The arrival of the Web 3.0 era: A review of Hong Kong court rulings on digital assets

Authors: Ye Hanjie, Li Jiankun, Huang Mingchen, Han Kun Law Offices

With the rapid development of financial technology, investment and trading in digital assets are becoming increasingly popular. As an international financial center, Hong Kong is not only promoting the improvement of the regulatory framework for digital assets but is also advancing its judicial system: applying legal principles to disputes related to cryptocurrencies and attempting to use innovative technology to freeze digital assets. These measures help strengthen protections for investors and increase their confidence in the digital asset market, enhancing their willingness to adopt Hong Kong law as the governing law for digital asset transactions. This article aims to introduce and summarize recent judicial decisions related to digital assets by Hong Kong courts. A. Starting Point: Cryptocurrencies Recognized as 'Property' in Hong Kong In Re Gatecoin Limited [2023] 2 HKLRD 1079, [2023] HKCFI 914^[1]^, the High Court of Hong Kong ruled that cryptocurrencies are considered property under Hong Kong law and can be the subject of a trust.

The court followed the ruling of the New Zealand court in Ruscoe v Cryptopia [2020] NZHC 728, determining that cryptocurrencies meet the four criteria for "property" established in the UK case National Provincial Bank v Ainsworth [1965] AC 1175. In short, cryptocurrencies are a form of intangible property:

1. Definable: The public key assigned to a cryptocurrency wallet is easily identifiable, possesses sufficient uniqueness, and can be uniquely allocated to each account holder.

2. Identifiable by third parties: Only the holder of the private key can access the cryptocurrency and transfer it from one wallet to another.

3. Capable of assumption by third parties: Cryptocurrencies can and do actively participate in trading markets; in these markets, the rights of owners are respected.

4. Some degree of permanence or stability: The entire transaction history of cryptocurrencies is stored on the blockchain [see paragraphs 57 and 59 of the judgment].

This ruling confirms that Hong Kong's position is consistent with other common law jurisdictions, recognizing the proprietary nature of cryptocurrencies as legitimate property. B. Importance of Terms and Conditions of Cryptocurrency Exchanges When determining whether a cryptocurrency exchange holds cryptocurrencies on behalf of clients as a trustee, the court considers the terms and conditions established between the cryptocurrency trading platform and its clients, as well as the operational methods of the exchange, including how the exchange handles cryptocurrencies.

For example, in the case of Re Gatecoin Limited, the latest version of Gatecoin's terms and conditions was found by the court not to declare a trust relationship, thus clarifying that no trust relationship exists between Gatecoin and its clients. The relevant terms and conditions also stipulated that cryptocurrencies could be stored in a pooled blockchain assets account or an omnibus fiat account (i.e., the cryptocurrencies were not segregated) [see paragraph 42 of the judgment]. Therefore, the cryptocurrencies deposited by Gatecoin clients were effectively treated as Gatecoin's assets, and Gatecoin could decide how to use the cryptocurrencies in its wallet, including trading them. Gatecoin's audited financial statements also regarded the cryptocurrencies held by Gatecoin as its assets, while "client deposits" were treated as liabilities [see paragraph 43 of the judgment].

For these reasons, the court ruled that according to the latest version of Gatecoin's terms and conditions, Gatecoin held the cryptocurrencies in its own name, rather than as a trustee for its clients. In other words, in the event of the exchange's liquidation, clients who accepted the latest version of the terms would be considered unsecured creditors, and their "deposits" would be treated as the exchange's assets, which would be liquidated to pay for liquidation costs. C. Interim Proprietary Injunctions Can Be Issued for Cryptocurrency Assets In recent years, Hong Kong courts have issued interim proprietary injunctions regarding cryptocurrency assets, such as in Nico Constantijn Antonius Samara v Stive Jean-Paul Dan [2021] HKCFI 1078^[2]^ (the injunction prohibited the defendant from dealing with their assets, including btc-42">Bitcoin) and Yan Yu Ying v Leung Wing Hei [2021] HKCFI 3160^[3]^ (the injunction prohibited the defendant from dealing with the Bitcoin in question). The relevant rulings confirm that Hong Kong courts can prohibit cryptocurrency holders from transferring cryptocurrencies from their wallets or otherwise dealing with cryptocurrencies without court approval. D. Approval of Tokenized Injunctions In the case of Worldwide A-Plus Investments Ltd v A-Plus Meta Technology Ltd (HCA 2417/2024), the High Court of Hong Kong granted, for the first time, a tokenized injunction delivered via blockchain technology, prohibiting the transfer of funds from cryptocurrency wallets involved in a Tether fraud case exceeding HKD 2.6 million.

The tokenized injunction breaks the limitations of traditional methods for serving injunctions (which require a copy of the order with necessary penalty notices to be delivered in person to the parties), allowing court documents to be served to anonymous virtual wallet holders (in this case, directly placed on the Tron blockchain). Once the injunction is tokenized, anyone intending to transact with the involved wallet will see the injunction stored on the blockchain, preventing anyone from using ignorance as a defense.

This ruling demonstrates that Hong Kong's legal system is evolving in line with the development of digital assets and blockchain technology, setting a precedent for the use of tokenized injunctions. E. Bankers Trust Orders Can Be Issued to Cryptocurrency Trading Platforms In the case of Wang Weiqing v Zhuo Yihao & Others [2025] HKCFI 4941^[4]^, the court ruled that the plaintiff could invoke a Bankers Trust order to compel the digital asset trading platform to provide relevant account information and transaction details, allowing the plaintiff to trace their stolen assets.

In this case, the court revoked the proprietary injunction against the hot wallet of the cryptocurrency exchange suspected of containing stolen assets, on the grounds that the plaintiff failed to provide full and frank disclosure to the court as required by the unilateral application, concealing potential defenses that the exchange might raise regarding the nature of the hot wallet and the pre-action correspondence between the parties.

Although the court's revocation of the proprietary injunction prevented the plaintiff from making a disclosure application in the form of an ancillary disclosure order, the court accepted and approved the plaintiff's request to invoke a Bankers Trust order requiring the exchange to provide relevant information to allow the plaintiff to trace the stolen cryptocurrency.

This ruling reflects that Hong Kong courts have decided to follow the practice of UK courts (which issued a Bankers Trust order in Ion Science Ltd v Persons Unknown [2020] EWHC 3688 (Comm) compelling Binance, a cryptocurrency trading platform, to disclose information) by issuing Bankers Trust orders to cryptocurrency exchanges to assist victims in tracing digital assets. F. Summary and Expected Trends Hong Kong courts have made a series of landmark rulings: recognizing cryptocurrencies as property, being the first to use tokenized injunctions to freeze digital assets suspected of being related to fraud, and utilizing Bankers Trust orders to compel cryptocurrency exchanges to disclose account information and transaction records related to stolen assets, assisting victims in tracing and recovering assets.

The improvement of the relevant legal framework significantly enhances protections for digital asset investors in Hong Kong and boosts investor confidence, further solidifying Hong Kong's position as an international financial center.

The Hong Kong Financial Services and the Treasury Bureau previously announced its goal of positioning Hong Kong as a global leader in the development of virtual assets and the sustainable development of an internationally competitive virtual asset industry^[5]^. The Hong Kong government also published the "Hong Kong Digital Asset Development Policy Declaration 2.0" in June 2025, outlining its vision to build a trustworthy and innovation-focused digital asset ecosystem, prioritizing risk management and investor protection. The framework proposed in the policy declaration emphasizes: establishing a unified and comprehensive regulatory framework for digital asset service providers and expanding the variety of tokenized products.

We remain optimistic that Hong Kong will continue to build a more comprehensive legal framework to protect cryptocurrency assets. We also anticipate more court litigations and arbitration cases involving cryptocurrency asset disputes, as well as Hong Kong courts continuing to refine their legal system and apply it to the field of digital assets.

For information on Hong Kong's regulatory framework for digital assets, please refer to "From Virtual Assets to Digital Assets, The Changes and Constants of the Hong Kong Declaration 2.0". Additionally, for insights into the regulatory framework for virtual currencies and real-world assets (RWA) in mainland China, please refer to "Interpretation and Reflection on the New Regulations No. 42 on Virtual Currency Regulation in China" and "Turning Points, Light at the End of the Tunnel --- Interpretation of New Regulations on Tokenization of Real-World Assets (RWA)".

[1] See Decision at https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=151622\&currpage=T
[2] See Reasons for Decision at https://legalref.judiciary.hk/lrs/common/search/search_result_detail_frame.jsp?DIS=135241\&QS=%2B%7C%28HCA%2C902%2F2018%29\&TP=JU
[3] See Decision at https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=139582\&currpage=T
[4] See Decision at https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=173524\&currpage=T
[5] Financial Services and the Treasury Bureau, Hong Kong Court Granted First "Tokenised Injunction Order", Setting Legal Precedent in Virtual Asset Sector (https://www.facebook.com/100064860394243/posts/1038215571683780/?mibextid=WC7FNe\&rdid=HW0LcDAq0hDQKAFB)