UK High Court Rules Tether as Property in Landmark Case Following New Regulations

UK High Court Rules Tether as Property in Landmark Case Following New Regulations

The UK High Court has officially recognized the stablecoin Tether (USDT) as property under English law in a groundbreaking decision. This ruling, delivered on September 12 by Deputy Judge Richard Farnhill, marks the first comprehensive trial judgment in the UK concerning the legal status of cryptocurrency.

The case involved a fraud victim, Fabrizio D’Aloia, who sought to recover stolen digital assets, including 400,000 USDT. These assets had been traced to the Thai crypto exchange BitKub after being laundered through various crypto mixers. The court’s decision to classify Tether as property was a preliminary issue in this lawsuit.

Judge Farnhill's ruling stated that "USDT attracts property rights under English law," noting that Tether is a unique form of property not dependent on an underlying legal right and is subject to tracing and trust claims, much like other property types. This decision aligns with a 2019 court judgment and the 2023 report by the England and Wales Law Commission, both of which supported the classification of digital assets as property.

Despite the court’s recognition of Tether as property, D’Aloia was unable to provide sufficient evidence linking the stolen USDT to BitKub’s wallet due to the obfuscation caused by crypto mixers. Judge Farnhill acknowledged the challenges in tracing assets through mixed pools but ruled that D’Aloia had not proven that BitKub had benefitted from his stolen funds.

Nicola McKinney, representing BitKub, highlighted that while the judge accepted the possibility of tracing assets, the lack of clear evidence linking the USDT to BitKub’s wallet impacted the case's outcome.

The ruling follows the UK government’s recent introduction of a new bill aimed at clarifying the legal status of digital assets, including NFTs, cryptocurrencies, and carbon credits. This legislation seeks to categorize these assets as “things” and “personal property” under UK law.

In response to regulatory pressures, the Financial Conduct Authority (FCA) has enforced stricter rules for crypto firms, including registration requirements and marketing approvals. Non-compliance can lead to significant penalties, including unlimited fines and up to two years’ imprisonment. Major crypto exchanges, including Coinbase, Revolut, and Binance, have updated their platforms to adhere to these new regulations.