The Legal Nature of Cryptocurrencies - Anna Freud and Marc Jones - Stewarts Law

Transcript

[Music] I'm not James this is I'm frying hi I'm partnerships associate with those litigators so we basically deal with stuff when all goes wrong just tends to mean that we're kind of back end it's all any other issues because it's been developed it's been useful news and it's only one that we all start and pull off the we gave all those sorts of issues it only just started triples really in the kind of

issues that you guys probably hear about this in the forum more often than when you hear people like me talking about legal issues what it also means is that whereas the technical side of things is present future what I deal with is quite literally late medieval period relatively think the law and tech do not go to city well together the law lags behind massively it's very slow to develop it is always behind the curve and it does not reflect where the reality and commercial side of things are that can give rise to all sorts of problems and uncertainty the reason why Jamie goes along here is that recently

about six months ago we dealt with one of the very first cases that considered a really basic and fundamental question is thought would've answered quite a long time ago which is what is a cryptocurrency legally speaking what is it is that it's a bit of property what rights do you have utilize get someone else paid you transfer it to someone else if you've got security over it would use some of the drawers your bet all that kind of stuff no answer to that question there still isn't oh I'm still uncertain English look it's crazy but that's that's where we are despite the fact that now you've got et ends in crypto she's all the way across strings turns fun again they're the exchange traded from these through yes you see all sorts of Sherman stop the Fundamentalist they'll have not beat meltdown Aniston ethos

briefly though the case that we dealt with to this question in German we've actually got put two currencies and then is gonna try and rumble a bit of boats and there she does only have shoes that effect the impact will will impact in the tech side of things quick fun story though is not long ago I gave a talk to nor use of lawyer I was trying to explain to them what watch it is words what distributed ledger technology is how a consent the mechanism works they thought it'd be good idea just an American like they're giving me a golden coin and Bitcoin things done but ain't got the produce because he was sick of people asking what bitcoins are and didn't believe we couldn't see them and touch them see just put we made these things to give out to people to

something a Bitcoin I passed it around the reefs get people to vote on if you've got it do you own it will stick your hands up and so that's basically consensus the worrying thing was at the end of the talk about half the people in that room thought the thing I was passing around was actually a bit so I don't wanna do too much but that's not a bad indicator for you guys is to quite how far the distances between where the legal side of things stand at the moment and where the tech is so with that I'll hand it a bit better casein and cotton back okay so a few months ago we acted for one of the largest crypto currency traders in Europe and in the Middle East our client

was a victim of a phishing attack the email account of a firm in which our client wanted to make a personal investment in was hacked and his internal investment of a hundred Bitcoin was misdirected to the hacker which we called a foodstuff obviously he wanted to recover his hundred Bitcoin so he instructed us we obviously didn't know the identity of the frauds to us so we sued persons unknown we first used the services of the blockchain investigations firm chain analysis to establish what had happened with the Bitcoin that way we found out that the vast majority of the Bitcoin 80 Bitcoin

ended up in a wallet at coinbase UK Limited which is the UK arm of the San francisco-based coinbase dia de 20 Bitcoin was sent to various local Bitcoin exchanges and cash out coinbase wanted to help us but they were restrained by certain confidentiality obligations so we went to court we applied for three orders a freezing order an asset preservation order and the bank trusts order the first use of freezing orden asset preservation order freezes assets we ended up going for the asset preservation order because an

asset preservation order freezes particular sets so we could we were able to freeze those ad Bitcoin and the amazing thing about bit kind of causes it's identifiable whereas Sampath cash is stolen if you lose a hundred pounds and someone picks it up you can't it's very difficult to prove those where you're 100 pounds west Bitcoin you can identify them the judge accepted our arguments that we our client had a proprietary claim but we have to discuss what bitcoin is is that property is not like Mark explained that there was no legal authorities so we have to find international authorities

we had to find some commentary that basically argued it is property we still don't know what kind of property it is but at least the court accept that it is property and we needed court to accept that because otherwise it wouldn't freeze the Bitcoin and then the second interesting thing we did was we applied for an order called Bankers Trust order so that's an order that allows Frank's exchanges to give you information that is otherwise confidential so that way that way we were able to get the information that identified the fraud stir so the result of the case was we had all the information we needed we

could contact the fraud stir and we negotiated the return of the 80 stolen Bitcoin so yeah that's it [Applause] that's so clear example some ways of why these sort of questions max occurs the dislike and sanity of that that hearing we had was when I was taught with it's freezing Lord of that doesn't make specific things you basically take say someone write with freezing a million quids worth of everything you've got right but we're not saying that any of its particularly ours we've got no right to any of it you just say can't do anything with it for the time being what we thought was always said those are

things Bitcoin Darrow's you can't do anything the reason we couldn't get the freezing over was because the judge wasn't satisfied because she didn't know who these persons and they were well they I don't know these that kind of being transferred from one bullet to another wallet for all I know the sucky wallet they could be running a hotel live these Bitcoin because it bought cars with these different really government's have brought here and if you're telling me that with that great evidence abroad you're not going to give me this kind of disorder to prevent fraud than you you're writing a blank cheque it's a totally could you know clean sheet for forces worldwide choose equipped occurs in exactly the way the other historically the maybe oppress and

regulated hood in the early days to trade cryptocurrencies that they are used for nefarious purposes and that's quite important in terms of the way the laws developed because you need silt loams that pie robbers and all that kind of up the immediate legal reaction to it it was a regulation one is to try and do with like money laundering cleaning fence so what happened worse everything jumped that regulatory level and they've North in the like questions that were what are these things there's this new technology it's not the right against someone because it and the blockchain you don't have a right against anymore there is no sin there is no counterparty distance mutate abuse and wait well it's big selling points but if you sort of

thing come hold onto you can't hand it over simply so you do fit within existing categories and that that fundamental issue wasn't considered so everybody's looking at we've got a D am your hunting money-laundering into the other you make sure your exchanges are doing that know your clients and all uh sort of regulatory still the lowest think about well if I someplace a Bitcoin or my theory or any of the perks of currency I'll get it back Lorenza my god there's a current issue at the moment of it and whether any of you had any hobbies in crypto Pia took a huge exchanger in New Zealand and that wasn't the millionth us hundreds of millions that's gone that and there's a huge art going on moment there in court

because people didn't focus on the face of which they've handed over that they were all loving clips idea to hold that cryptocurrencies I think people assumed that they'd put them in the exchange and they were theirs and they were sat there safely that may or may not be the case what's being said is that when they did that actually because the exchange this this changes property so when that exchange went bankrupt whatever cryptocurrencies were left but they were hacked in a whole load under the moon went whatever was left is then divided between all the creditors everybody's lost out but there's a bunch of people

that are single hand in the second because I can see from the blockchain that actually my tokens or whatever Assyrian become whatever they are in the exchange they're still there so I won't mind back thank you very much what their argument may be saying well no you can't have in fact because they're not your property they belong to exchange and we're gonna divide them up between everybody it's a really big issue because if those if those tokens same the pot maybe it won't gas I don't know twenty cents in the dollar if they go out use in people whose coins they are they get hundred cents in the dollar and everybody else gets huge issue and so people are going to be really well all they're gonna lose 0.8

my experience so far is people get a bit carried away and a lot of the fine print Kaiba doesn't get read all the fine print it's not even there so to date if you take you get back and look at white papers for any other kind of big tokens you will not find what law governs them anything goes wrong with it you will not find anywhere in that paperwork that tells you you've got to go with the English law English course you've got to go sleep courts this state New York or you've got to go to Mauritania or whatever it's just not there so you get personal you get massive issues that you don't even know what were your argument right let alone with remedies you can get so it's there from that point it just explodes because

another molecule a game all the really cool things about this are technically with DLC is you know no one person gets the ultimate ledger not knows that we were or argue in every country in the world that creates all sorts of problems to what you want to say what's the look what's the law of transactions on the blockchain and that one's chosen a law home to do it will court some different ways of working how they won the classic ways they do is they look geographically where something in base located more where the blockchain located I mean one of the nice things I've said Venus it is perfect shot be thrown Bitcoin but wonder if one approaches English cortex they say well you look at it's neat but what's what's really going on with the

blocking so it's a service the service we provide is my name so English losses bleep where's the mind service located well 65% of mining is done in China so I'm not basing this what we tell you to Wharf these Bitcoin watching these Chinese book is if any other problem with you bit Khan watching it wrong you've got to go into Chinese book and that's probably not what you want to hear all the good music I'm told is that Shawnee was actually pretty similar on this respected English it may not be a problem that's other things super complicated very exciting if your lawyer not so cool that we someone who's what was your cryptocurrencies you've got a problem other I mean at the other end of micro and you pay for something

in the cryptocurrency and you effects that's a Bartok these lots of sell goods in consumer protection right they're always the money transactions you buy sleeve money all sorts of different rules of market you buy something critical parenting you respect exchanging apples for sheep yeah that's it is treason it's just a bomb maybe he was boxer the rules are all totally different the loss totally different it's crazy the good news is and as a producer that's his English loss trying to get a grip on that they issued a statement that's then that's the closest you're gonna cash nor a longer lunch thing it's actually thought it's not particularly

legal in that things it's not really dry document it's not it's really well written they finally get a grip because the thing what any answer is better than no answer people uncertainty and the true with the way English girl works unlike some European systems is most stuff's gotta go to cool the course have got to get an answer before you know the answer is not great Lichtenstein taking different approach we've got trend to watch the centers the Korean beer over some text he's been wallet people who also this blocks enacting Lichtenstein if they've taken the new editor with his legislation that deals with everything but interesting I was really a bit early stay rereading it and they acknowledge one of the problems of doing that she sort of set in stone move your legal position and yet what you're really

dealing with is it and rapidly and just listening to the talk just now if we DQ a fast moving environment so literally if we're in a month two months six months the legislation you create this brand new shiny regime hope everybody know exactly what they're doing what they're creating what the IP rights are how do you transfer the profits of how you give some you're observing what happens and insolvency it's all completely redundant because the tectum you don't the arguing this law is made well it's fluid it adapt it might be responsive but it can respond and you can get to call you can get answers you just don't know what the answers going to be until yep the incentives great people like me it's not so great for everybody else I

don't want to take the too much time because it could just there's a team and it's a bit different it's history history I've almost restrained the kind of just go spy of pieces or piece of people whether it's straight to it well big issue about sort of cryptocurrencies and whether their money moving is the sort of deep deep inner areas and financial disintermediation special regulation for locations of all of that they went to a talk a few months ago ing back this 22nd Geneva reporting is about impacting traditional banking I went along and I saw that my quarters just hang people just see we did it like three minutes the word Libre came up and

plea Republicans dominates about Libre and I could not believe how obsessed and terrified the bank fees that were about Libre and its status whether they got recognition with committee regulatory and not necessary for the reasons you would think that would the main thing that came out today was there's a lot of totally protectors of crimson states of protection concerns about that in this environment as well that's a whole different that's a completely what came out that was about 30 percent of the big international bank profits derived from

straightforward vanilla clearing the payments internationally if you have a cannot Libra and issues recognized you wiped that off the bank balance shoes and the death I don't mean deadens and they just they don't operate they're not solvent they cannot work that's why he won't you've got the kind of micro stuff in your bathroom innocence you know protection of the other end the laws stretching rise over and the insertive stretches over you're gonna recognize it not sure clarity you get a regulated properly and if you do what implications of that sorry I did set rumble a bit but it's maybe the discussion you pick on any of the areas you want to I didn't

want to get too technical any one of its place law or get to you know to legal about it but it's it's really a lovely area because I like the fact I believe side even though work on the Bible it is behind you it's [Applause]