Virtually Everything | Episode 3 | Cryptocurrency in the courts: Lessons from the landmark UAE crypto case

  • Podcast 15 April 2024 15 April 2024
  • Global

  • Technology, Outsourcing & Data

In the third episode of the Virtually Everything podcats series, hosts Lucy Nash and Vyasna Mahadevey discuss a landmark cryptocurrency case, the first of its kind to go through the DIFC (Dubai International Financial Centre) Courts in the UAE.

The podcast begins with an overview of the legal system in Dubai and more specifically, the DIFC Courts and the recently introduced Digital Economy Court. Next, the hosts outline the background to the ground-breaking DIFC cryptocurrency case, the claims brought by the claimant, the eventual outcome, and takeaway points. 

Lucy begins by explaining the DIFC Courts, which she describes as “Dubai's international English language common law courts,” with different divisions to handle different types of cases. As part of the region’s focus on emerging technologies, the DIFC now also includes the world’s first Digital Economy Court, set up in 2022, with its own specialised rules to oversee disputes relating to issues, “ranging from big data, blockchain, AI, fintech, and cloud services… to 3D printing, robotics and unmanned aerial vehicles.” 

The conversation progresses to the high-profile cryptocurrency case, (1) Gate Mena DMCC (2) Huobi Mena FZE v. (1) Tabarak Investment Capital Limited (2) Christian Thurner, heard in the technology and construction division of the DIFC Courts in 2022. Lucy outlines the intricacies of the case, in which an Over The Counter (OTC) cryptocurrency trading company was left out-of-pocket when 300 bitcoins went missing from a cold wallet. Several claims were raised by the claimant, including breach of contractual duties, negligence, breach of confidence, breach of fiduciary duties, and breaches of the Dubai Financial Services Authority (DFSA) rulebook. 

Various elements made the case interesting, such as the inclusion of evidence on cryptocurrency transactions, and the process of tracing the movement of the bitcoin after it disappeared from the cold wallet. Quantifying the loss was another key point, given the large fluctuations in the bitcoin value from US$3 million on the day of the misappropriation to US$18 million in late 2021. And critically, the judge accepted the contention that bitcoin is property, following the judgement of AA v Unknown Persons [2019], from the English Court. 

Nonetheless, Lucy concludes that, as the claims were eventually dismissed: “the judgment doesn't contain any insight regarding the appropriate security protocols for custodians of digital assets, or whether the Court might be prepared to order payment of damages in bitcoin, or fiat currency.” However, the claimants are pursuing an appeal, and the dispute paves the way for similar claims in the future.

Join us next time when Virtually Everything will be joined by experts from around the world to discuss how virtual assets are being treated and legislated in different jurisdictions. 

This podcast forms part of the Virtually Everything podcast series. To find out more about the topics discussed in the series, please visit our dedicated Digital Assets and Blockchain page.


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