Cryptoassets
Blockchain and Digital Assets
Matt Green
July 2025
Following the Law Commission’s proposed reform of the UK’s crypto and digital assets regime, Director Matt Green explores what these proposals mean for advisers – as well as those looking to recover stolen or hacked cryptocurrency.
Matt’s article was co-authored with Ashley Fairbrother, Partner at Edmonds Marshall McMahon.
Matt and Ashley’s article was published in FT Adviser, 16 July 2025, and can be found here.
In June 2025, the UK’s Law Commission proposed new powers to drastically help victims of fraud following the loss of crypto assets where key details, like the bad actors’ details, are unknown. These proposals would allow courts to grant free-standing information orders at the outset of crypto fraud investigations, before the victim needs to commit to pursuing a substantive claim.
This may prove to be a vital legal reform and significantly increase access to justice, especially when victims have lost significant funds, and do not want to risk spending more money pursuing unknown parties who may or may not still hold funds.
The crypto fraud epidemic
Fraud concerning crypto assets is a significant issue for consumers and businesses alike. Chainalysis’s “The 2025 Crypto Crime Report” notes that ‘pig butchering’ scams (i.e. scams via social engineering) have increased 40% year on year, and cost victims a total of $9.9 billion as of 2024. Separately, Chainalysis’s report notes that $2.2billion was stolen from crypto platforms across this period.
Last year, Action Fraud – the UK’s reporting centre for fraud and cybercrime – reported over 649,000 instances of investment fraud, with 66% attributed to crypto investment related schemes. Individuals are losing life savings, family homes and pensions, and taking out astronomical loans to pay fraudsters who demand more money to release funds already taken under the guise of investment profits.
Scams are often initiated by telephone calls, texts and emails from actors purporting to be from major cryptocurrency exchanges or banks who hold convincing personal data, usually obtained via data scraping, to harbour a victim’s trust and eventually extract funds. Assets are then typically laundered to facilitate human trafficking, drugs trades and organised crime.
Currently, victims can follow their funds across their respective blockchains by providing practitioners with their transaction identifiers, which show the funds being withdrawn or sent from their control to the fraudster. Following a traceable laundering process, funds can end up at centralised retail outfits like Binance, Kraken and Coinbase, offshore swapping services like SimpleSwap and ChangeNow, to purportedly decentralised outfits, who offer services without obtaining Know Your Client documents or Anti Money Laundering checks, performing permissionless transactions.
Once at these exchanges, victims need to know key information to consider the viability of pursuing a legal claim, including details of the exchange’s customer, information concerning internet-protocol addresses, trading histories and, of course, the balances held at accounts. Without this information, it is extremely difficult to consider whether a victim should spend good money chasing lost assets, and in most reported cases, victims have taken a high-risk approach in pursuing “persons unknown” with limited information.
To obtain this material, lawyers can use gateway 25(b) of the Civil Procedure Rules (which dictate the rules around litigation in England and Wales), which requires victims to start a substantive claim alongside an application for disclosure of information. This means they must be prepared to sue someone and detail the claim clearly at that stage.
As a commercial proposition, this might be extremely costly. The Law Commission recognises this at paragraph 3.78 of its report, where it states that “victims are not always able to say that they definitely intend to commence proceedings in England and Wales”
Similarly, to obtain wider reliefs against perpetrators, including a worldwide freezing injunction which prohibits the defendants from moving or dissipating their assets globally up to the value of the claim, the victim must also show from the outset that they have other assets to the value of the loss, on the basis that the injunction detriments the defendants unfairly. This is an enormous burden for any victim of fraud to overcome, without really knowing anything about the defendants.
Currently, the bar to entry is very high. Only those with deep pockets, and a high appetite for risk, can pursue their funds via the courts.
The Law Commission’s proposal
The Law Commission has recently published the “Digital assets and (electronic) trade documents in private international law, including Section 72 of the Bills of Exchange Act 1882, consultation paper” to assist victims, by allowing the court to grant a “free -standing information order to assist a claimant at the initial investigations stage of the proceedings”.
Should the proposal be successful, this would allow victims to assess the viability of the claim and consider the facts at hand without starting a formal claim. The costs might be substantially lower, and without the risk associated with formal litigation.
The proposed test for granting one of these orders is provided at paragraph 4.92 within the consultation paper, and summarised as:
- The case has a certain strength, in that the claimant must evidence a wrongdoing;
- The disclosure of this information is necessary to allow the victim to bring legal proceedings or other redress;
- The court must be satisfied that there is no other court in which the claimant could reasonably bring the application for disclosure;
- The court must be satisfied there is an adequate link to England and or Wales. For example, that the victim resides, domiciles or is a national here. This might also include (though not explicit in the paper) that the defendant purports to have an adequate connection to this jurisdiction – for example where a scam investment website says the company is registered in England.
Effect and next steps
In principle, this initiative will drastically lower the obstacles to recourse by giving victims a cost-effective solution to assess a claim’s viability and mitigate litigation risks early on. A consultation period for this paper is open until 8 September 2025, and many law firms and individuals have already backed the Law Commission’s above proposal, including both of us as authors of this piece as well as our peers including Nathan Capone at Fieldfisher.
This reform is vital in widening access to justice by revolutionising the initial stages of crypto asset recovery by removing substantial financial and procedural barriers that currently prevent many victims from commencing a claim.
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