The Dubai court rejected the claim for the loss of 608 bitcoins due to the lack of evidence of ownership of the crypto wallet.
Dubai Court of First Instance Rules:
“…the plaintiff transferred the cryptocurrency “Bitcoin” to the defendant…. He did not indicate how to prove ownership of the account to the defendant, noting that by referring to the page described in the advisory report taken from the “blockchain” website, it became clear to the court that they are tokens …”
In short, the court found that the crypto-claims required the plaintiff to prove ownership of the crypto wallet by the alleged debtor.
The plaintiff met the defendant in Dubai and agreed to invest in Bitcoin in return for “fantastic financial returns.”
In January 2019, the plaintiff transferred 608 bitcoins to the defendant.
Bitcoins were transferred to the crypto wallet of an investment company according to the terms of the agreement between the plaintiff and the defendant.
It was also agreed that after February 15, 2019, even if the project is not completed for any reason, the defendant and the company that owns the crypto wallet must return the bitcoins to the plaintiff.
On March 15, 2019, the plaintiff demanded that the defendant and the investment company return the bitcoins that were handed over to them.
The request to return Bitcoins was denied by the defendant, and the defendant “disappeared.”
Claim and Judgment
The plaintiff sued the defendant before the Dubai Court of First Instance demanding the return of 608 bitcoins or their equivalent market value.
The plaintiff submitted an expert report that validated the transfer by referring to the blockchain (public ledger) records website showing that the Bitcoins were held by a particular crypto wallet.
The court commented that the expert’s report did not provide evidence that the crypto wallet belonged to the defendant nor to the investment company because the only identification of ownership of the wallet was “tokens”.
The court refers with the word “tokens” to the identification number of the crypto-wallet.
In essence, the Dubai Court has set a threshold for proving the wrongdoer’s possession of the tokens.
Proving the identity of cryptocurrency wallets is an ongoing problem in digital asset disputes.
But solutions and remedies are available to claimants.
Digital Asset Dispute Resolution
Digital asset disputes, particularly those involving token misappropriation, have led to innovative solutions in various jurisdictions using common law injunctive measures.
Mareva’s injunction is a global freezing and asset disclosure order.
It extends to all of the defendant’s assets worldwide, limiting the defendant from using those assets except for organizational purposes (ie, payment of labor salaries) unless consent is given by the plaintiff.
It requires the defendant to disclose its global assets that exceed a certain threshold value (ie more than $10,000 or $50,000).
The Hong Kong High Court recently awarded such compensation for fraudulently embezzled bitcoins in the Nico Constantin Antonios Samara – Steve Jean Paul Dunnand freezing up to $2.6 million of the defendant’s assets (including any digital assets).
Norwich injunctions – or Norwich Pharmacal orders – are injunctions obtained against an innocent third party in order to identify the offender or details of a possible wrongdoing.
The Norwich order obliges an innocent third party (such as a cryptocurrency exchange) to disclose relevant information to the plaintiff/applicant.
In digital asset disputes, these orders have been used to force exchanges to reveal details about crypto wallets and digital assets.
The English Supreme Court recently issued an order from Norwich in Mr. Dollar Bill Ltd. Against Unknown Persons and Others In particular, a Norwich order was issued against cryptocurrency exchanges outside England to force them to help determine what happened to the coins in question.
Anton Beller’s orders
One of the growing trends is relying on Anton Piller’s orders to gain access to a defendant’s digital assets and investigate records that could prove the token transfer.
Anton Beller Orders are a common law remedy that obliges a defendant to allow the plaintiff to enter his or her property to search and seize evidence and records, including electronic data and equipment.
The Ontario Supreme Court of Justice recently indicted Anton Beller in a cryptocurrency dispute Cicada 137 LLC v. Medjedovic In connection with the alleged theft of C$15 million in digital assets from the plaintiff’s crypto wallet.
Solutions in the UAE
The UAE has two common law court systems: the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Center (DIFC) courts.
Both ADGM and DIFC have the power to grant Mareva orders, and the DIFC has historically granted numerous Mareva orders against parties in the UAE and elsewhere.
The ADGM and DIFC may also consider requests by the Norwich Orders to compel third parties to provide evidence to support the dispute.
Anton Beller’s orders are possible before the ADGM and DIFC courts, but there are no records of the execution of these orders yet.
Digital Asset Disputes in the UAE
According to Chainalysis’s 2021 Geography of Cryptocurrency Report, the UAE hosted $25.5 billion worth of cryptocurrency transactions between July 2020 and June 2021.
With so much value in cryptocurrency transactions taking place in the UAE, plaintiffs need to carefully strategize any dispute process and take advantage of all local and cross-border remedies.
Relying on outdated means of pursuing claims in an increasingly complex industry may not be fruitful – instead innovative tactics and strategies must be developed.
The UAE has six court systems – each with its own utility – and the UAE has agreements and treaties with various international dispute settlement forums and courts, which plaintiffs have to take into account when pursuing digital asset claims.
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