SINGAPORE - The holder of a crypto asset has a legally enforceable property right recognisable by the common law, Singapore’s High Court has ruled in a landmark decision published on Tuesday.

This is the first time a common law court has made such a ruling.

Justice Philip Jeyaretnam, in granting ByBit Fintech summary judgment against the employee of a contractor to recover quantities of the US dollar-pegged stablecoin Tether, held that a crypto asset is a thing in action, enforceable via court orders and also capable of being subject to a trust.

A thing in action is a personal right of property which can only be claimed or enforced by action, and not by taking physical possession. An example is a debt that gives the creditor a right to money by claiming or enforcing against the debtor.

The judge pointed out that there is scepticism about the value of crypto assets, but one should understand that value is not inherent in an object.

“While we speak of expensive materials, with gold being more valuable than wood, this is a judgment made by an aggregate of human minds. It is also a judgment that varies with circumstances. A wooden chair that can float is more valuable on a ship that is sinking than a golden throne would be,” said Justice Jeyaretnam.

ByBit, a Seychellois company operating an eponymous cryptocurrency exchange, had argued through lawyers Gerard Quek and Daniel Ling of PDLegal that Ms Ho Kai Xin was holding over four million Tether on trust for it.

The non-physical stablecoin, commonly referred to as United States Dollar Tether (USDT), is redeemable for the greenback.

Ms Ho was employed by Singapore-incorporated firm WeChain to handle the payroll processing of ByBit’s staff, who are paid in fiat currency, cryptocurrency or both.

ByBit discovered in September 2022 that eight unauthorised cryptocurrency payments amounting to about 4.2 million USDT, redeemable for US$4.2 million (S$5.6 million), had been made between May and August 2022 to four addresses – encrypted digital “folders” that can receive and store cryptocurrency.

Nearly $120,000 was also transferred to Ms Ho’s personal bank account in May 2022.

Meanwhile, Ms Ho had engaged in a luxury spending spree beginning from July 2022, including splurging $3.7 million on a freehold penthouse apartment, $362,000 on a brand new car and $30,000 on Louis Vuitton products.

She had surrendered her Built-to-Order flat in favour of the private apartment.

ByBit also found out that a crypto wallet associated with one of the addresses that received the unauthorised stablecoin transfers is owned by Ms Ho.

While Ms Ho acknowledged that the payment of about $120,000 was made to her bank account by “mistake”, she pinned the stealing of the cryptocurrency on her maternal cousin Jason Teo. She claimed she has no means of identifying Mr Teo. She does not know his personal details and residential address either.

She denied receiving or benefiting from Mr Teo’s act and claimed that she had bought the freehold penthouse using gains from her cryptocurrency trading on MetaMask and crypto.com.

But Ms Ho failed to convince the judge.

“I accept on a balance of probabilities the inference that ByBit seeks to draw from the totality of the evidence that Jason does not exist (or at any rate did not play the role asserted for him by Ms Ho). The evidence is indeed compelling that Ms Ho fraudulently transferred the crypto asset and the fiat asset to herself,” said Justice Jeyaretnam.

Ms Ho has been ordered to pay with interest the nearly $120,000 that was transferred to her bank account, and US$647,880, the value of the crypto assets in two of the wallets. She is also to transfer the sum of up to US$3,561,880 remaining in one of her crypto wallets back to ByBit.

She will need to give an account of any shortfall, identify where the money went, as well as be liable for that shortfall and any profits made if she had used it to buy anything that appreciated in value.

If the shortfall stemmed from her transfer of part of the US$3,561,880 in her crypto wallet to third parties, the latter may be liable to return the sums or any assets purchased with those sums to ByBit. THE BUSINESS TIMES