FLiP advise on Leading Case on Divorce and Cryptoassets
FLiP Director Helen Greenfield and Senior Associate Nicole Phillips advised on one of the first financial remedy (divorce) cases of its kind in which a worldwide freezing order was secured over cryptoassets.
The cryptoassets in this case included cryptocurrency stored in a hardware crypto wallet, and on the trading platform, Coinbase. We were successful in securing an extraordinary order from the Central Family Court (England) which permitted the transfer of the funds held in the hardware crypto wallet (the “cold wallet”) to a new hardware wallet to be held by our client. In addition, as Coinbase is incorporated in the US, it was necessary to seek a US mirror order of the worldwide freezing order issued by the Central Family Court, and the team was successful in achieving this too.
There are particular issues arising in financial remedy proceedings involving cryptoassets which require careful handling. These issues were explored in detail by Ben Fearnley of 29 Bedford Row in his article “Cryptoassets – Still an Enigma?” (Financial Remedies Journal, Winter 2022, 199) and include:
- Disclosure: if full disclosure is not forthcoming, the anonymous nature of the blockchain system can create difficulties in identifying the cryptoassets;
- Freezing injunctions: success in achieving an injunction can depend on how and where the cryptoassets are held;
- Nature of the order sought from the court: much depends on whether the cryptoassets are treated as capital assets or as currency.
The FLiP team of Helen Greenfield and Nicole Phillips worked closely with barrister Ben Fearnley of 29 Bedford Row and the cryptocurrency experts, Cyfor on this case. Carmen R. Gillett and NLG divorce and family law provided US law advice.