Committal to prison: Wang v Darby

On 24 July 2024, the Defendant was sentenced to 18 months immediate imprisonment following the trial of a contempt application on 4 June 2024 (Wang v Darby [2024] EWHC 1394 (Comm)). The Court found that the Defendant had breached the asset disclosure provisions of a worldwide freezing order by giving inaccurate asset disclosure and that he had given false evidence seeking to verify that disclosure.

This case is likely to be of real significance to civil fraud and cryptocurrency fraud practitioners. It is believed to be one of the first successful contempt applications arising out of a cryptocurrency fraud claim.

The underlying claim (in which the Claimant was successful) pertained to breaches of contract concerning swaps of two cryptocurrencies, Bitcoin and Tezos. At the end of the relevant contractual period, the Defendant failed to transfer a substantial amount of Tezos to the Claimant. A worldwide freezing order was made prior to the commencement of proceedings.

In support of his application for a freezing order, the Claimant relied on expert blockchain forensic evidence to identify cryptocurrency assets on which the injunction could bite. A very sizeable cache of 100 Bitcoin was identified (which at the present date is worth nearly USD$7 million).

The Defendant’s asset disclosure and subsequent witness evidence failed to disclose the existence or ownership of these Bitcoin. The judgment on the contempt application attached great weight to the findings of the Claimant’s expert.

It is often wrongly said that blockchain technology provides anonymity, when in fact it only provides pseudonymity: parties to a transaction are generally identifiable by their unique cryptographic keys (i.e., wallet addresses), which are long strings of numbers and letters that are used to sign and verify transactions. It is therefore possible, with the right resources, to ascertain to a high degree of certainty the ownership of cryptocurrency.

The judgment is a timely reminder that the Court continues to take the breach of freezing orders extremely seriously, and that such breaches merit condign punishment, which is usually a prison sentence. The sentencing judgment is currently being transcribed and will be shared when available.

Daniel Scott was instructed by Rob Green of Curzon Green Solicitors and acted for the successful Claimant.

Read the full judgment