Beyond the wallet: Locating and enforcing against digital assets

Transcript below: 

Tom Brown: My name is Tom Brown and I'm a Director at Burford Capital specializing in judgment enforcement and asset recovery. Just before I introduce our distinguished panel today, I wanted to make a couple of opening remarks. As many of you will be aware, Burford Capital is the world's largest provider of litigation finance, which is listed on the London and New York stock exchanges, and we deploy over a billion dollars each year in litigation finance investments. Our investments are typically non-recourse, meaning that if litigation does not result in proceeds, then we end up out of pocket. Similarly, in a recent survey of senior in-house lawyers, over 60% of respondents said that in the majority of cases, their opponents did not voluntarily pay judgments or reward debts. Moving and transferring assets has never been as easy or as quick. As such, there is no such thing as too soon in considering whether and how a judgment will be collectible. 

Over the past few years, holding digital and crypto assets has become more and more commonplace. Recent reporting from Chainalysis said that in the 12 months leading up to June 2025, more than 3.5 trillion billion dollars was on-ramped into crypto and centralized exchanges. We're thrilled, therefore, to have today's panel of experts with us to help us navigate some of the opportunities these assets present and how to overcome some challenges in enforcement.

So with no further ado, and traveling roughly from east to west, I'm delighted that we are joined today by Dorothy Siron, who is a partner of Stephenson Harwood in Hong Kong, who has been described as the go-to partner for clients seeking asset tracing and recovery in the Hong Kong and the PRC. She's the co-founder of the Hong Kong crypto fraud and asset recovery network, and has published extensively on the legal and regulatory landscape of cryptocurrency assets across Asia.

Next, we have Adrian Morris, who is an associate director of Grant Thornton in London, where he and his team focus on the identification, tracing and recovery of digital assets. Prior to joining GT, Adrian led HMRC's technology money laundering threat team, overseeing multi-jurisdictional investigations leading to multi-million pound seizures and obtaining one of the UK's first crypto wallet freezing orders.

Next, we have Nia Statham, who is an associate of Baker & Partners in the Cayman Islands. Nia has significant experience in crypto recovery strategies, having advised on matters arising from high value acts, and she also acts on the first successful winding up of a Cayman domestic holding company behind a cryptocurrency exchange. Her asset recovery practice also focuses on Web3 disputes, decentralized autonomous organizations and the corporate infrastructures that support them.

Next, we have Ben Bathgate, who is the chair of WeirFould's commercial litigation practice and the co-chair of this digital assets practice. Ben has been described as one of the most knowledgeable and experienced lawyers in the crypto world globally. And among many career highlights, Ben has obtained Canada's first search and seizure order against crypto assets, and has recently represented investors, token holders and platforms in several high profile matters in the digital space.

And lastly, we have Rupert Black, who is a vice president of Burford's asset recovery team. Rupert has over 10 years experience working in complex recovery matters and routinely provides enforcement risk analysis on prospective cases, particularly those which have a digital element to them. To kick us off, I thought it might first be helpful if our panelists could introduce briefly what has been, they have been seen recently in their respective jurisdictions. Perhaps we start in London with Adrian.

Adrian Morris: Hi Tom, and thanks all for having me. In London at the moment, we've got the emergence of a UK regulatory regime for crypto asset service providers and stablecoin issuers that is due to open for registration later this year, and will come into full effect from October 2027. What this is trying to cover crypto asset firms and those working in and around the industry under the current FISMA rules, so treating it like other assets and financial products that already exist.

There is a fair amount of burden on the firms looking to register. And what we have seen is some firms already withdraw themselves from the UK market because of this in order to focus on jurisdictions with lighter touch or more bespoke crypto regulatory regimes. In addition to this, we are, in the UK, one of the first go lives for the crypto asset reporting framework, which is the tax compliance element for crypto asset service providers globally. The first reporting of that will start going into HMRC from next year, and it really will be a game changer on seeing individuals that are domiciled in your country, but are registered with crypto asset service providers elsewhere and having their tax footprint reported directly to the local tax authorities.

Tom Brown: And then, Dorothy, what are you seeing in Hong Kong at the moment?

Dorothy Siron: Thanks, Tom. So in Hong Kong, we are now moving towards control and regularization of trading platforms. And recently there's a virtual asset trading platform license that has been granted to trading platforms. And, you know, Hong Kong's threshold under the securities and finance commission, SFC is quite high. But now to bring that virtual trading platform of virtual assets under it is going to be a very protective threshold. So it may, there will be exchanges who fulfill to make it for regularized for registration, but those who do, it will be a platform that you can trust. And the idea is to bring it all within the governance of the FFC.

Tom Brown: Nia, a quick word on what you're seeing in Cayman at the moment.

Nia Statham: Sure. So Cayman is a global crypto hub. We house 57% of the world's crypto hedge funds. We have around 17 major Web3 foundations managing approximately over $10 billion in assets. Each treasury wallet belonging to those has at least 100 million each. The jurisdiction does have a vast regime. It does require a license for virtual assets, exchange and custody. We also are home to a sophisticated network of operations of providers for decentralized autonomous organizations. For those of you who don't know what those are they're sometimes referred to as companies of the future. Associations of token holders essentially have come together for a purpose. Sometimes that purpose is monetary investments, not always, but sometimes these are essentially fundraising vehicles in addition to governance mechanisms. Democratized structures where essentially funds can be raised either in a decentralized mutual investment fund manner, or they can be straight fundraising, or they can be communities of token holders which exercise voting rights, which may ever say over a protocol, and that protocol may generate returns or investments through, for example, fees generated through transactions.

And for that, the Cayman Islands is also home to the Cayman Islands Foundation Company, which is a form of legal wrappers, a corporate intermediary, which many Web3 ventures need in part for the KYC that they provide also to limit the liability of its members, but that's not been tested in Cayman yet. But the idea is that these legal wrappers provide governance solutions, alternative offer ramping solutions, KYC to access regulated services on Web3 ventures behalf and support treasury management and governance.

Tom Brown: And then just finally just kick us off, Ben, an overview of what you're seeing in Canada in the moment as well, that'd be great.

Ben Bathgate: Yeah. So just to set the stage a bit first, I think some people will be asking themselves, you know, what's different than with conventional assets, right? Like, why are we having a separate conversation as it pertains to digital assets and the different cross border implications that come about, you know, why is it more complicated? Why do you need experts like the people on this panel to help you through? And I think it's important to keep in mind some of the unique attributes. I mean, we're talking about digital asset transactions, you're talking about immediately executable, trustless, pseudo-anonymous transactions, and that has different implications for the courts and how they're assessing jurisdiction. And in Canada, you know, we do have a different analysis, not unlike other common law jurisdictions. When that counterparty is a defendant, let's say the fraudster, versus when you're dealing with a production order and you're just trying to get productions from a third party.

So yes, you can get into more fulsome, we call it real and substantial connection test. In the US, it's more the minimum contact standard test, but you get into questions of fairness and connections to the forum, and in Canada, presumptive factors, you know, such as is the defendant resident in Canada carry on business in Canada, you know, was the tort committed here or is the contract at all made there? But what we're going to focus more on today are these situations where these virtual asset service providers, are only are being named and targeted to get information. We're going to be talking across board implications there, what happens when you're just trying to get their data, what's reach of the courts in your jurisdiction versus overreach. And I think there's some new laws certainly out of Canada and we're seeing the US about how those vasps are being targeted and that push and pull tension between those two sides.

Tom Brown: Thanks, Matt. I think for our audience, I think these third parties are going to be a very key part of what we discussed today and terms like, such as vasp, be familiar to many in this area, but perhaps Ben, you can sort of give a little bit more detail on, on actually how you're seeing those third party exchanges, that are so often critical to both getting the information and recovery is being brought into litigation and, and, and how the courts are dealing with that.

Ben Bathgate: Yeah. So starting with how they're being targeted when it's coming about, certainly we're seeing a lot more focus as these virtual asset service providers are reorganizing or redomiciling. You'll hear a lot about the Seychelles out there, right? I mean, there's, there is this redomiciling that's happening and it is creating interesting tensions. But first, you know, what are we talking about when we say virtual asset service providers or vasps, right? I mean, certainly wallet service providers, mixers or tumblers that sometimes obstacate the blockchain with transactions, so it's harder to trace things. Custodians of digital assets or payment processors, there's lots of different players, intermediaries that might be targeted with these kinds of orders. They can help with trading, interoperability between platforms for multichain functionality, lots of different services, but there are some commonalities on where they come into play and why they matter, because as much as they may not want to admit it publicly, they are massive repositories of really important data, that is integral to people who investigate like ourselves, whether it's, you know, the forensic people, like Adrian, or the lawyers like me and Dorothy and myself, that data that a lot of them hold, these massive repositories is so critical.

It's a treasure trove of information to help us deanonymize accounts and get to final end users. And although many of these vasps deny having the API data, they deny having some of this extra information, that they carry, you don't have to be an everyday person on Discord or Reddit to know. Sometimes they do have it, even if they're not saying they do. So we're seeing increasing cases where at least in Canada, there have been more direct, you know, I think successful attacks at that redomiciling effort where there's a bit of keep away going on where these exchanges are prioritizing privacy of their users and trying to say, "Well, we don't have that or we don't have it there. We have it here." And when it comes back later on, I'll give you a few cases that we've seen just the last month that are attacking that and looking at constructive possession of data, both the purposes of getting the data through Norwich and third party production orders, but also just to preserve it and freeze it if it's still on those exchanges and platforms.

So I'll come back to that later, Tom.

Tom Brown: Great. And then, I mean, I'm sure all our panel have experience of similar matters in their own backyards, but perhaps Dorothy, you can speak to what, what you've seen on this angle in Hong Kong. 

Dorothy Siron: I echo what Ben said because recently we had a case where we were suing a rather well known exchange. So as we all know here when the crypto or the money is invested and it goes into the crypto, then of course the exchange itself may pass it to another vehicle to store. It may not be exactly where you landed. It might be like pinging elsewhere. So we sue that outfit and they go into court and they say, "Well, it's not with us. We're a group of companies. We're just in court because you've someone that says to court, but they want us to identify exactly where that, what crypto would have gone." And we actually, you know, at the time before we were doing an injunction, and an NPO, Norwich Pharmaco, we didn't have that information yet and we hadn't gone into it yet.

So then when you suing the exchange, the money that the crypto went in, it pinged into 1,200 accounts. The poor investor or a victim would have to follow all of those cases to get orders for discovery against all those, the way that the money went or the way that the crypto went paint out and it's very, very expensive. So it's very painful for a victim to recover, and that's what we're experiencing here. And a lot of the clients don't understand, even if you get a forensics team to go in and say, "There's it, there it is sitting on the blockchain, I see it. " And we will say, "Hey, I see it too, but the point is, we have to convince the court that A went to B, B went to C, C went to D, and D went to E." And with the string of evidence, we can do an affidavit, go into a court and say, "There's your crypto." So otherwise, you could point anywhere and say it's mine and we will have no way to show it.

So a lot of the clients will say, "I see it, get it back for me. " And we say, "No, it's actually a very long paper exercise. We need the forensics. We need to prove how it went from A to B to C and then when the court order says, and, when they see it, they say, you know, we were duped." I said, "You cannot ask the exchange or whoever's holding it to be an arbiter of good and bad and reverse the transactions to you. You need a court order for that. " So, so, you know, these are the problems that we're seeing and very much echoing what, some of what Ben said just now.

Tom Brown: Nia, I suspect you were gonna say it's completely different in Cayman.

Nia Statham: I mean it's an interesting space, isn't it? I mean, the reality of cryptocurrency exchanges is that we can't trace beyond them. So that's why we also need the Norwich Pharmacal information on that for instance, because we need to do an onward trade. So they're still there if they've gone somewhere else. In Cayman and often we serve exchanges in a foreign proceedings. Because of our Cayman Islands company, it's got this very unique feature of being ownerless, which creates another tracing barrier in addition to the other barriers that we've been talking about. However, I don't think this is necessarily fatal to recovery assets because we're also holding jurisdictions. So it's a double edged sword. Cayman Islands Foundation companies, they are incorporated like regular companies, they can just be incorporated by a corporate service provider. The share is canceled.

So the only member detail that you have is the corporate service provider that incorporated it. Then the control of that company will be assigned to a director and a supervisor that can also be the corporate service company, or it could be a director that's parachuted in. The reality of it is, is that we're not entirely sure how much due diligence is being done on project teams, the signatories of multi-sig wallets, when this happens. Certainly regulated institutions, including banks, because remember these are corporate clients that are being onboarded to access regulated activities, won't necessarily be aware that their corporate clients are fronting these Web3 ventures and might not necessarily understand that there's a whole amount of activity set behind that. An Norwich Pharmacal from an exchange and also from a foundation company itself might not get you that information.

However, what it will give you is control of hopefully it's operating subsidiaries that hold intellectual properties, subsidiaries that will operate the protocol, because very often whilst we're talking about this in a very cross-border context, very often decentralization, is masking centralized control, and looking at holding jurisdictions I think is important. So whilst we do have an information black hole from a Norwich Pharmacal side of things, when we might never be able to get full accountability when something goes wrong in a project, and by all means, a lot of legitimate projects use these structures. But what you might be able to do is seize control from the top down and enforcement very much will come down to the protocol because that's very often where the assets are locked, that's where the treasury management might be. It also might be outsourced, but again, that's information that you should be able to get from going in at the top level.

Tom Brown: Thank you. And Adrian, perhaps this question you have slightly different perspective as sort of from the forensics rather than the legal side of things.

Adrian Morris: Yeah, absolutely. And I think I'm gonna take a stance that is very unusual for me and, and provide a little bit of defense towards the industry. So I would say that some, some exchanges are extremely forward-leaning in cases and as Dorothy and others have mentioned, if you present a clear tracing exercise, the clear forensics side of it, they will engage at times voluntarily if it is very clear that a crime has happened and in other instances we'll give you the guidance needed to help with court orders, such as you might wanna move a bit quickly because there's a significant amount of assets currently on our platform, or the assets have already moved, you might wanna put inquiries in elsewhere. What I would also say is that, in the UK, and I know other jurisdictions have similar, is being able to bring cases against persons unknown.

So not having to go after the exchanges, not having to identify, fully identify the criminal enterprise, for want of a better phrase, behind certain scams or frauds or thefts. And that can be really supported by some of the others operating in this industry, and I'll avoid names, but it might be pretty obvious, who do sort of burn and remit of assets, so have parts of the crypto tokens themselves being codable and therefore being able to prevent the criminals or bad actors from utilizing what they've taken and refund directly to clients. We've had real success, in working both sort of public-private partnerships with law enforcement there and these entities in order to get funds back to either creditors or victims or where it needs to be. So I said different for me to take a defensive stance of the industry, but I thought I'd provide a bit of balance there.

Tom Brown: Someone has to on this panel, don't they? I think it probably that point also maybe is quite nice on to talking about how this can interplay as well when you have that insolvency context as well which we can see quite frequently in cases, particularly where we're talking more towards the nefarious end of the cryptocurrency sort of scams and pump and dumps. I don't know whether Adrian, perhaps again, you could kind of kick us off on that one.

Adrian Morris: Yeah, absolutely. I would say that in the industry, we've seen a more traditional type of insolvencies, sort of voluntary and winding ups there, such as cryptopia in New Zealand, that was a unique case of having to return assets, or making the decision to return assets in specie. What is obvious there is that in the early days of the crypto industry, which cryptopia was, the KYC wasn't exactly the best and I think we had something like 12,000 creditors, who were all registered on an uninhabited island off the coast of Australia, so obviously returning funds to those was rather difficult. But insolvency is also a really useful tool in that civil space. Criminal investigations can be extremely long. Obviously, there is a different burden of proof, and when we're talking about the jurisdiction hopping that we've covered already, the mutual legal assistance routes can be extremely cumbersome and take years.

So insolvency against fraudsters and criminals can be a really powerful tool. There are multiple examples of it having crossed jurisdictional reach. So if it insolvency is brought against in, or bankruptcy is brought against individuals based in one jurisdiction, it doesn't matter that the creditors are not. And a lot of the exchanges, and again, not all, but a lot of the exchanges, do engage with the process and will look to facilitate the returning of assets through the sort of the appointed trustees back to creditors. In those cases, as I mentioned, when it can be used against criminals, the creditors is just another name for the victims. Unfortunately in those situations, they are unlikely to receive 100% of their assets back as they might in a direct criminal case. But, you know, from my view, and I hope it's not a particularly controversial one, getting some of your funds back is better than getting none of your funds back.

So I think it's just something I would urge people to always consider that criminal routes and things like that aren't always the only option. There are definite civil routes, and that's where things like public-private partnerships globally, can really come into play and do some real good.

Tom Brown: Thank you. And I think, Nia you've seen this in the Cayman context as well.

Nia Statham: Yeah, that's right. Baker & Partners was the firm to first wind up a Cayman domicile holding company of a group which operated a cryptocurrency exchange. The reason why some platforms might get a bad rep is because particularly if they're trying to evade licensing requirements, they can be fundraising vehicles. And very often we've seen examples, particularly in Hong Kong and Singapore as well, where platforms have been fraudulent platforms and they've just been raising money from credit investors or users and then transferring them out. In Atom Holdings, which is the Cayman domicile company, the exchange actually stopped honoring withdrawals after FDX collapsed, transpired that directors had absconded with millions of dollars of assets. And two petitioning creditors came to the Cayman Islands to wind up the company. They did get funding for that. The Cayman Court did allow the petition and actually waived the requirement for fortification when they applied to put provisional liquidators in.

And that's an example of the Cayman Islands working very hard to ensure access to justice, to ensure that to maintain its reputation as accredited friendly jurisdiction. And, asset recovery efforts still underway in that respect. And insolvency is a, as a tool for Shell Games, which is I think something that Ben's gonna talk about next, and I'll chime in afterwards, has been a very, very useful tool on the BVI, and I'm happy to speak to that once Ben's touched base on that.

Ben Bathgate: Yeah. Shell Game, another pejorative word from the investigative lawyers, right? But yeah, I mean, there certainly are common considerations across jurisdictions, and I'll describe one recent Canadian case in particular, right? We're seeing, I think, part of a trend. I think it's part of a common law trend. We are seeing in this tension between vasps, again, virtual asset service providers and investigative teams like ourselves trying to get at data. And again, remember why it's important. I mean, we're not just talking about maybe a picture of a license that's probably not authentic, and we're talking about social media accounts that get tied to people's accounts sometimes. IP geolocation data, which is so key in finding where the ultimate end user is. Device identifiers, biometrics, API data becoming increasingly important and actually being found to be located with a number of wall service providers who say they don't have it, user logs, support tickets.

I mean, there really is a treasure trove of data, and I've had conversations, as I'm sure others here have, with GCs at vaps, where they say, "Well, you know, we don't have that kind of data." And then because we have good networks, we show them why we know they do have that data. And then, "Oh, that data. Yeah, yeah, we have that. Let's talk about your order again." So, you know, there is this tension and this game of keep-away and interestingly in Canada, we've had both a criminal case and a civil case in the last six months, that have really been informative on this. And, you know, unfortunately for Binance and Coinbase, they got dragged into this one, and both of them, but you know, really interesting cases where I, you know, I mentioned them because I think they do have common considerations that go to other common law jurisdictions as well.

In the one case, the Attorney General versus Binance, just this past December, there was a number of different Binance entities, but it was this Seychelles-based entity, they called it Nest that didn't carry on business in Canada, but certain other ones did, and there had been past filings with our securities commission, although much less recent operations or use of accounts in Canada because it'd been restricted. And certainly there was an argument where Binance is saying, "Well, you know, certain of the entities and the key one, Nest, is outside of Canada, Seychelles." But the Attorney General successfully came back and said, "Well, yes, but certain of these Binance entities that are in Canada had constructive possession." And that was such an important finding where they said, you know, "We can issue orders in Canada to preserve that property, get more data." And part of what was different here is that Binance started sweeping and pooling client assets into these omnibus wallets, and that's how it does its organization internally.

So because of that tendency, and it's not stored in an individual bad actor's wallet on Binance, it's all pooled together in these omnibus wallets, certain findings came as a result on constructive possession to all of these Binance entities, some of which were still in Canada and not doing very much. So there was a number of findings there in constructive possession on, you know, finding knowledge of the assets in all of the entities, them being for the benefit of all the entities in their business model, and them demonstrating control over it to some extent. So I think it created interesting implications about the dangers of these omnibus pooling wallets, some of these exchanges used, findings of constructive possession as a result, even when you restructure your corporate entities as Binance did, and it's a bit of a warning too about, you know, watch your operational footprint, right?

It may not be overreach by the courts if you've allowed periods of operational access to people in that jurisdiction. So there were some interesting findings there we saw on the criminal side and also on the civil side with another case last year with finance and Coinbase and courts now in Canada are saying, even if part of your structure's offshore and there's a bit of this shell game, if it's accessible to people in Canada, we can find it more than a mere passive presence and we're going to give that order for access to your productions, your KYC, and possibly a preservation order as well. So I think it's going to be interesting to see if it becomes a trend elsewhere.

Tom Brown: I think, as Nia alluded to earlier, I think this is something as well, which I think has come up in Cayman too. So, pass it back across.

Nia Statham: Yeah. Thank you. It's actually come up in the British Virgin Islands and, it's, I'll try to give you the kind of the background to the story, but essentially Bi-bit is a centralized cryptocurrency exchange, which had sort of like a turnover of sort of a transaction volume of around 40 billion dollars last year, and services around 20 million users and was operating, it seems as an unlicensed criminal currency exchange in the British Virgin Islands. For regulatory reasons, it appears that it decided to re-domicile to the Seychelles. The curious thing about Bybit is that it operates three companies with the same name, I think Bybitfin Tech Limited in the Seychelles, the British Virgin Islands and the United Kingdom. And what, Bybit did was it transferred all the assets of the BVI entity to the Seychelles entity for no or almost no consideration.

The registered agent, resigned, the company was track off and it was eventually dissolved. In the interim, as all digital asset recovery or many digital asset recovery stories start, it starts with a user who's unable to access their account and, it's that Bybit unilaterally, froze their ability to access their account. The user notified Bybit and had a claim for 700 million + dollars in assets. Bybit acknowledged that some was owed back to the user, but was never paid. So what the user did was it went to the British Virgin Islands after writing to both the BVI entity and the Seychelles entity. Not entirely sure if that they wrote when the BVI entity was actually dissolved and filed an application to restore the BVI entity and to restore it into liquidation. Now, importantly, Bybit Seychelles wasn't able to intervene in that process.

What Bybit Seychelles wanted to do was for the company to be restored under the management of the company. And the court said, "Well, actually, this is an insolvent liquidation. All the assets have been transferred out. The business appears to have been continued out of the BVI to Seychelles without certain requirements being complied in the BVI before that could happen." And actually, you don't have standing in the liquidation to bring an intervention, because you're not a contributory in the sense that you've received it for free. So, it was restored, and the liquidators took certain steps, and this is where the asset recovery strategy comes into play. What they did was they, and it appears what they're doing is, they're pursuing an avoidance claim, so almost like a clawback to get all those assets back. And what they did initially was actually approach, Bybit Seychelles directly.

So please, can you transfer 900 million dollars? There were two creditors in the end. These were the unadjudicated amounts, put them in a separate wallet for us to access once we've adjudicated. And by Bybit Seychelles in the end only transferred what it thought users were owed, so it actually did the adjudication process for the liquidators without referencing them. It went to a wallet under by Bybits control. They gave the liquidators monitoring rights, which forced the liquidators then to get an injunction against Bybit Seychelles for under delivery up for the remaining and adjudicated amounts. And the court was highly critical of the liquidators for not doing that immediately because at the point it's, on the date that they're appointed their obligations to collect in and gather the assets and safeguard them are triggered. And unfortunately, the liquidators waited a number of months before making this application.

So I think that's a really good. It's an interesting roadmap for this kind of situation. And actually, if you are transferring assets for no consideration, there's an insolvency rule and you might not be able to participate in that liquidation when it's restored into liquidation. So again, seeing the courts working around that kind of corporate behavior.

Tom Brown: I think that might be a slightly common theme that I think many of our panels have referenced there, which is that the courts do seem very keen to work around what they consider to be shady conduct, in the digital asset sphere. And we're increasingly seeing courts crafting novel relief on cases that are being, you know, well thought through and pleaded accordingly. I thought sort of with that in mind, it might be just worth asking the panel whether there's any sort of particular practical considerations that they would urge people to have in mind when they're bringing their cases into the future, which would enhance their possibilities of making strong recoveries and perhaps we'll start on this one with Adrian.

Adrian Morris: Yeah, I've got three points that I'd like to phrase, and I promise only one of them is a plug. So my first would be, and it's exactly what people have already mentioned on here, the robustness of any tracing, that needs to be done if it is going to court. There have been a few cases now where either the judiciary or the defense have torn tracing reports apart in court because they have not held up, they have not been done to what you would see as sort of a professional standard from a traditional financing investigator, etc. So I would say that that is a huge part of it. If you are going to be presenting tracing reports to the court, make sure they're robust, get them peer reviewed if possible to make sure that they go over the line.

And GT offer that service, hence the little plug. The other two points that I was going to raise, were with custodians. So custody, knowing where you want to store the assets, if you do take control of them, as crypto, it is unlikely you would want to store them on an exchange, and there are plenty of professional custody providers out there who are not exchanges. The one consideration I would put with that is that liquidity is not as quick with those entities. And in situations where you see a market crash, like we have recently or dip with Bitcoin, you can lose a lot of value very, very quickly if you are unable to liquidate those assets because they're being held with a custodian. So that is just something to bear in mind. And my final point, and I promise to be quick on it, is don't only think in crypto.

If crypto has been taken or crypto has gone missing, you don't have to recover the crypto, you can recover the real world assets, you can recover the equivalents. We've had jobs where crypto has gone missing and we've recovered beachfront property in Miami and some lovely yachts because it was purchased with the proceeds of the crypto fraud. So they're probably my three main considerations that I put forward.

Tom Brown: Thank you. Dorothy, perhaps from Hong Kong, what would you, what would you add?

Dorothy Siron: Yes. I just wanted to talk about two different things. One of them is that we have a lot of cases that come maybe sometimes from the US side, and the client will have the FBI on it, Secret Service on it, and a lot of the enforcers on it. And they come to this side and they sort of expect the Hong Kong police to assist, but sadly, the Hong Kong police, unlike the FBI and the Secret Service, only play the role of policing for the purposes of laying criminal charges against the fraudster. And there isn't anything that they actually do for the victim, so you can't command them to assist, and you can't command them to share information with you. So sadly, you know, the victim will have to go through the courts. So, we, there's a bit of a disconnect and a bit of tension when the client comes with giving us a lot of the information and we say, "Well, we have to actually go to court." That's one angle of it because it's different from the other jurisdictions.

Another angle I wanted to discuss was that recently we have had a couple of cases and they actually settled. There was an exchange, there was a hack, and instead of running to court, we said, "Okay, let's just take this computer and see whether perhaps there might be something in the integrity of the exchange that was lacking." And we got a very well-known forensics company because that way when they throw the report out, it's gonna have gravitas and that it, you know, after studying the computer, we, they said yes, and they gave us a preliminary report. They said, you know, we think that the compliance was lacking in this exchange. So before we started suing, we actually threw out the report to them on a without prejudice basis to the exchange. One that, one of you mentioned just now, I can't say which, but and we showed it to them and we said, "Look, we can take this to court or we can settle." And, you know, luckily enough, they settled, but another thing is when you settle, they give you back what they say you lost.

So they gave us USD. So that's okay, but you also take a punt when you say, because you agree it beforehand, and then there comes for the completion date, transfer date, and there is a risk of value moving. There is also the exposure that you probably won't ever get your costs back because they're not going to pay costs, unlike in a normal litigation case where you'll be adjudicated a certain amount of cost and you can enforce anytime it is DFI, it's unlikely you'll ever get costs back in the traditional sense. So I wanted to mention and flag up these points, you know, for thought.

Tom Brown: No, I think we're gonna come back to a couple days in a minute with report on some of the funding equals as well, but, but before we do that Ben, is there anything you wanted to sort of flag as being real practical considerations here?

Ben Bathgate: Yeah. I'll just flag two, I want be even handed here, so why don't we start with the exchanges just to mix things up and, practical sort of tip or consideration there. I mean, look, a lot of us as well as doing investigations on claimant side also do advisory work for the exchanges. So we're cognizant of how they see the risks. On that side, it goes back to what I said before. Restructuring of your business model is not the last word on whether you're gonna have to give up data or not. It doesn't end the conversation. We've seen that recently in Canada. Any operational footprint, any ability for the court to find a pathway to the possible on having an order be practically, effective, if they say you're pooling between these omnibus wallets and they can find an entity in there, they'll find constructive possessions.

So be aware of that risk when you do have any operational access to countries like Canada, the US, that there are pathways, and the courts can find that to not be a mere passive presence. They can find that to be enough for constructive possession, that's what we're seeing now. On the flip side, practical considerations on the investigative side, when you're trying to do the art of the possible for claimants, it's so important to realize, especially when you have people like this on this panel, we have great networks in the industry. We don't do this just a bit. We do this kind of work a lot. So we really do have intel and the inside scoop. We have WhatsApp chats together talking about, "Hey, did you know this exchange carries this data, this wall service provider has device identifiers or has API data." We have a wealth of information knowledge in our network.

So make sure you get the right people, to get access to that because that information can really change that conversation with that GC or compliance officer at that vast when you already know what they've got and they may not know, frankly, they're not always kept in the loop. So having that right network, which all of us do have to know what they've got and what they don't, it's so important to open up that door and get production that can change your whole case.

Tom Brown: There's nothing quite as terrifying if you're asked to confirm something which you don't know whether is true, which has come from someone that works with you on these things. Definitely changes the dynamic a little bit. Just, we thought we'd just briefly cover off a couple of things about how digital assets are interacting, particularly with the litigation funding world. And I thought to start by, Rupert, if you could set out how a funder approaches a matter where we see crypto and digital assets being involved in the assets.

Rupert Black: Yeah, sure. Thanks, Tom. I think the first thing to say is, in a general sense, when we look at any recovery matter, we always look at collection risk, you know? What assets does a debtor have and where are they from which they can satisfy any claim? We look at this right at the outset, as well as throughout the lifetime of the case and we do this by identifying and analyzing the mix of recoverable assets held by the debtor. This can be anything from property, cash, receivables, securities, etc. digital assets as a asset class are very much part of that mix. As Ben mentioned earlier, there are features unique to holding securities in a brokerage account, and there are inherent characteristics to crypto that we have to kind of factor into our underwriting. You know, if we see a high degree of concentration in crypto without any more traditional assets which we might be able to kind of anchor recoveries against, this could increase the collection risk on our part.

But it's not always that straightforward, you know. We could see millions in Bitcoin sitting in a US exchange hosted wallet in the debtor's name, and this would arguably count as low hanging fruit. The funding terms would obviously have to price that risk accordingly. The same would likely apply if those holdings were in ether or stablecoins, but if their digital asset profile is made up of meme coins, tokens, other exotic digital assets with really questionable, inherent, realizable value, it's unlikely that we could rely on that solely to get paid.

Tom Brown: And quite a bit of your panel earlier has alluded to the issues that, that surround getting proof of ownership that it's your debtor that has the asset and issues of attribution and perhaps you could sort of outline how that might come into consideration.

Rupert Black: Yeah. And I, I think for us, attribution is typically the hardest part of crypto recovery. The key question for us is what are the, what is the strength of evidence we have attributing ownership of hosted or even self-custody wallets to a debtor? You know, is the debtor a sophisticated user? Are they using proxies, mixers, cross chain bridges, all these exciting things which several of the panel members are kind of mentioned? You know, does the wallet have multi-sig, is it, are there proxy entities involved? Are there any other structures in place which are obfuscating the kind of debtor's ownership? If that's the case, then even the most kind of sophisticated blockchain analysis may not be able to make the leap between pseudonymous wallet and owner. And I think in those circumstances, we really need to plug that information gap and there's a number of ways that we can do this.

And first off, what we try and do is find evidence of direct control. You know, we can use, we can try and use search orders in jurisdictions like England and Canada to get hold of hardware wallets and devices, and we'd want to search these for seed phrases, keystore files, or even messages sent over encrypted channels. I think what a lot of the panel have discussed today about the challenges with seeking information from VASPs and from third parties, is a real challenge and it's a growing one. And I think, even in favorable jurisdictions like Cayman or Hong Kong, you may not be able to find a compliant custodian that's gonna furnish you with KYC records or IP data, etc. And in these cases, I think we're gonna really have to widen the net with the third parties that we're looking at.

One way of doing this which we use often is by opening a discovery portal, say, in the US, either with a 1782 or with a recognition action. That way we can do things like subpoena the debtor's email service provider for non-content data, this might give us messages between custody providers, investors, etc, or alternatively, we might want to subpoena a crypto debit card provider we know they use. They'd give us account records, even in some cases for accounts which aren't held in the US. And finally, just to wrap up this point, I think what we always try and do is supplement these requests with open source pattern of life analysis which involves a real deep dive of the public record.

You know, do the transactions that we see in the crypto debit card providers account statements like match up with the debtor's movements on social media. Do big on chain transactions align with the debtor's lifestyle purchases? I think combining the inferential picture of the debtor's activities with hard evidence of control can often make the difference when it comes to the kind of naughty question of attribution.

Tom Brown: And I think it's probably, again, a slightly related question that builds on some of what people were saying earlier, but the crypto space, you are often seeking relief that is not, you know, you're in uncharted orders, you're setting new precedent. How does that impact the decision making process?

Rupert Black: That's right. And I think novel remedies are always gonna be part and parcel of crypto litigation. For us, they can increase the duration risk by simply making appeals more likely. We can typically get comfortable with this by, you know, providing funding for these kind of remedies as along, you know, alongside other actions which are not just the sole route of recovery, right? It's about diversifying the options in the past to recovery. There's also the possibility as well as novel orders. So you could have a judgment that's denominated in crypto. And if that's the case, we have to have a robust currency risk management plan in place to manage that award when it's rendered. That kind of speaks to the wider issue of volatility in the digital asset space, which I'm sure everyone is aware of and very much aligned to and how it impacts everything from valuation all the way down to timing.

Nia Statham: Can I chime in just on that? I think that's a really good point, alternative orders, and kind of fed into some of the practical considerations I was thinking of just now.  I think networks, like Ben said, are really important. The tools that you're using to trace social assets are really important. I'll speak to why in a moment. But essentially, there are skill sets coming into market which have challenged, how we've approached digital asset recovery before. Previously it used to be where you could only really go to a third party custodian, that was the safest bet. But now we're seeing skills coming into the market where they can hack our wallets. And that's permissible if you can get a court order which sanctions that. And there is an example of this happening in the United Kingdom where a ethical hack, court sanctioned ethical hack was granted and actually a recovery of 100 millions of dollars was in fact made.

There is, I think understanding who's in the market, what everyone's skill sets are and appreciating now that actually hot wallets on their own and hosted aren't necessarily beyond reach. That's helpful. There was a case in the United States, actually it's the United States restilling of 2024 case where the court, had to decide on the admissibility of blockchain analytical chain analysis primarily. And it survived the application and that court confirmed that chain analysis, TRM, attribution methodologies which trace through mixes, all of this is admissible. It's not junk science. So being able to identify the correct sort of tracing tools, reliable tools that have benefited from this kind of legal treatment is also really helpful, gives you a bit more certainty in terms of the strength of your case. And I think, as far as recoveries go, your recovery targets are changing as well.

Debit cards have been mentioned, legal wrappers, companies and structures, these are alternative off ramping solutions. And you can now purchase things directly in crypto. You don't need to go through a centralized exchange and bad actors will try and circumvent the effectiveness of regulated exchanges by not using centralized exchanges for that reason, or regulated ones.

Tom Brown: We were going to go and talk on about duration, but I think actually this question led us very nicely on to one of the questions we've had submitted in the Q&A, and the question is, "Once assets pass through mixes, timeless or privacy protocols, are you finding that the real bottleneck is technical traceability or judicial appetite for drawing adverse inferences? How are courts responding to this in your experience as well to probabilistic blockchain analysis rather than perfect trading?" Do you know whether Ben or Adrian or whether you want to kick us off on, on that?

Ben Bathgate: Well, why don't I go first as a lawyer and then Adrian can correct me. That's probably the right way of doing it. And this one's actually near and dear to my heart. It's a great question and I love that you use the word probabilistic because that's what we're talking about. And this is something that's, it is near and dear to my heart because we actually do the education for judges in Canada. We do a program for them teaching them about digital assets to get past this reticence and anxiety around it. But the bottom line is you have to be honest with it. And we've said this numerous times. I mean, we're in court every week on cases like this with digital assets. The first thing we say is we're going to give you a report from someone like Adrian and we got to be clear about this.

It's probabilistic. This is research, something from a number of different licensed programs. It is not perfect. This is not disposable, it's not objectively. We can tell you it goes from A to B to C. It doesn't work like that. So you need to disabuse the judge of that immediately to retain your credibility, and you need to be honest about what you do and don't know. And then the second part of it is from the lawyer's perspective, is find that corroborative data as best you can. It might be using, other programs as well, which have different research, so different ability to deanonymize accounts and be able to figure out which account belongs to whom, but you're corroborating based on other transactions with those wallets that can dial back when you've got great mapping from someone like Adrian that can come bring it back and show you multiple points of contact.

And then of course, trying to get at open source information and other data. I'd say API data, especially recently, has been great as another source of information. So finding corroborative tracing and finding corroborative data, open source data, it can fill a few of those gaps in the probabilistic blockchain forensic work, and that can get you far enough that you can say to the judge, "This is as good as it gets. Let's make the right decision here." But Adrian, you're the expert, you tell us.

Adrian Morris: No, I totally agree. My key point was going to be that it comes down to the education of the judiciary and that's a key point. There are some that you can go in front of and you're not gonna get across the first hurdle. There are others that are much more okay with this world than you can have conversations with and you can explain it. As Ben said, people seem, especially experts in this space and I use the term loosely because crypto is such a vast thing, that having individual experts is quite difficult. But in, especially in the tracings fit field, I don't know seems to be like a really dirty phrase and I don't understand, I personally don't understand why because it can be really powerful while building that credibility and showing that you're not trying to pull the wool over anybody's eyes here, you are trying to present as much as you can as fact and everything else is either assumption or inference as most expert situations can be.

In relation to the technical side of it, again, it really is on an ad hoc basis. Sometimes you can trace through a mixer, because of the values involved, because of the market at the time and the amount of activity, you can do it. In other instances, you are looking for a needle in a giant stack of needles buried somewhere in the middle of a haystack and it's just not viable. So, and you have to be honest with your clients about that. I think that's really important, not just the honesty with the judiciary and with others that work in the sector. But with the ultimate clients of being like, "Look, we've had a look, we're really sorry, we can only take you to this, we can only take you this far." And then as Ben said, you've got to start looking at the other levers that you can pull.

Tom Brown: I just think maybe bringing that back to the cross border context as well, you see how you have to be very mindful of what are the standards of evidence in the court you're going to. And we see it all the time if you know, if you're in New York, for instance, and you're trying to see things on information and belief, it is a very different world if you're trying to get someone's account for us in the UK and you've got full and frank disclosure there, but I suspect probably something we can all agree on is that being upfront with the court about what you do and you don't know will certainly help you in the longer run on these things, even if it doesn't necessarily mean you, we're always going to be at that stage based on probabilistic reports and almost the interim evidential picture being enough to satisfy particularly one of the more or the, one of the one of the judges who hasn't had the benefit of Ben's briefing beforehand.

So, I am very conscious that we are almost at the hour now. So I would like to extend a huge thanks on behalf of both the capital to, first, everyone who's attended and who's helpful today forward, but in particular to our panelists to Adrian, Ben, Dorothy, and Nia with particular thanks to those who are braving the beginning and ends of their working days to be here. So, thank you very much. A recording of this should be online in the next few days. And if there are any questions people have after the end, please do feel free to get in touch with one or any of us. Thank you very much for attending. It's been an absolute pleasure.