature of assumption by third parties, and have some degree of permanence.
The increased certainty in relation to the proprietary status of cryptocurrencies (and other cryptoassets) will be welcomed by those using and investing in digital ledger technologies. That said, it is worth remembering that the law in relation to cryptoassets is still developing. This decision, like the decisions in Vorotyntseva v. Money-4 Limited t/a Nebeus.com  EWHC 2596 (Ch) and Robertson v. Persons Unknown (unreported), followed an application for the grant of interim relief only. Legal practitioners and users of cryptoassets will be watching closely to see how (if at all) the jurisprudential landscape changes in respect of fully defended 'crypto-claims', and those determined following a full trial.