Publication
29 May 2024 ·
United Kingdom
Cryptoasset disputes on the rise – what to expect in 2024
2 min read
CMS analysed the 118 High Court cases related to cryptoassets to identify trends in the decisions and inform our forecasts for what lies ahead in this sector. Download the report for analysis on the types of claims and judgements and commentary on what these mean for those operating in the cryptoasset sector.
"Our research has identified an upward trend in the number of High Court claims, and we expect this trajectory to continue. Numerous factors, including an increase in the number of claims issued and judgments handed down, combined with the law becoming more certain, makes it more attractive for law firms to litigate the right cases.”
Kushal Gandhi
Partner
Kushal Gandhi, Partner
TL;DR
- Crypto disputes determine our law on crypto: England and Wales is a common law jurisdiction, meaning much of our law comes from judgments. It follows that crypto disputes are determining our law on crypto (e.g. that crypto can be property, and that crypto is located where its owner resides).
- Judgments are typically on time-sensitive issues: Over 80% of crypto judgments are on interim applications, like applications for freezing and disclosure orders in fraud claims. Fraud claims make up over 50% of issued claims.
- We predict case volumes will rise: Case volumes are low compared to crypto ownership and interaction (118 High Court cases since 2017, whereas 10% of UK adults hold crypto). We expect case numbers will rise as more judgments are issued and the law becomes more certain, also as the less time-sensitive crypto disputes approach limitation (which usually falls after 6 years).
- Class action risk: Crypto businesses face real class action risk. They operate at the intersection of the finance and technology sectors, the second and third biggest sectors for class actions in the UK by volume. The third largest competition class action in the UK by damages is a crypto case.
- Arbitration: Arbitration is a favoured method for resolving cryptoasset disputes, but arbitration agreements with consumers can fall foul of English consumer protection law.
“With the recent rise in cryptocurrency prices, there is a surge in new owners and tokens. We anticipate an upward shift as many new investors encounter issues for the first time and there is an increase in availability of litigation funders in the market.”
Charles Kerrigan
Partner
Charles Kerrigan
Publication
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