Information Orders Against Exchanges To Aid The Recovery Of Misappropriated Cryptocurrency

As part of our series looking at the potential impact of recent cases on the future decisions of the Cayman Islands, BVI and Bermuda Courts relating to crypto assets, we consider the English decision of LMN v Bitflyer Holdings Inc and others [2022] EWHC 2954 (Comm), and specifically whether victims of cryptocurrency fraud are able to obtain Bankers Trust orders compelling cryptocurrency exchanges to disclose confidential information to help recover misappropriated cryptocurrency.

The applicant in LMN v Bitflyer and otherswas a cryptocurrency exchange (the "Applicant") which fell victim to a hack where millions of dollars-worth of cryptocurrency was stolen. In preparing to commence proceedings to recover the cryptocurrency, the Applicant instructed an expert to trace the stolen cryptocurrency. The expert was able to track the initial dissipation from the Applicant as such transactions stemmed from 'Hot Wallets' (i.e. wallets connected to the internet)