March 18, 2025
March is Fraud Awareness Month. Our firm often reminds fraud victims that they cannot reasonably rely on Canada’s criminal justice system for recovery or justice in fraud matters. The prospects of recovery are directly correlated to the timing of tracing and preserving stolen funds. Frauds involving cryptocurrencies are especially time sensitive. Tracing and Production orders (legally referred to as ‘Norwich’ orders) often involve crypto exchanges located in non-Canadian jurisdictions. The following case is helpful to understanding this issue:
Case Summary:
Wang v. Binance Holdings Ltd., 2025 BCSC 425
Heard: February 4, 2025
Judgment: February 6, 2025
Supreme Court of British Columbia
Between: Lixiao Wang ats Binance Holdings Ltd. and Coinbase Global, Inc.
Counsel: N.N. Alavi for the Applicant – no one appearing for Binance and Coinbase
The Supreme Court of British Columbia has recently issued an important decision granting special orders (Norwich and preservation orders) in a $26M cryptocurrency fraud case.
Lixiao Wang, the applicant, alleged that he was solicited to engage in crypto currency trading with an individual who identified herself as “Qin Xin”. Mr. Wang transferred $26 million CAD worth of bitcoin to an investment platform (weeexproit.com) on Xin’s recommendation. Xin claimed to reside in British Columbia and be an expert in crypto trading. Wang did not meet Xin in person.
After depositing his funds with weeexproit.com, Wang found himself unable to access his investment on his on-line account. Xin advised Wang that their platform had been subject to cyber attacks and that they needed $6M for an audit. This demand raised Wang’s suspicions.
Wang hired private investigator Greg Tweed of the Preston Matthews Group Inc., a long-standing investigative firm Mr. Tweed determined that Xin’s identity and documents were fake. The cryptocurrency was traced to accounts at two cryptocurrency platforms: Binance Holdings Ltd. (Cayman Islands) and Coinbase Global, Inc. (United States).
Upon obtaining this evidence, Wang made an application to the Court seeking a Norwich (tracing and production order) and a preservation order (over what remained in the crypto platform accounts). The preliminary issue for the Court was determining whether a BC Court had jurisdiction to issue the orders against Binance based in the Cayman Islands and Coinbase based in the United States.
The BC Court held that it has jurisdiction over Binance and Coinbase because their cryptocurrency platforms actively served users in British Columbia. The Court found this established sufficient legal connection, even though both companies were foreign entities. A full read of this decision is necessary to address the jurisdiction issue.
With respect to the Norwich application, the Court held that Wang met the test because:
- he demonstrated a strong claim of fraud;
- identifying account holders on Binance and Coinbase was essential to pursue legal action and recover the stolen bitcoin;
- Binance and Coinbase were the only practical sources of identifying information; and
- the orders would not harm Binance or Coinbase significantly and were clearly in the interests of justice to prevent further cryptocurrency scams.
With respect to the Preservation Order application, the Court held that the test forpreserving the stolen cryptocurrency on Binance and Coinbase accounts was met because Wang:
- demonstrated a legitimate proprietary claim to the bitcoin;
- established a real risk the cryptocurrency could be moved beyond recovery; and
- showed that preserving the funds was fair and necessary to ensure any future judgment could be enforced.
Our additional commentary: While Canadian Courts can issue Norwich and asset preservation orders against foreign cryptocurrency platforms, this does not automatically mean that Binance and Coinbase will comply with the orders. Wang may be required to make applications in the Caymans (for Binance) and Coinbase (in the US) to have their courts recognize these orders.
As a practical matter, some crypto exchanges will put holds on accounts without receiving court orders. In some instances, based on relationships between security staff at crypto exchanges and police agencies and some law firms, a crypto exchange will put a hold on accounts that are proven to involve fraudulent actors. Formal court orders may later be required to release those funds.
In any event, Norwich orders are crucial in cryptocurrency fraud cases, allowing victims to uncover fraudsters’ identities. Preservation orders protect stolen funds from being transferred, safeguarding recovery prospects. Wang’s case provides a good analysis of the jurisdiction issue.
Inquiries: At Investigation Counsel, we only act for victims. We are Canada’s only boutique victim focused fraud recovery firm. We investigate and litigate fraud recovery cases each and every day.
If you discover you are a victim of fraud, contact us to have your case assessed and a strategy for recovery mapped out before contacting police or alerting the fraudster. The Courts grant tracing and freezing orders much quicker through the civil process than the criminal process, and even if a criminal complaint is made, the police most often do not disclose their findings with victims.
We also promote victim advocacy and academic discussion through various private and public professional associations and organizations. If you have an interest in the topics discussed herein, we welcome your inquiries.