Charles Russell Speechlys prevails in landmark DIFC Courts case for digital assets industry

The ruling provides crucial insights into how various legal principles apply to cryptocurrencies within the DIFC. Justice Black’s judgment includes several important elements:

• DIFC Jurisdiction: The judgment offers a detailed summary of how the DIFC jurisdiction was established and has evolved, including its development and application of common law, with references to other leading jurisdictions globally.
• Key Terminology: The ruling serves as a primer on essential terms such as “Bitcoin,” “Wallet,” “Addresses,” “Public and Private Keys,” and “Seed phrases or Mnemonics,” explaining their functions.

The judgment provides a comprehensive analysis of several legal issues:

1. Cryptocurrencies as Property: The Court confirmed that cryptocurrencies are considered a third class of property under the Digital Assets Law.
2. Ownership and Transfer: The Court affirmed that cryptocurrencies are capable of being owned and transferred, despite their existence on the blockchain, aligning with consumer expectations and commercial logic.
3. Control vs. Possession: The Court determined that "control" over cryptocurrencies, such as through the possession of a private key, can be equivalent to possession. This principle particularly applies to custodians of digital assets and the ownership of confidential information like Seed Phrases or Mnemonics when disclosed to third parties.

While the judgment leaves certain questions open, including the valuation of cryptocurrencies for damages (whether at the time of loss, judgment, or enforcement), it orders a retrial on some points addressed at the first instance.

Sarah Sheffield, Partner and Head of Offshore Litigation (DIFC & ADGM) at Charles Russell Speechlys, commented, "I am delighted for our clients, whose determination and perseverance has paved the way for this important judgment, which offers clarity not only as to the law in the DIFC, but to the wider digital assets community."

Max Davis, Legal Director at Charles Russell Speechlys, remarked, "It is very rare to have the opportunity to work on a case that establishes the answers to important legal questions that will reverberate around the world. It is a privilege to have been part of the team grappling with these issues and to have worked alongside our clients to achieve this result for them."

The successful team from Charles Russell Speechlys included Sara Sheffield (Partner), Max Davis (Legal Director), Peter Smith (Legal Director), James Colautti (Associate), and Reem Faqihi (Associate), with counsel Andrew Spink KC and Justina Stewart of Outer Temple Chambers. This landmark judgment not only clarifies the legal stance of the DIFC on digital assets but also sets a precedent likely to influence jurisdictions globally.