In its recent decision in Mooij v Persons Unknown [2024] WHC 814 (Comm), the High Court of England and Wales granted summary judgment and continued freezing injunctions against a number of “persons unknown”. This case is another example of the English Courts adapting their existing toolbox to grant protection to victims of crypto-crime, with the Court ruling that, as jurisdiction had been established through alternative service by NFT airdrop, the anonymity of the defendants should not prevent the court from exercising its jurisdiction to grant non-proprietary relief.
Background
The claimant alleged he had been defrauded of approximately 20.34 of bitcoin and sums totalling €330,000 – the equivalent of over £1 million at time of writing. Mr Mooij transferred his bitcoin from a legitimate account to what transpired to be a bogus trading platform operating as “MegaMarkets”, and also transferred cash to a bank account controlled by the bogus “MegaMarkets” (though it did not reach that account).
Mr Mooij brought proceedings against 11 defendants, none of whom engaged with the proceedings (save Binance and the real Megamarkets, who assisted Mr Mooij in seeking to recover his Bitcoin, and who reached terms of discontinuance).
Given the circumstances in the case, a number of the defendants were “Persons Unknown”, namely:
- the First Defendant “Persons Unknown”, who accessed Mr Mooij’s bitcoin and carried out the transactions which transferred the bitcoin to other accounts (the Fraudsters);
- the Second Defendant “Persons Unknown”, who controlled the accounts into which the assets were transferred (the Beneficiaries of the Fraud);
- the Third Defendant “Persons Unknown”, who were innocent third parties that received the stolen funds without knowledge of the scam (the Innocent Recipients); and
- the remaining defendants, who were described as being “within the ‘Huobi ecosystem”, Huobi being the bitcoin exchange that controlled the wallet into which the claimant’s cryptocurrency was ultimately traced (the Huobi Defendants).
On 14 December 2023, Mr Mooij applied for and was granted freezing injunctions by way of interim relief. Mr Mooij then sought the continuation of the freezing injunctions and summary judgment.
Key findings
Summary judgment
The Court was satisfied there was a proper case for summary judgment except against the Innocent Recipients, on the basis there was evidence Mr Mooij was defrauded, there was no evidence to the contrary, and the defendants had not sought to defend themselves against the claim, such that there was not “even a hint” of a real prospect of defending the claim.
Cash
The Court noted that the evidence did not seem to support a case for the Huobi Defendants being accountable for the cash that was lost on the basis that, unlike Bitcoin, this disappeared into the ether when paid over, and there was no basis to think any part of that sum rested with the Huobi Defendants. The Court therefore adjourned the summary judgment application in relation to the cash aspect of the claim against the Huobi Defendants.
Ability to award non-proprietary relief
The Court considered a recent decision by a Deputy Judge of the High Court in the London Circuit Commercial Court in Boonyaem v Persons Unknown and Others [2023] EWHC 3180 (Comm) with a similar fact pattern, in which the Court refused to grant final judgment against defendant “persons unknown”, on the basis that their identity remained unknown and unidentifiable at the time of the judgment (relying on the UKSC decision in Cameron v Liverpool Victoria Insurance Co Ltd [2019] UKSC 6, which concerned a hit and run).
The Court considered that the decision in Boonyaem was based on concerns as to whether the Court could establish jurisdiction over the defendant “persons unknown” in circumstances where those persons unknown could not be “identified with sufficient certainty” to make a judgment enforceable. However, the Court was satisfied that the order for substituted service in the present case meant the Court had jurisdiction, as it provided for service on various email addresses and by NFT airdrop, with an acknowledgement of service to be filed within 31 days. Therefore, given the purpose of serving proceedings is to establish that the court has jurisdiction (subject to a challenge in the acknowledgement of service), and the ultimate purpose of jurisdiction is to grant judgment, the court found it was entitled to do so here. Further, it said neither the enforcement principle or the test for granting a freezing injunction are “further qualified by a requirement or even an assumption that [the defendant’s] true identity must be established by the time the court grants judgment”.
The Court therefore gave judgment in favour of the Claimant and against the Fraudsters and the Beneficiaries of the Fraud in respect of both the cash and bitcoin, but against the Huobi Defendants only in relation to the bitcoin (see above). The Court also continued the freezing injunction as against the defendants, and did not require Mr Mooij to give a cross-undertaking in damages to any of the defendants.
Conclusion
Following the curveball in the Boonyaem decision, this most recent decision will be seen by victims and their legal representatives as a welcome return to the previously accepted position that judgments can be sought and obtained against unknown, unidentifiable third parties (see for example Jones v Persons Unknown [2022] EWHC 2543 (Comm.) and Mannarino v Persons Unknown [2023] EWHC 3176 (Ch)). However, Boonyaem introduced a counterview on which further judicial comment may be needed in order to fully cement the return to the status quo.