Global FinTech Series

The rapid evolution of digital assets continues to reshape the global legal landscape, presenting new challenges and opportunities for regulators, courts, and market participants alike. From disputes over tokenized assets and smart contract enforcement to insolvencies within the crypto industry and evolving regulatory frameworks, 2024 has been a year of significant developments.

Our global review reflects on key trends, landmark cases, and legislative updates that shaped the digital asset dispute landscape in the UK, the US, Singapore and Australia throughout 2024. By examining how courts and regulators have addressed issues such as fraud, market manipulation, and the rights of creditors in crypto-related insolvencies, this report offers insights into the legal precedents and strategies that have emerged during the year.

Looking ahead, 2025 promises to be a pivotal year, with anticipated regulatory reforms, greater clarity in international enforcement cooperation, and the potential for further litigation as stakeholders test the boundaries of digital asset law. In this outlook, we assess the likely direction of future disputes and regulation in this rapidly maturing sector.

Read on for an overview of the current state of play and what may lie ahead.

• The UK
• The US

The UK

Determining the rights and liabilities of participants in the digital asset ecosystem is critical to its future development and regulation. This has been the focus of several cases in the English Courts in 2024. These include important decisions on the property nature of digital assets, proprietary remedies against exchanges and fiduciary duties of DeFi participants. We expect further clarity from similar disputes that reach the Courts in 2025, together with the presumed passage of the Property (Digital Assets etc) Bill ("the Digital Assets Bill") into law.

Legal treatment of crypto exchanges

Exchanges play a central role in the digital asset ecosystem. The creation or extension of regulation to exchanges, occurring worldwide as part of the growing maturity of the digital asset economy and likely to continue in 2025, depends on the legal treatment of exchanges. Victims of fraud have attempted to use proprietary claims and injunctions to recover their assets from exchanges but the English Courts are still exploring how this should be approached. In Piroozzadeh v Persons Unknown [2023] EWHC 1024, Binance, a crypto exchange, successfully argued that an injunction against it should be discharged on the basis that it functioned in a similar way to a bank: digital assets deposited with it were not segregated and the depositor retained only a contractual claim against it rather than any proprietary rights in crypto assets. This throws doubt on the possibility of any proprietary or restitutionary liability against exchanges. Proprietary remedies may still be relevant in other situations and practical redress might be obtained through other remedies, such as freezing injunctions served on exchanges so as to fix them with knowledge of the fraud and require them to freeze the fraudster's account. The decision is also revealing as to how exchanges operate, particularly given that it was the exchange itself setting out its position, and may inform the regulatory approach to exchanges going forward.

Push payment fraud in the digital assets economy

'Push payment fraud' - where a victim is induced by a fraudster to transfer funds - has led to litigation involving the traditional economy and has also spread to the digital assets economy. In D'Aloia v Persons Unknown [2024] EWHC 2342 (Ch), the High Court considered whether crypto exchanges could be liable for the return of fraudulently misappropriated cryptocurrency. While the court found in favour of the exchange, on the basis that the cryptocurrency could not be traced to it, the decision merits careful attention by crypto exchanges. The judge found that the exchange had sufficient knowledge to found liability for allowing the fraudster to withdraw funds from its account. If the claimant had been able to provide more evidence on the movement of the cryptocurrency through different accounts to allow it to be traced, the crypto exchange might have been held liable.

Of wider interest to all financial institutions dealing with cryptocurrencies will be the judge's finding that the cryptocurrency constituted property, following a detailed analysis of the authorities and academic arguments. This is the first judgment following a contested trial to deal with this issue, together with proprietary remedies.

Relevant to the decision was the introduction of the Digital Assets Bill the previous day. The Bill gives explicit statutory recognition of digital assets as a 'third form' of property. Passage of this Bill, expected in 2025, will not only give certainty as to the property nature of digital assets but also allow the English common law to develop in a way that suits the unique characteristics of digital assets, without being hampered by false analogies with existing categories of property including intangible assets.

Interestingly, in D'Aloia, the judge also found that Tether, the cryptocurrency taken from the claimant, was persistent. In other words, coins that were sent from the first account were the same coins that arrived in the second account. The Law Commission has previously suggested that the transfer of digital currencies might be more likely to take place by the destruction of the coins in the first account and the creation of new coins in the second account. Persistence of digital currencies will affect tracing and proprietary remedies.

Duties of care in public blockchains and DeFi

As financial institutions, sponsors, developers and others participate in public blockchains, perhaps by providing infrastructure to support consensus or custody mechanisms, arguments arise as to whether they owe a duty of care to other participants. The same applies to participants in DeFi pools, perhaps by sponsoring a new pool or setting parameters for liquidity or collateralisation. These arguments were highlighted by the high-profile Tulip Trading litigation. This reached the Court of Appeal in a jurisdiction challenge (see Tulip Trading Ltd v van der Laan [20223] EWCA Civ 83). The claimant argued - among other things - that software developers and miners of Bitcoin owe a duty of care to Bitcoin holders, essentially because the decentralisation of Bitcoin is a 'myth'. The expected trial in 2024 did not take place after the case was resolved. But it has highlighted to market participants that they may owe duties of care. Many are already taking advice on operational measures to limit their potential exposure and 2025 could see further litigation in this area as well as other areas of uncertainty, such as the partnership status, especially cross-border, of crypto organisations including DAOs and DeFi pools.

Looking ahead: The Digital Assets Bill and beyond

In 2024, the English Courts continued to delineate the scope of digital asset legal concepts and liability, especially via a series of decisions on fraudulent transfer of digital assets. We expect this to continue in 2025. Assuming the Digital Assets Bill becomes law, this will provide a boost to the digital asset economy and further scope for continued development of the law.

The US

In the United States, there is no doubt that 2025 holds great promise for crypto. As such, there will be downstream effects on crypto litigation-namely that much of the major enforcement litigation will likely resolve in the favor of digital asset providers and exchanges. It is inarguable that there will be-and has been-a significant change in terms of crypto's regulatory outlook in the United States. However, that does not necessarily mean that every court will agree on how to approach crypto. Accordingly, a number of cases remain to be resolved on novel issues of law in this space, ranging from consumer law to intellectual property disputes.

Crypto Litigation in 2024

2024 was a banner year for crypto industry litigation victories, following from the successes of 2023's SEC v. Ripple Labs and Grayscale Investments v. SEC. Ancillary to this prior litigation was the SEC's January approval of spot Bitcoin ETFs following the D.C. Circuit's decision in Grayscale Investments v. SEC. Similarly, this year saw the conclusion of the SEC v. Ripple Labs in the Southern District of New York only for an appeal to begin in October. Between these two major cases, there were only a handful of major litigation developments until the end of the year. Flyfish Club settled an SEC enforcement action over its NFT restaurant memberships, and an exchange appealed the SEC's denial of rulemaking for digital assets.

Interestingly, most of the major developments in crypto litigation for 2024 came shortly before and after the election. Before the election, Crypto.com sued the SEC seeking clarity on regulation. A few weeks after the election of Donald Trump, a quick succession of rulings and rulemaking then came: first, the SEC's "Dealer Rule" was vacated in the Northern District of Texas, then the CFPB's final rule on market participants under the Consumer Financial Protection Act omitted crypto, and finally, the Fifth Circuit held that immutable smart contracts were not "property" under OFAC's current sanctions regime.

It appears that the 2024 election was, in part, a referendum on crypto, and litigation has begun to reflect that.

2025's Regulatory Outlook:

Given the outcome of the 2024 election and the impact of the Supreme Court's decision in Loper Bright being seen in crypto cases such as Van Loon v. Treasury Department, regulation with respect to crypto is likely to see a major change. Determining a regulatory framework between the SEC and the CFTC is likely to be a major point of discussion, and the CFPB is likely to further explore how to approach digital assets after it excluded them from its recent rulemaking. OFAC also faces an interesting dilemma: will it adjust its rules to encompass immutable smart contracts for sanction purposes following the blow the agency was dealt in Van Loon v. Treasury Department?

With SEC Chair Gary Gensler resigning on January 20, 2025 and Paul Atkins taking his place, the SEC's regulatory outlook for crypto is significantly more positive than it was a year ago. The SEC has a number of enforcement actions outstanding against actors in the crypto industry, particularly the majority of the major American exchanges. These actions may fizzle out-or may lead to more regulatory clarity brought through the judiciary. The CFTC is also well-positioned to serve as a potential crypto regulator. With respect to other regulatory areas for crypto, it is unclear what actions may be taken-the CFPB's most recent rule deferred including crypto, but the agency may nevertheless revisit application of its rules to crypto in 2025. Nevertheless, the regulatory outlook for crypto in 2025 is sunny.

Crypto Cases to Watch in 2025:

There are a number of cases to keep eyes on in 2025-all with far-reaching implications across different areas of the law. The "Exchange Cases" involve suits either by or against major crypto exchanges on the issue of broker-dealer and Securities Exchange Act issues, such as SEC v. Binance. There are also a few larger consumer law cases on appeal which deal with the application of Securities Act Section 12(a) with respect to crypto, and another sanctions-based case in Coin Center v. Secretary, U.S. Department of Treasury.

We expect there to be major developments in SEC v. Binance, beginning first with Binance's motion to dismiss. This motion deals with allegations of digital assets as securities, and Binance contending that they are not. Although this case is only at the motion to dismiss stage, a decision on the securities issue comes at a crucial moment-just as the SEC is experiencing a massive change. The same is true of Risley v. Universal Navigation, Inc., which will see the Second Circuit adding to its jurisprudence on Section 12(a) of the Securities Act-and what activities qualify as selling under the test set forth in the Supreme Court's Pinter v. Dahl. Finally, there is an open question as to whether the Eleventh Circuit will follow the Fifth Circuit's lead on the "property" issue under OFAC's sanctions regime.

These cases will be covered as decisions are rendered on our FinTech Digital Asset Disputes Updater.

Looking ahead

As the SEC experiences what is likely to be a sea change for its crypto enforcement priorities, the conversation will turn toward the need for legislation or a cooperative regulatory framework for digital assets.