A landmark ruling by a United Kingdom High Court has established that the stablecoin Tether (USDT) is classified as property under English law. This decision marks the first time that a court in England has addressed the status and treatment of cryptocurrency after a comprehensive trial. The case arose from a fraud incident in which the victim’s cryptocurrency, including Tether, was stolen and subsequently laundered through various exchanges and crypto mixers.
The court, led by Deputy Judge Richard Farnhill, concluded that USDT possesses property rights in accordance with English law. He distinguished USDT as a unique form of property, stating that it is not reliant on any underlying legal right. Additionally, the judge highlighted that USDT can be subject to tracing and may be treated as trust property similarly to other asset classes. This ruling builds on a precedent set in 2019 that recognized cryptocurrencies as property, aligning with the recent findings of the England and Wales Law Commission which identified digital assets as property in a 2023 report.
This ruling comes on the heels of a government bill aimed at classifying non-fungible tokens (NFTs), cryptocurrency, and carbon credits as “personal property” under existing laws in the UK.
In a related case, the plaintiff Fabrizio D’Aloia was unable to prove that the Thai cryptocurrency exchange BitKub was enriched by his stolen USDT. Despite acknowledging the fraudulent activity, the judge found insufficient evidence linking D’Aloia’s USDT to a wallet on the BitKub exchange, primarily due to the complexities introduced by the use of crypto mixers. As a result, the court dismissed D’Aloia’s claims against BitKub, stating that the legal connection to the exchange was not substantiated.
D’Aloia had transferred approximately $3.3 million to various fraudsters, additionally naming several other exchanges and unidentified individuals in his claims. The court will later address a summary judgment application regarding the matter.
