April 21, 2023
By Anjali Kochhar
In a court case linked to the now-defunct crypto exchange Gatecoin, a Hong Kong judge has ruled that cryptocurrencies are “property” which is “capable of being held on trust.” According to the law firm Hogan Lovells, this case should provide greater clarity to insolvency practitioners and other common law jurisdictions.
Here’s what we know:
According to a summary of the ruling published on April 18, 2023, Judge Linda Chan in Hong Kong has classified crypto assets as “property.” The decision was made in connection with the Gatecoin crypto exchange liquidation court case from 2019.
In 2019, Hong Kong-based crypto exchange Gatecoin announced it would shut down and start liquidation following an attempt to recover disputed funds from a former payment services provider.
Liquidators sought directions from the court on whether the crypto held by Gatecoin should be treated as property held on trust or “if no trust existed, the digital assets should be made available to the general body of creditors,” according to the Hogan Lovells report.
The report said the exchange held up to 140 million Hong Kong dollars ($17.8 million) in crypto as of last October.
“While the court determined that cryptocurrencies are capable of forming the subject matter of a trust more generally, on the facts in this particular case, it found that a trust had not been established,” the report said.
Hogan Lovells said that a ruling would give Hong Kong liquidators “greater clarity” on how crypto assets held by companies should be treated in wind-down procedures.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
