Individuals who plan to open a cryptocurrency business in the US or EU often question the legal status of cryptocurrencies. This short report’s goal is to analyze a few lawsuits and find an answer. In the first case, an English court declared a decision to preserve assets deposited on a cryptocurrency trading platform. When it comes to the second one, it was a judgment of the same court that dictated a stop of actions explaining that the exchange of Bitcoin and Ethereum was happening on different platforms.
Lawsuit no. 1
This case refers to the dilemma of whether the plaintiff could claim Bitcoin their personal property. The plaintiff received an email and, afterwards, transferred one hundred Bitcoins to the sender. After that, the sender transferred eighty Bitcoins to another person.
After the Bitcoin blockchain was analyzed, the trace of eighty Bitcoin was followed to a digital wallet in the ownership of a digital currency exchange platform called Coinbase.
Since the court believed that the risk of bitcoin dispersal was not high enough for the required threshold or that there was a reason for opening a cryptocurrency exchange, a freeze order against “unknown persons” was not issued. Moreover, the court also doubted the effectiveness of the freezing order for this case. In this situation, the judge found fitting to issue an order to store the assets in a digital wallet because the lower threshold was exceeded by the plaintiff.
Lawsuit no. 2
In the second situation, the cryptocurrencies were transferred by the plaintiff to the defendant who was supposed to participate in cryptocurrency trading on the plaintiff’s behalf. After, when the plaintiff began to suspect that the company did not have their assets anymore, a freeze order was demanded.
The court decided that there was a serious probability that the plaintiff’s funds could be exhausted because the defendants did not present any evidence indicating that they were still holding the transferred cryptocurrency. Additionally, the defendants did not question the plaintiff’s claim to the cryptocurrency and did not deny the ownership form of the funds. Due to this reasoning, the court rendered this judgment which made opening a cryptocurrency company in the EU or US more attractive for interested individuals.
The legal status of cryptocurrencies
For a long time, it could not be definitely decided whether cryptocurrency is only data and information, or it could be considered a property. Normally, any kind of ownership cannot be applied to cryptocurrency given its non-physical and intangible nature.
In fact, there is a little number of ownerships that could recognize cryptocurrency. The Patent Act from 1977 is probably the most obvious among others. Actually, this question is becoming more relative for individuals who want to register their own crypto company. Despite not being legal tender, cryptocurrency fulfills the key characteristics of intangible property.
For those who are planning to invest in cryptocurrencies in Great Britain soon, it is worth remembering that the country had decided on the status of cryptocurrency. More specifically, crypto assets are qualified to have all attributes of ownership and are treated correspondingly.
A team of experts in COREDO is here for everyone needing consultancy in the sphere of cryptocurrency business in the European Union and other jurisdictions. If you would like to open your own crypto company, we are prepared to provide you with legal advice and even technical support for engaging in cryptocurrency activities.