The Singapore Courts have issued yet another landmark decision on the nature of crypto assets. In ByBit Fintech Ltd v Ho Kai Xin and others [2023] SGHC 199, the High Court was presented with the issue of whether crypto assets are property capable of being held on trust, and if so, what type of property they are. These issues arose as the Plaintiff in that case was seeking a declaration that cryptocurrency payments (which were wrongfully transferred out of its accounts by the Defendant, a former employee) were held on constructive trust.
The Court addressed both issues head on. As to the issue of “what type of property” crypto assets are, the Court considered the following factors:
- crypto assets have been transferred for value, appear on companies’ balance sheets when so held by companies and have been given general recognition as movable property under Order 22 of the Rules of Court 2021 (which deals with the enforcement of judgments);
- while crypto assets not classed as physical assets because we cannot “possess them in the way we can possess objects like cars and jewellery”, they “do manifest themselves in the physical world” and can be defined and identified by modern humans, such that they can be traded and valued as holdings.
In view of these inherent qualities of crypto assets, the High Court reasoned that crypto assets can be classified as “things in action” (i.e. rights enforceable by action (in the sense of litigation in court) against persons and not by taking physical possession). Some examples of “things in action” are the right to be paid money or debts. Crypto Assets could also thus, as with all other “things in action”, be held on trust. The Court accordingly allowed the Plaintiff its remedy sought and declared a constructive trust over the misappropriated crypto assets.
Proponents of cryptocurrency will no doubt welcome this decision, which shows the Singapore courts addressing the novel issues presented by the incorporeal nature of the new asset class while honouring established legal principles, in order to administer justice.