Crypto exchange gives green light to track stolen assets in UK court ruling

A London court has ordered cryptocurrency exchanges including Binance, Coinbase, Kraken and Luno to hand over customer details to a competing operator to help it track $10.7 million in stolen funds.

In a ruling on Tuesday, the High Court ordered six exchanges, all based outside the UK, to release customer information including names, bank accounts and card details, subject to certain redactions.

Judge said ‘steps should be taken before the smell gets cold’ to trace $1.7 million of the money that was tracked to 26 accounts, all of which were owned or operated by one of the six scholarships. The funds were in digital currencies including Bitcoin, Ripple, Tether, and Ethereum.

The lawsuit by the UK-based exchange is one of the first applications of new court rules designed to help victims of cyber fraud track their overseas assets. The name of the exchange was withheld to avoid “warning” thieves, according to the ruling.

The UK exchange asked the court to intervene after being hacked in 2020. It had initially sought help from UK law enforcement, but when that proved unsuccessful the group hired crypto tracing specialists. They tracked $1.7 million to accounts owned or operated by one of the six exchanges, lawyers for the UK exchange told the court.

Courts and law enforcement rush to catch up sharp rise in crypto fraud. In the UK, data from the police unit Action Fraud showed that the total value of reported crypto frauds increased by a third in the 12 months to September 2022. Last year, criminals stole around $6.2 billion, according to blockchain research group Chainalysis, up 80 per cent from 2020.

In this case, the court used new rules that allow English judges to order foreign companies to hand over documents. The rules have been hailed by lawyers as particularly helpful to victims of cryptocurrency fraud, where the parties involved are often anonymous.

Victims who turn to the law for help often don’t even have the most basic information about who stole their money or where they live.

Barrister Syed Rahman, who represented the UK stock exchange, said: ‘The case is a huge step forward for those trying to recover assets that have been fraudulently taken and moved across borders.

The decision concluded that it would be “impracticable and contrary to the interests of justice to require a victim of fraud to make speculative claims in different jurisdictions” in order to recover their assets.

Binance declined to comment. Kraken, Luno and Coinbase did not immediately respond to requests for comment.