The High Court has continued a freezing order over a series of cryptocurrency asset accounts connected to participants in the international fraud scheme known as "Inferno Drainer," in a judgment that offers important guidance on jurisdiction and asset preservation in cross-border cryptoasset fraud litigation.
The claimants alleged that their cryptocurrency assets had been fraudulently misappropriated. The respondents were persons unknown, specifically, the holders or owners of the relevant cryptoasset accounts, identified through expert forensic analysis. Notably, the claimants did not contend that those accounts held their own assets directly; rather, they alleged that the accounts belonged to participants in the fraud, who were said to be liable in the tort of unlawful means conspiracy.
Stephen Midwinter KC, sitting as a judge of the High Court, was satisfied that the claimants had established a good arguable case on the merits. The allegations were detailed and plausible, supported by expert evidence and had not been answered by the respondents. On the question of dissipation risk, the Court found that the nature of the fraud alleged was, in itself, sufficient to establish such a risk, a conclusion further reinforced by the ready transferability of cryptoassets and the inherent difficulty of tracing them once moved.
On the question of jurisdiction, the Court held that the tort gateway in Practice Direction 6B, paragraph 3.1.9 of the Civil Procedure Rules was satisfied. There was a good arguable case that damage had been sustained within England and Wales, given that the cryptoassets had been taken from an individual resident in that jurisdiction.
The Court took the opportunity to emphasise the importance of adopting a realistic and pragmatic approach to the jurisdictional gateways in Practice Direction 6B when dealing with international fraud claims involving internet-based assets. Technical debates as to where such assets are "located" in a theoretical or technical sense were unlikely to provide a sensible or workable basis for establishing jurisdiction. Instead, the Court held that cryptoassets should be treated in law as existing at the place where their owner resides and that the courts of that jurisdiction should have competence to hear tort claims relating to them.
Acknowledging that the exchanges likely to be asked to enforce the order were based overseas, the Court noted that the claimants intended to apply for summary judgment and thereafter to seek enforcement of that judgment in the relevant foreign jurisdictions. The Court was satisfied that the claimants' undertakings, including the fortification of the cross-undertaking in damages, remained appropriate and accordingly continued the freezing order until further order or trial.
<span class="news-text_medium">Case:</span> <span class="news-text_italic-underline">Smithers and another v Persons Unknown [2026] 3 WLUK 397</span> (20 March 2026, Stephen Midwinter KC, sitting as a judge of the High Court)
