UK court recognizes USDT as a form of property

The court’s ruling clarifies the legal status of crypto currencies, reinforcing that digital assets are recognized as a form of property that can attract property rights and be subject to tracing in cases of fraud

The High Court of Justice, Business and Property Courts of England and Wales, issued a notable ruling on September 12, addressing whether crypto currencies such as USDT (tether) can be considered property under English law.

The case involved Fabrizio D’Aloia, who claimed that he was defrauded of more than £2.5 million ($3.3 million) in crypto currency, including USDT, which was laundered through multiple blockchain wallets. The court’s ruling clarifies the legal status of crypto currencies, reinforcing that digital assets are recognized as a form of property that can attract property rights and be subject to tracing in cases of fraud.

The court detailed that crypto currencies such as USDT do not rely on traditional legal rights or physical possession, but are nevertheless treated as property for legal purposes. This acknowledgment means that crypto currencies can be traced, transferred, and held in trust in the same way as other tangible and intangible assets. In the ruling, the judge confirmed: USDT attract property rights under English law. It is neither a chose in action nor a chose in possession but a distinct form of property not premised on an underlying legal right.

This allows crypto to be subject to the legal principle of tracing, which is typically applied to assets in cases of theft or misappropriation.

The judgment has significant implications for future crypto currency-related disputes in English courts, especially around fraud and asset recovery. Despite acknowledging the status of crypto as property, the court ruled that in this case, D’Aloia failed to present sufficient evidence to trace his stolen crypto currency to the specific accounts held by crypto exchange Bitkub, one of the defendants.