Crypto Update: The Curious Case of Yuen v Li

On 10 March 2026, Cotter J. handed down an interim judgment in the case of Yuen v Li [2026] EWHC 532 (KB).

The facts are worthy of note.  The claimant was the owner of Bitcoin with an estimated value of at least £160 million.  Until 2 August 2023, this was recorded on the blockchain under his control.  The claimant had a private key which was stored in a ‘cold wallet’, which itself was held on a physical device known as a ‘Trezor’.  The Trezor was in turn protected by a six-digit PIN, so that even if it was stolen, the contents remained protected.

So far, so good.  However, any person with access to the claimant’s ‘seed phrase’ (a randomly generated set of 24 words) could use it to recreate the wallet on a separate device.  On 2 August 2023, without the claimant’s knowledge or consent, the Bitcoin was transferred from its then address to 71 new addresses, where it now remains.

The claimant alleges that this unauthorised transfer of the Bitcoin was effected by his wife (the first defendant) from whom, unsurprisingly, he is now estranged.  His case is that she set up covert CCTV in the house to film him at his computer, thereby obtaining his seed phrase and stealing the crypto.  The subterfuge was not all one way, however, as the claimant himself installed covert audio equipment which, he claims, records her discussing the alleged theft with her sister (the second defendant).

Things took a colourful (if unpleasant) turn for the worse when the claimant thereafter assaulted his wife and was convicted of ABH.  The police, meanwhile, investigated the claimant’s allegations but resolved not to proceed unless further evidence came to light.  Given the nature and quality of the audio recordings, it is not clear what else they thought they needed, but persuading the authorities to prosecute fraud these days is depressingly difficult.

As far as the civil proceedings are concerned, the application before Cotter J. was listed (in part at least) for the defendants to strike out some of the pleaded causes of action, which included the tort of conversion (ie unlawful interference with the claimant’s property).

In making her submissions, counsel for the first defendant accepted that Bitcoin amounted to ‘property’ (Tulip Trading Ltd v Bitcoin Association for BSV & Others [2023] EWCA Civ 83).  However, she further submitted that it was intangible property and that, following the decision of the Supreme Court in OBG v Allan [2008] 1 AC, the tort of conversion cannot apply to property of that type.

Counsel for the claimant accepted that, on a conventional analysis, there have only ever been two categories of personal property rights, namely (1) rights relating to ‘things in possession’ (i.e. tangible property) and (2) rights relating to ‘things (choses) in action’ (i.e. legal rights or claims enforceable by action), and that the tort of conversion attaches only to the former (Colonial Bank v Whinney [1885] 30 ChD 261; OBG v Allan, supra). However, he drew the court’s attention to the newly enacted Property (Digital Assets) Act 2025, section 1 of which reads as follows:

“A thing (including a thing that is digital or electronic in nature) is not prevented from being the object of personal property rights merely because it is neither –

• 1. A thing in possession, nor
  2. A thing in action.”

In other words, a new third category of property has been created, which could include digital assets such as cryptocurrency.  As envisaged by the Explanatory Notes to the Act, counsel pointed out that it will be for the common law to resolve whether the tort of conversion extends to this new classification, and he urged the court to make a start on that process.  In doing so, he pointed to the recommendations of a Law Commission report in 2023 and also to the position in other parts of the Commonwealth, where this is already the default position.  For example, in the New Zealand case of Henderson v Walker [2019] NZHC 2184, the court concluded:

“Standing back, it seems obvious that digital assets should be afforded the protection of property law,  They have all the characteristics of property and the conceptual difficulties appear to arise predominantly from the historical origins of our law of tangible property. There is a real difference between digital assets and the information they record. Such permanent records of information are already convertible when they take a physical form and it would be arbitrary to base the law on the form of the medium, especially now that digital media has assumed a ubiquitous role in modern life.”

Whilst not unsympathetic to the claimant’s submissions, the judge concluded that he was bound by OBG v Allan and struck out the claim in conversion.

A number of practical ramifications flow from the academic niceties of all of this.  Firstly, as acknowledged by the Law Commission, the unavailability of conversion in relation to digital objects leaves a lacuna in the remedies available to a claimant, especially where an action based on unjust enrichment or proprietary restitution cannot be made out.

Secondly, the law is in a worrying state when something (in this case, cryptocurrency) is acknowledged as being ‘property’ and yet the full suite of potential remedies is not available when that property is interfered with by someone else.

Finally, there are wider concerns about the adequacy of the current legal framework.  In light of the rapid, on-going advances in technology, decisions from twenty years ago (let alone 150 years ago) should not be the basis of resolving the rights of crypto owners.  The law in this area was in need of a proper overhaul.  Disappointingly, the 2025 Act has ducked the most difficult questions.

Christopher Coltart KC is Head of the Business Crime Team at 2 Hare Court