Hong Kong's High Court has for the first time approved the use of blockchain technology to issue an order to freeze assets related to two wallets holding stolen cryptocurrency, marking a first in the city.
Zhu Qiaohua, the lawyer and cybersecurity consultant for tech companies handling the case, said that this method is like "printing the word 'stolen money' on banknotes," effectively freezing the stolen cryptocurrency and preventing the assets from being transferred.
He stated that the technology used to issue tokenized legal notices is already ahead of countries like the UK and the US, and he believes that in the future, more local and foreign individuals will resolve cryptocurrency disputes through Hong Kong's tech companies and law enforcement agencies.
A company named Worldwide A-Plus Limited filed a case in the High Court in early December 2024, claiming that 2.6 million Tether (USDT), equivalent to US dollars (approximately 20.24 million Hong Kong dollars), was stolen, and requested a restraining order to freeze the assets in two Tron (TRON) cryptocurrency wallet addresses involved in the case.
In December, the court approved the issuance of a tokenized restraining order through blockchain technology to the holders of the two cryptocurrency wallets involved in the case, recording the restraining order on the blockchain, a first for Hong Kong.
Since all cryptocurrency transaction details are recorded on the blockchain, anyone trading with the involved cryptocurrency wallets will see the restraining order recorded on the blockchain, similar to a property being "nailed to the deed."
The plaintiff's representative lawyer, Liu Minting, pointed out that the current legal requirement for personal delivery of court documents and legal notices is challenging to manage when sending notices to holders of cold wallet addresses. He believes that using the latest technology to effectively deliver court documents and legal notices to cold wallet address holders shows that Hong Kong courts are ready to accept new methods to handle the unique nature of virtual asset disputes.
Hong Kong has also seen victims of cryptocurrency scams file civil lawsuits in the past, and the court has issued restraining orders to individual or corporate defendants. This case is the first time the court has issued a restraining order to unidentified cryptocurrency wallet address holders.
The tech company responsible for issuing the tokenized restraining order, Marco Systems Limited, and its cybersecurity and asset recovery specialist lawyer, Zhu Qiaohua, stated that the court accepted the two cryptocurrency wallet addresses as defendants in the case, breaking the past misconception that it was impossible to pursue legal action without knowing the identity of the fraudsters.
The tokenized restraining order is globally applicable, and Zhu Qiaohua said that the method is like "printing the word 'stolen money' on banknotes," making it impossible for anyone to claim ignorance of the notice regarding the involved cryptocurrency wallet.
Zhu Qiaohua stated that anyone entering or dealing with the cryptocurrency in the involved wallet would be criminally liable, believing that no one would dare to transact with it, and any transactions would trigger the anti-money laundering mechanisms of third-party trading platforms, effectively freezing and locking the related accounts. He expressed that after the court's order, the assets in the wallet were no longer transferred, believing that the restraining order had been successfully executed, describing the action as if the law enforcement had "sealed the crime scene."
Zhu Qiaohua mentioned that issuing tokenized legal notices is a significant advancement in resolving disputes related to virtual assets, and he believes that in the future, more individuals involved in cryptocurrency disputes will apply to the court to recover losses in this manner.
He also pointed out that Hong Kong is already leading countries like the UK and the US in the technology of issuing tokenized legal notices, and he believes that in the future, foreigners involved in cryptocurrency disputes can also recover losses through Hong Kong's tech companies and law enforcement agencies.
