Digital asset theft: no substitute for proprietary claims?

The High Court’s decision in Ping Fai Yuen v Fun Yung Li & Anor [2026] EWHC 532 (KB) provides important guidance on the remedies available to victims of cryptoasset theft. While the court reaffirmed that Bitcoin constitutes property under English law, it drew a clear line around the scope of traditional torts such as conversion and trespass.

The judgment is a reminder that, for now, claims in unjust enrichment and proprietary restitution remain the primary route to recovery.

Facts

The Claimant stored 2,323 Bitcoin (valued between £160-180 million during the proceedings) in a Trezor cold wallet protected by a PIN and recoverable via a 24‑word seed phrase. During marital breakdown in 2023, his estranged wife allegedly obtained the seed phrase — said to have been captured by covertly recording him entering it — and transferred the Bitcoin through a series of blockchain transactions to 71 addresses. The assets have not moved since December 2023.

Audio recordings from late July 2023, relied upon heavily by the claimant, purported to capture the Defendant discussing the transfer, how to realise such a large sum, and how to avoid detection.

Police investigations located multiple cold wallets and recovery seeds linked to the Claimant at her home, but no criminal charges followed. Civil proceedings were subsequently issued, together with proprietary injunctions and disclosure orders.

The Claimant brought proceedings seeking to recover the Bitcoin or its traceable proceeds. His claims included:

• conversion;
• trespass to goods; and
• a proprietary restitutionary claim.

The central legal issue was not whether Bitcoin can amount to property — that proposition is now well established. Rather, the court had to determine which causes of action are available where digital assets are wrongfully transferred.

The attraction of tortious claims

Conversion in particular is attractive because:

• it is a strict liability tort;
• it protects possessory and proprietary rights; and
• it entitles the claimant to damages assessed by reference to the value of the goods at the date of conversion (which is helpful in respect of a volatile asset such as Bitcoin).

Where an asset has been wrongfully taken, conversion can provide a direct route to a money judgment for its full value, without the need to navigate tracing rules or equitable doctrines.

Given the scale of the Bitcoin holding, a successful claim in conversion would have provided a powerful and relatively simple personal remedy.

Trespass to goods, although more limited, similarly provides a common law cause of action for direct interference with goods in the claimant’s possession.

Conversion and its limits

Conversion has historically protected possessory rights in tangible property. At its core, it involves a wrongful interference with goods that is inconsistent with the rights of the person entitled to possession.

The difficulty for the Claimant was straightforward: Bitcoin is intangible.

The court reviewed the authorities on conversion and emphasised that:

• the tort is closely tied to interference with physical possession;
• its historical development is rooted in chattels;
• appellate authority has consistently resisted extending it to purely intangible assets.

While there have been narrow exceptions, the judge considered that recognising Bitcoin as capable of being converted would represent a significant doctrinal leap.

Importantly, the court declined to treat cryptoassets as simply the next evolutionary step in the law of conversion. Extending conversion to digital assets would not be a modest refinement. It would involve detaching the tort from its long-standing conceptual link with tangible goods.

The claim in conversion therefore failed.

Trespass to goods

The trespass claim faced similar difficulties.

Trespass to goods, like conversion, is premised on direct interference with tangible property in the claimant’s possession. The cause of action historically presupposes physical goods capable of being touched and possessed.

The court considered that the same conceptual barrier arises in relation to Bitcoin. As an intangible digital asset, it does not fit within the established structure of the tort.

The Claimant’s pleading was ambiguous on whether the Defendant physically interfered with the Trezor cold wallet or merely misused the data associated with it. While suggesting the claim appeared legally difficult, the judge allowed the claimant seven days to amend the pleading to articulate a viable basis.

A gap in the law?

The judgment engaged with a broader question that has occupied courts and commentators in recent years: whether there is a lacuna in the common law when dealing with wrongful interferences with digital assets.

The Law Commission has previously identified the possibility of a narrow gap in cases involving so-called “third category” things — digital objects that are neither choses in possession nor choses in action in the traditional sense.

In this case, the judge acknowledged the argument that the common law might develop:

• a new, discrete tort addressing wrongful interferences with digital assets;
• or a conversion-like cause of action adapted to intangible property.

However, he declined to take that step. It appears that  development of a fundamentally expanded version of conversion must be a matter more appropriately left to appellate courts or to Parliament.

The primacy of restitution claims

Although the tort claims failed, the court reaffirmed that Bitcoin is property and that a claimant retains a subsisting proprietary interest in stolen cryptoassets. That proprietary interest can be enforced by following or tracing the asset into the hands of a defendant.

The practical message is clear:

• traditional torts such as conversion and trespass are ill-suited to purely intangible cryptoassets;
• proprietary restitution (e.g. Jones v Persons Unknown) and unjust enrichment (e.g. AA v Persons Unknown) claims remain the most robust and reliable mechanism for recovery.

For victims of digital asset fraud, properly framed proprietary restitution or unjust enrichment claims are the primary route to recovery.

Looking ahead

The case leaves open an important question. As digital assets become increasingly central to commercial life, should the common law recognise:

• a new tort designed specifically for wrongful interferences with digital property,
• or an expanded, conversion-like cause of action that reflects the realities of intangible assets?

For now, the answer is no. But the issue has been squarely identified.

Whether incremental development will ultimately fill that gap — or whether legislative intervention will be required — remains to be seen. What is clear is that the conceptual pressure on traditional property torts will only increase as the digital economy continues to evolve.