First third-party debt order for an ICO fraud case

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Initial Coin Offerings (ICOs) are a type of capital-raising activity, and are how blockchain projects raise money and launch their virtual currency networks. ICOs are particularly interesting since they’re often the subject of hot debate in the Crypto Community due to the ever changing rules and regulations- combined with the constant starting and failing of new companies.

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Recent developments on the crypto ico calendar 2022 include the UK High Court granting the first third-party debt order for an ICO fraud case. This kind of debt order intercepts a payment due from a third party and redirects it to the judgment creditor to satisfy the judgment debt. The plaintiffs of this case claimed they were victims of an initial coin offering scam, in which they were asked to invest large sums of money in cryptocurrency products. These were understood to be genuine, and it was agreed they would make commission payments for the profits from these investments.

However, it resulted in a misused 64.35 bitcoin, which had ended up in cryptocurrency accounts on Binance and Kraken.

The court stated that it had jurisdictional authority to determine the dispute, and granted the proprietary injunction against the unknown persons. It also granted a worldwide freezing order meaning the defendant’s modus operandi of using aliases and fake documents were sufficient grounds for the order. The plaintiffs also filed a disclosure order against crypto exchages Kraken and Binance, this compelled them to release the names of the account holders where the fraudulent funds were transferred.

The plaintiffs claimed to recover the misappropriated funds, but the company did not respond, which prompted the plaintiffs to seek a third-party order to enforce their judgment debt. The High Court granted the plaintiff’s application- makling this the first ruling of its kind in the cryptocurrency industry.

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