Recovering crypto assets – Scotland and England compared

Introduction

The case of Ping Fai Yuen v Fun Yung Li & Anor [2026] EWHC 532 (KB) has generated interest in legal circles because it concerns the law of conversion, and a claim by a husband against his estranged wife after 2,323 Bitcoin ended up in 71 different locations.

As the judge explained:

“The Claimant’s case is straightforward. At a time when divorce was contemplated his (now estranged) wife, the First Defendant, obtained his seed phrase and “stole” the Bitcoin; either acting alone or with her sister (the Second Defendant). She did so by covertly recording the Claimant to obtain the seed phrase.”

“[The] private key was contained in a “cold wallet” (i.e. not connected to the internet) on a physical device referred to as the “Trezor”. The Trezor was protected by a six-digit PIN, so that, even if it was physically stolen, the contents remained protected. However, any person with access to the Claimant’s “seed phrase” (a randomly generated set of 24 words) could use it to recreate the wallet on a separate device.”

The “theft” was achieved by the oldest of techniques – eavesdropping. But it concerned a very modern concept – an intangible digital currency.

The Claim

The claim was presented as one of “Damages for conversion, conspiracy to convert, trespass to goods and conspiracy to trespass to goods arising from the unauthorised transfer and concealment of 2,323.28422137 Bitcoin (BTC)”.

Faced with a strike out application, the claimant applied to amend in claims based on unjust enrichment, breach of confidence and misuse of private information, causing loss by unlawful means, and a proprietary restitution claim and constructive trust. If you are struggling with some of the terms being used, the judge was sympathetic, quoting from St John Salmond in 1905 who said, “Forms of action are dead, but their ghosts still haunt the precincts of the law. In their life they were powers of evil, and even in death they have not wholly ceased from troubling. In earlier days they filled the law with formalism and fiction, confusion and complexity, and though most of the mischief which they did has been buried with them, some portion of it remains inherent in the law of the present day.”

In summary, the issue was whether conversion was available as a cause of action. Conversion is the illegal act (known as a tort) which occurs when someone interferes with the personal property of someone else, for example by taking it or withholding it. The judge concluded that it was not: “Conversion, trespass and the other torts above are not available in respect of intangible property. It follows that a person deprived of intangible property, such as a computer file, the benefit of a contract, or some transferable government licence, will have to rely on some other cause of action.”

The Property (Digital Assets etc.) Act 2025 did not help, because although the Act provided that digital assets could be the object of personal property rights, conversion still required that the object be physical or tangible. Despite recognising the rationale behind the enactment of the 2025 Act, the judge determined that he was bound to follow an earlier decision of the House of Lords which was “a clear block to the extension of the law of conversion for this purpose”.

With trespass, the position was slightly more complex as it was suggested that there may be a claim in trespass if the defendant had touched the physical asset (the cold wallet). The judge was not satisfied that enough had been pleaded to justify the trespass ground of action and gave the claimant the opportunity to amend.

The attempt to bring a claim based on conversion is no doubt because conversion is a strict liability tort – anyone who converts a chattel, that is to say, does an act inconsistent with the rights of the owner, however innocent they may be, is liable for the loss caused – usually the value of the goods.

By contrast, claims seeking to recover pure economic loss are much more difficult. The attempt was understandable, but failed. So, the grounds of action that remained were:

Unjust enrichment
Breach of confidence and misuse of private information
Causing loss by unlawful means
Proprietary restitution
Constructive trust

Comparison with Scots law

In Scotland, the Digital Assets (Scotland) Act 2026 has been passed but the operative provisions are not yet in force. This Act sought to deal with the question of the property status of digital assets, such as cryptocurrencies. The effect of the Act is that digital assets are incorporeal moveables (section 1) but in relation to ownership a digital asset is to be treated as though it were a corporeal moveable. In other words, digital assets are recognised as intangible assets, except where acquisition of ownership is concerned. In that case it is a tangible asset.

If the circumstances set out in the Ping case were to happen in Scotland, what would be the grounds of action?

Before the 2026 Act comes into force, the answer is not very clear. Typically, with incorporeal moveables, one is dealing with rights – those may be intellectual property rights, such as copyright or contract rights. If the issue concerns information, then the law of confidence may assist.

Unless there was a particular “right” that had been infringed, the Scottish courts are unlikely to grant an order for delivery of an incorporeal moveable – because logically there is nothing to deliver. Instead, the court may make an order requiring a party to implement a transfer, but that is a remedy rather than a ground of action. Failing to implement the transfer could be a contempt and there would need to be a separate claim for damages.

The grounds of action are likely to reflect those presented as fall-back positions in the Ping case: unjust enrichment, breach of confidence and misuse of private information, and causing loss by unlawful means.

Like in England, the Scottish courts have no difficulty recognising an action based on trespass of moveable property. In Phestos Shipping co Ltd v Kurmiawan 1983 SC 165, it was said that the respondents had wrongfully deprived the petitioners of their rightful possession of a ship. The respondents had no right or title to do so and were therefore in the position of trespassers. That proposition was not contested, and the arguments were developed on other grounds.

When the 2026 Act comes into force the position will be much clearer and the rights of Bitcoin owners will be much stronger. They will have an ownership right over the Bitcoin, and if ownership is lost the Scottish courts will assist in recovering possession, on the basis that the Bitcoin is a corporeal moveable.

If you have any questions about the topics covered in this article, please contact a member of our Commercial Disputes team.

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