Legal Commentary: D’Aloia v Persons Unknown & Ors [2024] EWHC 2342 (Ch)

Tubrazy Shahid
Oct 10
4 min read

By Crypto Lawyer & Legal Researcher

The landmark judgment in D’Aloia v Persons Unknown & Ors [2024] EWHC 2342 (Ch) marks a significant development in the law of digital assets and crypto recovery actions. Having pursued several blockchain-related matters myself, I view this case as a crucial moment where traditional equitable principles have been tested against the realities of decentralized finance.

Background

The claimant, Fabrizio D’Aloia, alleged that he was defrauded of substantial sums in cryptocurrency (primarily USDT) through a fraudulent online trading platform. His claim sought recovery against unidentified persons (the fraudsters) and a crypto exchange, Bitkub, where he believed part of the stolen assets were transferred. The case thus raised fundamental questions: Can digital assets like USDT be legally treated as property? Can victims trace and recover such assets through the English courts? And under what circumstances can exchanges be held accountable?

Cryptocurrency as Property

The High Court reaffirmed that USDT qualifies as property under English law, extending the principle recognized in earlier cases to stablecoins as well. While USDT is neither a “chose in possession” nor a “chose in action,” it represents a distinct, enforceable form of property reflecting value, control, and transferability. This recognition strengthens the legal infrastructure for pursuing equitable remedies such as tracing, constructive trusts, and proprietary injunctions in digital asset disputes.

This reasoning aligns with the UK Law Commission’s recommendations and the emerging Property (Digital Assets, etc.) Bill, both acknowledging digital assets as a unique form of property deserving independent protection under law.

Tracing Digital Assets – Evidential Rigor Matters

One of the central challenges in this case was the tracing of misappropriated USDT through multiple wallets and into the exchange’s accounts. The Court reiterated the distinction between “following” an asset and “tracing” its substituted value. However, the Claimant’s expert tracing evidence was found to be inconsistent and inadequately reasoned.

The result was a dismissal — not because the law prevents tracing crypto, but because the methodology and evidence failed the required standard of precision. This serves as a strong reminder to future claimants: in crypto litigation, blockchain analytics must be presented with forensic clarity and logical consistency.

Constructive Trust & Unjust Enrichment

The Court accepted that the fraudsters held the stolen crypto on constructive trust for D’Aloia. However, the attempt to extend that trust to Bitkub failed due to insufficient proof and lack of properly pleaded claims, such as knowing receipt.

The unjust enrichment argument also faltered because the Claimant could not show that Bitkub’s enrichment was “at his expense” — a direct result of poor tracing. Yet, the Court left open the possibility that, in future, an exchange ignoring clear red flags or failing its AML obligations could face equitable liability.

This is a warning shot for global exchanges: turning a blind eye to suspicious activity may not shield them from liability once a clear causal link is proven.

Analytical Perspective

From a practitioner’s standpoint, the ruling highlights both progress and limitation. It moves crypto jurisprudence forward by clarifying that digital assets are legally recognized property, but it also emphasizes the evidential demands of proving ownership and tracing in a decentralized environment.

The decision reinforces that crypto recovery actions will succeed or fail on technical accuracy, not on equitable sympathy. Lawyers handling such matters must therefore combine legal precision with blockchain analytics expertise — an increasingly indispensable intersection in modern crypto litigation.

Global Relevance

Though a UK decision, D’Aloia will influence courts in other common law jurisdictions considering crypto asset recovery. Its reasoning on property classification and tracing methodology provides persuasive authority for jurisdictions like Singapore, Canada, and the UAE, all of which are refining their digital asset frameworks.

Key Takeaways

Cryptoassets (including stablecoins) are property under English law.
Tracing requires rigorous, transparent methodology — flawed analytics will destroy a claim.
Exchanges are not immune — poor AML/KYC practices can expose them to constructive trust or unjust enrichment liability.
Proper pleadings matter — claims for knowing receipt or breach of trust must be expressly stated and supported by clear evidence.
Law and technology must converge — effective legal recovery in crypto fraud demands collaboration between lawyers, forensic analysts, and blockchain experts.

Conclusion

D’Aloia v Persons Unknown & Ors is a defining case for the jurisprudence of digital assets. It signals that the English courts are willing to adapt equitable doctrines to the crypto ecosystem, but success depends on the precision of both legal argument and technical tracing.

As a crypto lawyer, I consider this decision a turning point — a move toward a more mature, evidence-driven framework for asset recovery in the decentralized world.

The future of crypto law belongs to those who can bridge legal reasoning with blockchain logic.

Disclaimer

The information provided in this article is for general informational purposes only and does not constitute legal or financial advice.

Author & Crypto Consultant

Shahid Jamal Tubrazy (Crypto & Fintech Law Consultant)

Shahid Jamal Tubrazy, a certified top expert in Crypto Law from Duke University, is a leading authority in the cryptocurrency and blockchain space. As a seasoned Fintech lawyer, he offers a full spectrum of services, including licensing, legal guidance for ICOs, STOs, DeFi, and DAOs, as well as specialized expertise in crypto mediation, negotiation, and mergers and acquisitions. With a proven track record and published works on Blockchain Regulation and Cryptocurrency Laws, Shahid provides unparalleled insights into the complexities of the fintech world, ensuring compliance and strategic success. 🌐💼 #CryptoLaw #Fintech #Blockchain #LicenseServices #CryptoMediator #MergersAndAcquisitions #CryptoCompliance #FrozenAssetsrecovery.