Trump's coming to power is bound to mean a boom in the cryptocurrency market, but under the surface of prosperity, there will also be undercurrents. A few days ago, the Sajie team reviewed the judicial decisions related to cryptocurrency that have been of guiding significance or have had a significant impact in the mainland in recent times. Today, the Sajie team will turn its attention from the mainland to Hong Kong and talk about the judicial precedents recently set by the Hong Kong High Court in the field of cryptocurrency.
01. Will the Hong Kong High Court continue to use blockchain to issue injunctions against cryptocurrency wallets?
I guess old friends in the cryptocurrency circle have seen this injunction issued by the Hong Kong High Court at the end of last year.
The case itself is not complicated. The plaintiff, W Company, is a private limited company established in Hong Kong in March 2015. Its main business is marketing consulting. The company was defrauded of nearly 2.6 million USDT by telecommunications fraud in December last year. After the person in charge of the company realized that he had been defrauded, he immediately contacted the Hong Kong High Court through a lawyer and requested an injunction to freeze the assets in the two Tron wallet addresses holding the stolen money involved in the case.
Just a few days later, Douglas Lam, deputy judge of the Hong Kong High Court, issued the asset freezing injunction shown above and issued it to the two wallet addresses involved in the case through a technology company called M. The whole process was as smooth as flowing water. Since all cryptocurrency transaction details will be recorded on the blockchain, if anyone trades with the two cryptocurrency wallets involved in the case, they will see the injunction recorded on the blockchain. This practice can be regarded as a kind of "inscription" technology in disguise, that is, it is like engraving the word "stolen money" in the cryptocurrency wallet involved in the case.
Under Hong Kong law, violators of the injunction may be found guilty of contempt of court, sentenced to jail or fined. The injunction essentially blocked the liquidity of the cryptocurrencies in the two cryptocurrency wallets involved in the case, preventing the plaintiffs from suffering greater losses.
02. Why is this matter of great significance?
Due to the anonymity of blockchain technology and cryptocurrency itself, it is extremely costly for law enforcement agencies to track down the real people behind cryptocurrency wallets (extremely high cost does not mean impossible. In fact, the police in China, the United States and other countries have the ability to track down the real people behind cryptocurrency wallets, but the cost of handling the case is disproportionate to the loss. Therefore, in small and micro criminal cases involving currency, relevant technology and manpower will not be used for considerations of case handling costs).
In fact, in the vast majority of civil disputes involving currency in Hong Kong, the party that suffered losses only knew the other party’s cryptocurrency wallet address, but could not know the other party’s exact identity, which made it extremely difficult to sue, and it was impossible to seek relief through legal means. The Hong Kong High Court approved the issuance of an injunction directly to two wallet addresses through blockchain technology, which directly solved the problem of “only knowing the wallet but not the real person” in currency disputes. It can also be seen from the content of the injunction that the Hong Kong High Court directly wrote two wallet addresses in the “Defendant” column, which can be regarded as solving the litigation problem caused by the anonymity of cryptocurrency.
03. Will cryptocurrency no longer be “safe” in the future?
Recently, when the Sajie team was communicating with old friends, one of them sighed: I chose to invest in cryptocurrency because the investment prospects of cryptocurrency are indeed good, and secondly, I saw that the "anonymous" wallet can make assets more "safe". Once I get involved in legal proceedings, at least I can "preserve" some property. In fact, many old friends hold this idea. If "safety" is understood in this way - that is, it does not mean reducing the risk of theft or damage, but allowing the holders of virtual currency to get rid of the "entanglement" of judicial organs as much as possible, then the Sajie team can say directly - yes, cryptocurrency is no longer "safe".
This time, the Hong Kong High Court directly sued the cryptocurrency wallet address and issued an injunction to the cryptocurrency wallet address directly through a technology company. In fact, it has created a precedent worldwide - even if the exchange or stablecoin issuer does not cooperate, the judicial authorities can still issue judicial orders directly to the wallet address to broadcast to all addresses that intend to and trade with the wallet involved - if you dare to trade, it is illegal and you will be subject to corresponding punishment.
Since then, Hong Kong's judicial authorities can not only issue injunctions to clearly identified individuals or companies in cryptocurrency disputes. Even anonymous wallets can do so. It has to be admitted that Hong Kong is at the forefront of the technology of issuing tokenized legal notices. I believe that in the future, foreigners involved in cryptocurrency disputes can also issue similar injunctions through Hong Kong's technology companies and law enforcement agencies to recover losses. The space for the idea of using the anonymity of cryptocurrency to escape the control and sanctions of judicial authorities is getting smaller and smaller.
04. Final words
Finally, Sister Sa’s team will take everyone to review the major judicial systems in the field of cryptocurrency in Hong Kong over the years, and appreciate the steps taken by the Hong Kong judicial authorities to help Hong Kong become a cryptocurrency center.
Step 1: Determine that cryptocurrencies constitute "property". The most important milestone for the Hong Kong judiciary in protecting cryptocurrencies can be said to be the Gatecoin case in early 2023. In this case, the Hong Kong Court of First Instance ruled for the first time that cryptocurrencies are "property" under Hong Kong law and can be regulated by relevant laws protecting private property. The Gatecoin case provides legal certainty and shows that the judicial position of the Hong Kong courts is consistent with the judicial position of other major common law jurisdictions (including the United Kingdom, the British Virgin Islands, Singapore, Australia, New Zealand, Canada and the United States) that cryptocurrencies are considered "property". This is the most shining achievement of the Hong Kong judiciary in the field of cryptocurrency in recent years.
Step 2: Stablecoin bill is introduced. Stablecoin is a bridge between traditional finance and blockchain technology. Hong Kong's Stablecoin Bill puts forward a relatively complete compliance path and compliance requirements for stablecoins pegged to fiat currencies, directly guaranteeing the financial security of stablecoin holders and institutions. This step is an important step in linking Hong Kong's traditional financial sector and technology finance sector.
Step 3: Protect cryptocurrency assets through blockchain technology. This step is what this article lists. That is, based on the anonymous nature of blockchain itself, the plaintiff does not have to know the defendant's true identity. As long as there is a wallet address, an injunction can still be sent to the wallet address. This step can be said to be an important part of improving judicial protection. It is also a major change in the traditional judicial system under the field of financial technology, which directly breaks the problem that Hong Kong could not know the identity of cryptocurrency scammers in the past and could not follow legal channels for relief.
