CBFL Seminar Series: Tracing Crypto-currencies, Mixed Funds and Other Legal Quandaries by Professor Hannah Lim Yee-Fen, Nanyang Technological University

On 22 April 2025, the Centre for Banking and Finance Law (CBFL) was pleased to welcome Professor Hannah Lim Yee-Fen from Nanyang Technological University to present her seminar entitled “Tracing crypto-currencies, mixed funds and other legal quandaries.” The seminar, which was moderated by Associate Professor Sandra Booysen, Director of CBFL was held at the Lee Sheridan Conference Room and was well attended by academics, legal practitioners, and regulators alike.

Professor Lim presented her analysis of the recent case in the English High Court in D’Aloia v Persons Unknown [2024] EWHC 2342 (Ch). The D’Aloia case was significant as it was one of the first decisions involving cryptocurrency fraud following a full trial (i.e. not after interlocutory or summary judgment proceedings), including the taking of expert evidence.

The case involved a series of scam transactions involving the cryptocurrency USD Tether (USDT). The claimant had in January 2022 transferred close to 1m USDT to an account controlled by the 1^st Defendant (an unknown scammer). A proportion of these funds were later transferred through a series of transfers (referred to as Hops) eventually arriving on the BitKub exchange in Thailand (the 6^th Defendant) in the account of a Ms Hlangpan which eventually withdrew the funds. The claimant sought to trace the cryptocurrencies to the hands of BitKub.

According to Professor Lim, the case was beset by errors in the understanding of fundamental principles of computer science surrounding cryptocurrencies and the ways in which cryptocurrency exchanges operated (for instance whether private keys were held by the exchanges or the customers). This was further exacerbated by the inconsistent and sometimes plainly wrong expert evidence which was tendered in the course of the trial. This resulted in inconsistencies in the way the technology was described and also potential misattributions insofar as the actions of some of the personalities in the case may have been concerned.

In particular, Professor Lim was of the view that the Judge’s reliance on the decision in Piroozzadeh v Persons Unknown [2023] EWHC 1024 (Ch) at [8] on “sweeping” and its legal effect was misplaced. In the first place, there was no significance to the phenomenon described as sweeping and as Professor Lim explained and demonstrated, this so-called sweeping did not in any way affect the identifiability of the USDT for the purposes of tracing. The recording of the transactions on, among others, the Bitcoin blockchain (which USDT was predominantly built upon) would have maintained their separate identifiability through the use of, inter alia, public and private key pairs.

On a final note, Professor Lim concluded that what the court described as “mixed funds” in all the Hops were not in fact mixed as the USDTs were all identifiable, and thus the “mixed fund” on BitKub in what was described as the “sweep” was not a true mixed fund. Therefore, she concluded that following and common law tracing could have been used. In the light of the above, equitable tracing methodologies e.g. First In First Out, pari passu need not have been argued and discussed.

The session then concluded with some brief questions in which Professor Lim continued to expound on the key aspects of the technology behind crypto-currencies and the different ways in which cryptocurrencies may be held by crypto exchanges and the different legal consequences these alternatives might bring. A key takeaway from the discussion was the importance of understanding and engaging with the technology in legal adjudication to achieve clear, accurate, and sensible outcomes in litigation.

Professor Lim’s profile may be found here.