Crypto’s a thing, right, or is it? Another Australian court weighs in
A recent Australian judgment in the Supreme Court of Tasmania has upheld a lower court’s finding that a plaintiff could enforce rights in relation to his crypto assets using legal causes of action (conversion and detinue) that are associated with physical “things” that are capable of being possessed. That finding is contentious. It seems to us that the same result could have been reached by a finding that the plaintiff had a property right in intangible property and that property right justified a mandatory injunction requiring the defendant to relinquish control of the plaintiff’s crypto assets. But that was not how the case was pleaded or argued. This case is the second Australian case in six months to look whether (and if so what) proprietary rights can be asserted in relation to crypto assets.
The case
Poulton v Conrad [2025] TASSC 2
The facts
The lower court’s findings (either unchallenged or upheld on appeal) were as follows:
- The plaintiff had become interested in investing in Bitcoin in 2013. At that time, the defendant was in the process of starting a business which included assisting clients to purchase Bitcoin.
- The plaintiff paid A$10,000 to the defendant in December 2013 to enable the defendant to purchase Bitcoin on behalf of the plaintiff.
- 10.5 Bitcoin was attributed to the funds paid by the plaintiff. That Bitcoin was derived from Bitcoin purchases made by the defendant as well as from Bitcoin already owned by the defendant.
- The parties had agreed that the plaintiff would pay a fee to the defendant. However, no agreement was reached as to the amount of that fee.
- In July 2014, the defendant gave the plaintiff a Bitcoin wallet that only provided access to 6 Bitcoins, not 10.5.
- In November or December 2017, the defendant transferred control of 3 more Bitcoins to the plaintiff.
- This left the defendant in control of the following crypto assets claimed by the plaintiff:
- 1.5 Bitcoin
- 4.5 Bitcoin gold and 4.5 Bitcoin cash, both assets generated out of the plaintiff’s Bitcoin as a result of forking
What the magistrate found
The plaintiff brought proceedings before a magistrate. He succeeded in a claim of detinue and conversion in relation to the crypto assets claimed by him and was awarded damages, including exemplary damages. The magistrate allowed an offset of $1,500 against the damages on account of the fee due to the defendant.
The appeal
On appeal to the Supreme Court of Tasmania, the defendant did not challenge the magistrate’s finding that Bitcoin amounted to property, for the purposes of the causes of action in detinue and conversion. Instead, the defendant argued that the crypto assets retained by him represented his fee. In the words of the Court: “the [defendant] asserted that it had always been understood by the [plaintiff] that the [defendant] would be entitled to a fee for his services. He claimed that although the quantification of the fee had been deferred, he and the [plaintiff] had eventually agreed that he would retain the relevant cryptocurrency as the fee. The magistrate rejected that there had been such an agreement but concluded that the respondent understood there would be a fee, and relied on expert evidence to assess a reasonable fee” [2025] TASSC 2 at paragraph 35. The Supreme Court upheld the magistrate’s reasoning and conclusion.
Two other arguments were made by the defendant and rejected by the Supreme Court. The first was that it was a company associated with the defendant (and not the defendant himself) which had possession of the crypto assets. In response, the Court found that the facts overwhelmingly established that it was the defendant personally who dealt with the plaintiff and was in actual control of the crypto assets. The defendant also raised a technical point about the adequacy of the plaintiff’s pleadings. This too was rejected.
Our views
It seems to us that detinue and conversion were not the appropriate remedies to be sought and granted in this case. The same result could have been reached by a finding that the plaintiff had a property right in intangible property and that property right justified a mandatory injunction requiring the defendant to relinquish control of the plaintiff’s crypto assets. That approach is consistent with the November 2024 judgment of another Australian superior court: the Supreme Court of Victoria in Re Blockchain Tech Pty Ltd [2024] VSC 690 (12 November 2024). In that case, at paragraph 389, Attiwill J said that:
I find that a person’s interest in Bitcoin is property. It is not a chose in possession as it is intangible. It cannot be possessed. It is a chose in action. As I have already said, it is well established in Australia that a chose in action comprises a heterogeneous group of rights which have only one common characteristic in that they do not confer the present possession of a tangible object. That is the case with Bitcoin.
You may also be interested in
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Queries
If you have any questions about this article, please get in touch with an author or any member of our Fintech, Privacy & Emerging Technologies team.
Disclaimer
This information is general in nature. It is intended to express the state of affairs as of the date of publication. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.