While reviewing the upcoming distribution of digital assets left in Cryptopia storage, Judge David Gendall at the High Court in New Zealand classified Bitcoin and all cryptocurrencies as “properties.” The decision means that users of the exchange are allowed to receive the remaining funds.
Cryptopia was a New Zealand-based cryptocurrency exchange with a significant number of users. In January 2019, however, the platform suffered two back-to-back hacks. The total amount lost was approximately $18 million.
A few months after the attack, Cryptopia was placed into liquidation. The liquidators, a company called Grant Thornton, said that the exchange held cryptocurrencies worth about $100 million.
Thus began the dispute regarding those funds. Judge Gendall explained it in the court document “the tussle, which is before the Court is one between the creditors of Cryptopia on the one hand and the account holders who have invested in various digital assets (“the accountholders”) on the other.”
Ultimately, the Court ruled that all cryptocurrencies fall under the “property” category, as per section 2 of the Companies Act:
“I find that all of the various cryptocurrencies are “property” within the definition outlined in s2 of the Companies Act and also probably more generally. In addition, these digital assets, I find, being property, are capable of forming the subject matter of a trust.”
Judge Gendall also informed that Cryptopia held the assets via trusts for each cryptocurrency. And as a result of the Court ruling, customers of the exchange are entitled to the funds.
Last year, a Chinese Court held a similar dispute case on Bitcoin distribution. To settle it, the Hangzhou Internet Court confirmed that the “virtual property” of the primary cryptocurrency. At the time, this was the first case in which a Chinese court has defined Bitcoin in such a manner.
“The Hangzhou Internet Court believes that Bitcoin has the value, scarcity, and controllability of property as an object of rights, and it should determine its virtual property status.”
Two years ago, Russia also made the same recognition. The Ninth Arbitration Court of Appeal proclaimed the largest digital asset as property when settling a debtor case.
“To qualify cryptocurrency as other property, you can refer to the practice of the European Court of Human Rights (ECHR). According to which, “property” means everything that has economic value for participants in civil circulation and allows the transition from one person to another.”