Crypto Assets as Things in Action: A Landmark Ruling by the Singapore High Court

In yet another landmark decision on 25 July 2023, the Singapore High Court presided by Judge Philip Jeyaretnam (“Court”) in ByBit Fintech Ltd v Ho Kai Xin and others [2023] SGHC 199 ruled that crypto assets are “things in action” (also described as “choses in action”) capable of being held on trust and enforceable via court orders.
Background facts
The present case concerns the misappropriation of a crypto asset by the name of Tether, a stablecoin which is backed by the United States Dollar1 and commonly referred to as USDT. The claimant, ByBit Fintech Ltd (“ByBit”), owns a cryptocurrency exchange and remunerates its employees with traditional fiat currency, cryptocurrency, or a combination of both.
The defendant is an employee of a company which provides payroll services to ByBit, and was solely responsible for processing ByBit’s payroll. On 7 September 2022, ByBit discovered that eight suspicious cryptocurrency transactions had been made to four distinct addresses (the “Addresses”) between 31 May 2022 and 31 August 2022, leading to a significant transfer of 4,209,720 USDT (the “Anomalous Transactions”).
Initially, when questioned, the defendant alleged that the Anomalous Transactions were inadvertent mistakes or technical errors, but when ByBit contacted one of the purported recipients of the USDT, the recipient denied ever designating an address for USDT payments. Further investigations by ByBit disclosed correspondence between the defendant’s work and personal email accounts containing the Addresses. Additionally, it was discovered that the defendant had transferred $117,238.46 to her personal bank account in May 2022.
ByBit commenced proceedings on 12 October 2022 and succeeded in obtaining several interim orders, including a worldwide freezing order against the defendant, and a proprietary injunction in respect of the USDT in the Addresses and the $117,238.46 in the defendant’s bank account. ByBit also obtained orders for disclosure against the defendant and a number of third parties. And this is where the plot thickens: it was discovered that the defendant had, from July 2022 onwards, purchased, amongst others, a freehold penthouse apartment, a car, and several Louis Vuitton products. The defendant alleged that the penthouse was bought with her own money earned from cryptocurrency trading on Metamask and, but failed to provide the Court with her MetaMask or addresses, or account statements.
On 30 March 2023, ByBit applied for summary judgment against the defendant. ByBit’s claim centres on the assertion that the defendant breached her employment contract and abused her position to transfer large amounts of USDT to the Addresses she clandestinely owned, and to fraudulently transfer fiat currency to her personal account. ByBit sought a declaration that the defendant holds the USDT and fiat currency on trust for ByBit, and an order for the return of the same or of its traceable proceeds, or for the payment of a sum equivalent in value. The crux of the defence is the defendant’s claim that the Addresses belonged to her maternal cousin, Jason, who she alleged stole the USDT from ByBit without her knowledge or consent. This narrative presents an intriguing twist considering her initial claims that the Anomalous Transactions were inadvertent mistakes or technical errors. Jason did not appear in the proceedings even though the defendant had obtained permission to serve notice of the proceedings on him by substituted service. The defendant did not adduce any evidence pointing to the existence of Jason, despite claiming that such evidence exists.
Issues and High Court Decision
Two issues arose for determination: 
  1. whether USDT is property capable of being held on trust; and
  2. whether ByBit is entitled to summary judgment. 
Issue (i): Whether USDT is property capable of being held on trust
In short, the Court held that holders of crypto assets, such as USDT, have “an incorporeal right of property recognisable by the common law as a thing in action” which are enforceable in court and can be held on trust. There were two elements to the Court’s decision: (i) that crypto assets can constitute a form of property; and (ii) that crypto assets can be classified as things in action.
On the first element, the Court first referred to “Response to Public Consultation on Proposed Regulatory Measures for Digital Payment Token Services” published on 3 July 2023 by the Monetary Authority of Singapore and observed that the proposal by the monetary authority to amend the payment services regulations to implement segregation and custody requirements for digital payment tokens reflects the reality that it is possible in practice to identify and segregate digital assets, and supports the view that it should be legally possible to hold them on trust.
Next, the Court referred to Order 22 of the Singapore Rules of Court 2021 which deals with the enforcement of judgments and orders, and which defines “movable property” to include “cryptocurrency or other digital currency”. Going further, the Court referred to Professor Kevin Low who opined in ‘Trusts of Cryptoassets (2021) 34(4) Trust Law International 191 that a holder of a private key obtains a “narrow right to have the unspent transaction output of a crypto asset locked to a holder’s public address on a blockchain”. The Court held that this description of crypto assets shows they can be defined and identified such that they can be traded and valued as holdings, and that they meet the oft-quoted test laid down by Lord Wilberforce in National Provincial Bank v Ainsworth [1965] 1 AC 1175:
Before a right or an interest can be admitted into the category of property, or of a right affecting property, it must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability.
Interestingly, whilst the Court here adopted the same position and test as in the cases of Janesh s/o Rajkumar v Unknown person (CHEFPIERRE) [2022] SGHC 2642 and CLM v CLN [2022] SGHC 463 in ruling that crypto assets satisfy the definition of a property right as laid out in Ainsworth, it made no reference to these cases in this judgment.
On the second element, the Court referred to “The History of the Treatment of Choses in Action by the Common Law” (1920) 33(8) Harvard Law Review 997, where the learned author, WS Holdsworth, traced the expansion of the category of things in action to include a diverse range of incorporeal rights and held that this diversity suggests that the category is broad, flexible and not closed. Accordingly, the Court concluded that the holder of a crypto asset has in principle an incorporeal right of property recognisable by the common law as a thing in action that is enforceable in court.
Notably, the Court acknowledged in its judgment that there is scepticism amongst some people as to the value of crypto assets but stated that value is not inherent in an object, and that the value assigned to a particular object is “a judgment made by an aggregate of human minds”. Going further, the Court stated that money or currency is only generally accepted as such “by virtue of a collective act of mutual faith” and referred to Miller v Race (1758) 1 Burr 452, in which Lord Mansfield observed that anything “treated as money, as cash, in the ordinary course and transaction of business, by the general consent of mankind” is given “the credit and currency of money, to all intents and purposes”.
Issue (ii): Whether ByBit is entitled to summary judgment
The Court found on a balance of probabilities that Jason’s existence is dubious at best and even if he existed, did not play the role attributed to him by the defendant. The Court held that the evidence is compelling that it was the defendant who had fraudulently transferred the USDT and the fiat currency to herself. Referring to the oft-quoted case of Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] 1 AC 669, the Court declared a constructive trust over the USDT transferred under the Anomalous Transactions, as well as the $117,238.46 in the defendant’s bank account to which ByBit is the legal and beneficial owner.
Citing Foskett v McKeown [2001] 1 AC 102, the Court added that the constructive trust may operate even if the defendant had mixed the USDT belonging to ByBit with other similar assets in the balances of the respective online wallets, or the fiat currency with other money in her bank account:.
The present case heralds a significant development as it is the first reported case of a common law court ruling that crypto assets can constitute things in action, and is a welcome addition to the series of common law cases giving recognition to the fact that crypto assets constitute a form of property. Whilst previous cases have tiptoed around the subject, none have provided a definitive ruling.
For example, the Singapore High Court in Janesh s/o Rajkumar embarked on a discussion as to whether crypto assets constitute things in action but did not issue a definitive ruling on the same as the parties in that case did not adduce any arguments on the issue. Similarly, the New Zealand High Court in Ruscoe v Cryptopia Ltd (in liquidation) [2020] NZHC 728 noted that a common objection raised to suggest that cryptocurrencies cannot constitute property is that common law only recognises two forms of property, i.e. tangibles and things in action, of which cryptocurrencies are neither; the New Zealand High Court held that this argument is a red-herring, and further held that “the most that could be said is that cryptocoins might have to be classified as choses in action” but did not elaborate further on this statement.
Amidst this shifting legal landscape, the UK Law Commission’s report in 2023 on Digital Assets (“Report”) 4 introduces a different perspective – the emergence of a “third category” of property. This bridges the realm of personal property rights with digital assets, including crypto assets. However, the Report refrains from carving a strict definition for this category, proposing instead for the common law to determine which objects fall within this category, thereby enabling anuanced approach to recognising that things such as crypto-tokenscan be objects of personal property rights.  This perspective from the UK Law Commission further underscores the evolving legal discourse surrounding digital assets and offers a fresh lens through which to view the Singapore High Court’s recent ruling.
In Malaysia, the High Court has previously ruled in Robert Ong Thien Cheng v Luno Pte Ltd & Anor [2020] 3 AMR 143 that cryptocurrencies can constitute “things” pursuant to Section 73 of the Contracts Act 19505 and recognised that there is indeed value attached to cryptocurrencies, stating that that the Contracts Act 1950, having been drafted seven decades ago, ought to be construed to reflect the evolving cadence of modern technology and commerce. However, there have been no reported Malaysian cases on whether crypto assets can constitute a thing in action.
This Singapore High Court decision therefore sets a precedent that could influence future rulings in other common law jurisdictions. It also invites curiosity as to whether a similar position will be adopted in Malaysia, particularly as the string of crypto asset-related cases in common law courts indicates a trend towards recognising crypto assets as being a protectable and enforceable right or property. The unfolding story promises further chapters, and it remains to be seen how these narratives will evolve within the legal realm.
Case commentary by Natalie Lim (Partner) and Cheam Tat Sean (Associate) of the Intellectual Property Practice of Skrine.

1 A “stablecoin” is a type of cryptocurrency that is backed by a reference asset which can consist of fiat currency, exchange-traded commodities, or another cryptocurrency. In this case, Tether was backed by the United States Dollar, and verified holders of Tether have the contractual right to redeem it with the issuer for USD.
2 Our commentary on this case can be read here.
3 Our commentary on this case can be read here.
4 The Report can be read here.
5 Our commentary on this case can be read here.

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