Ping Fai Yuen v Fun Yung Li: Bitcoin theft, conversion and the limits of tort law

In a judgement handed down on 10 March 2026, Mr Justice Cotter addressed four interlocutory applications in Ping Fai Yuen v Fun Yung Li & Anor [2026] EWHC 532 (KB), a claim arising from the alleged theft of 2,323 Bitcoin — worth between £160 and £180 million — by the claimant's estranged wife.

The factual background is stark. The claimant stored his Bitcoin using a hardware "cold wallet" protected by a seed phrase. He alleges that the first defendant covertly recorded him to obtain that phrase and used it to transfer the Bitcoin to 71 addresses, where it has remained since December 2023. Audio recordings obtained shortly before the transfer are said to capture the first defendant discussing the theft, problems laundering the proceeds, and the difficulty of realising such a large sum. When a police search followed her arrest, ten cold wallets and five recovery seeds were found at her property. She has declined to explain any of this, filing a one-sentence affidavit denying relevant knowledge.

Conversion does not extend to Bitcoin

The most significant legal question was whether Bitcoin — now recognised as a "third category" of personal property under the Property (Digital Assets etc.) Act 2025 — can be the subject of the tort of conversion.

Mr Justice Cotter struck out the conversion claim. The reasoning of the House of Lords majority in OBG Ltd v Allan [2008] 1 AC 1 remains binding: conversion is a tort confined to tangible chattels, and the 2025 Act does not alter that position. The Law Commission, having comprehensively reviewed the field, explicitly concluded that third category things are "currently incapable of being converted under the existing law" and declined to recommend statutory reversal of OBG.

The claimant's counsel pointed to persuasive authority from Canada, New Zealand, and several US states extending conversion to digital and intangible property. The court acknowledged these decisions but found them unable to displace settled domestic authority. Lord Hoffmann's observation in OBG — that strict liability in conversion for intangible property was "foreign to English law" — remained determinative.

Cotter J was nonetheless careful to preserve space for future development, noting that a discrete cause of action drawn by analogy with conversion, rather than conversion itself, might yet emerge for wrongful interference with third category things. The amended claim's proprietary restitution head, drawing on Armstrong DLW GmbH v Winnington Networks Ltd [2012] EWHC 10 (Ch), was permitted to proceed.

Trespass to goods: time to replead

The trespass to goods claim was not struck out immediately. Rather than dismiss it summarily, the court gave the claimant seven days to apply for permission to amend the particulars. The difficulty is that trespass requires direct physical interference with a chattel, and on the facts as pleaded it appeared the first defendant had not touched the Trezor device but had used the copied seed phrase to alter the blockchain remotely.

Security for costs refused

The first defendant's application for £678,715 in security for costs failed on multiple grounds. The court found the estimate demonstrably excessive — describing the 245 hours of solicitor time budgeted for disclosure in what is not a document-heavy case as "a staggering" figure, and the 75 hours for CMC preparation as "nonsense". The inflated estimate was itself treated as a relevant circumstance weighing against any order.

More fundamentally, the court assessed the claimant's prospects as carrying a very high probability of success, and noted that property — including numerous high-value watches — seized from the first defendant's home and held by Sussex Police represented readily available security already within the jurisdiction.

The claim proceeds on causes including unjust enrichment, breach of confidence, proprietary restitution, and constructive trust.

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