Bybit payroll manager stole a large amount of USDT, Singapore court explains the property attributes of cryptocurrency

Crypto exchange Bybit sued Ms. Ho, who was responsible for paying salaries within the company, for abusing her position by transferring large amounts of USDT to addresses she secretly owned and controlled. The General Division of the Singapore High Court upheld the ruling on July 25, saying that cryptocurrencies are generally recognized as property, and holders of crypto assets in principle have intangible property rights recognized by common law, as articles in litigation, and therefore can be enforced in court. The court ruled that Ms. Ho should immediately pay Bybit all the transferred funds and interest.

The following is the full translation of the judgment (original link)

introduce

1. This case concerns a crypto-asset called Tether, which is an example of what is known as a stablecoin. This means that its issuer claims that each stablecoin issued is backed by a fiat currency or other reserve value. Issuers typically offer terms of service under which verified holders of the stablecoin are entitled to redeem it for fiat currency from the issuer. This link to fiat currency (in this case, the US dollar) is reflected in Tether’s common name, which is USDT, standing for US Dollar Tether. I will use this abbreviation in this judgment.

2. In this application, ByBit Fintech Limited (“ByBit”) seeks judgment against the first defendant, Ho Kai Xin (“Ms. Ho”). The allegation against her is that she breached her employment contract and abused her position by transferring some USDT to “addresses” that she secretly owned and controlled, and some fiat currency to her own bank account. The primary relief sought is a declaration that Ms. Ho held custody of USDT and fiat currency for ByBit. As such, ByBit seeks the return of the same or traceable proceeds, or payment of an amount of equal value.

3. In granting interim injunctions, courts in Singapore and elsewhere have acknowledged that there is at least a serious question to be resolved, or a good arguable case to be made, as to whether crypto assets are property that can be held as a trust. In doing so, it has not necessarily been determined whether these crypto assets are things in action or a new type of intangible property. In order to grant judgment and ultimately declare a trust, this court must further decide whether the crypto assets in this case, namely USDT, are indeed property that can be held as a trust, and if so, what type of property they are.

4. In this case, I find that USDT, which can be transferred from one holder to another through cryptography even without the help of the legal system, is still a thing in action. In this judgment, I mostly use the phrase thing in action, which means the same thing as a thing in action. Although USDT also carries the right to be redeemed for an equivalent amount of U.S. dollars from Tether Limited in the British Virgin Islands (“BVI”), which makes it more like a traditionally recognized thing in action, I do not believe that this feature is a necessary condition for a crypto asset to be classified as a thing in action. Like any other thing in action, USD++++++++++++++++++++ can be held on trust.

5. I further hold that ByBi has proved the case for which it seeks judgment and I therefore grant the declaration sought on the basis of institutional constructive trust.

6. I now explain why I have reached these conclusions.

background

7. ByBit, a Seychelles company, owns a cryptocurrency exchange named after it. ByBit pays its employees in traditional currencies, cryptocurrencies, or a mixture of both. WeChat Fintech Pte Ltd (“WeChain”), a Singaporean company, provides payroll services to ByBit and related entities. Ms. Ho is an employee of WeChat and is responsible for processing payroll calculations for ByBit employees.

8. As part of her duties, Ms. Ho maintained a Microsoft Excel sheet that recorded the cash and cryptocurrency payments due to ByBit employees each month (the “Fiat Excel File” and the “Crypto Excel File”, respectively). The Crypto Excel File listed the “addresses” used by ByBit employees to receive cryptocurrency payments. An “address” can be understood as an encrypted digital “folder” where cryptocurrency can be “received” and “stored”. Each address is a unique alphanumeric string. A corresponding “private key” is required to access and authorize transfers between addresses. These private keys are in turn stored in “wallets”, which can therefore be understood as the way to interact with cryptocurrency. Wallets that are hosted online by a service provider (usually a cryptocurrency exchange) are called “hosted wallets”. Hosted wallets are usually in the form of user interface applications. Offline wallets are called “self-hosted wallets” and may be a simple piece of paper with the private key written on it, or a complex encryption software that restricts access to the private key. In short, accessing a wallet means obtaining the stored private key and thus controlling the address and the cryptocurrency stored therein. ByBit employees could and did frequently change their designated addresses by communicating the new addresses to Ms. Ho, who would then update the encrypted Excel files. Only Ms. Ho was able to update the encrypted Excel files, and only she had access to them, except for the need to submit the encrypted Excel files to her direct supervisor, Casandra Teo, for approval each month.

9. On September 7, 2022, ByBit discovered that eight unusual cryptocurrency payments had occurred between May 31 and August 31, 2022 (the “Anomalous Transactions”) involving the transfer of large amounts of USDT to four addresses (which I will simply refer to as Addresses 1, 2, 3 and 4). A total of 4,209,720 USDT (the “Crypto Assets”) were transferred. USDT gets its name because its value is pegged to the U.S. dollar and each USDT confers a contractual right to its holder (i.e., a “Verified Customer” of the issuer, Tether Limited) to redeem their USDT for U.S. dollars. The Anomalous Transactions were compiled into an Excel spreadsheet (the “Reconciliation Excel File”) and Ms. Ho was assigned the task of interpreting the discrepancies. Ms. Ho initially attributed the Anomalous Transactions to an inadvertent mistake or technical error and offered to calculate the amounts that needed to be recovered from ByBit’s employees.

10. From September 9 to 22, 2022, Ms. Ho still failed to provide any explanation for the unusual transactions. When asked why the amounts paid to different employees were sent to the same address, Address 1, Ms. Ho suggested that she may have made an accidental mistake. Ms. Ho continued to provide status updates in the reconciliation Excel file, describing the unusual transactions as "excessive payments" to ByBit's employees.

11. On September 27, 2022, ByBit contacted a supposed recipient of the unusual transaction. 1.3 million USDT was paid to address 1 in his name. However, according to ByBit, the employee denied ever specifying an address because he had only ever been paid in traditional currencies and did not know who owned address 1. ByBit's internal investigation found that Ms. Ho's work email sent an email to herself containing address 1 on May 19, 2022. Ms. Ho's work email also received an email containing all four addresses on August 29, 2022, this time from Ms. Ho's personal email. These emails were recovered by ByBit because they had been deleted.

12. ByBit also discovered that Ms. Ho caused $117,238.46 (the “Fiat Assets”) to be paid into her personal bank account in May 2022. It is undisputed that Ms. Ho had no right to the Fiat Assets and that Ms. Ho expressly accepted that she was holding the Fiat Assets on trust for ByBit. However, to date, Ms. Ho has taken no steps to return the Fiat Assets.

13. On September 29 and October 4, 2022, ByBit conducted interview meetings with Ms. Ho. In the first meeting, Ms. Ho claimed that she could not remember the details of the unusual transactions. In the second meeting, Ms. Ho was confronted with ByBit’s findings. Ms. Ho told ByBit that she did not own the wallets associated with the four addresses, that the wallets belonged to her cousin, and that she could not access them. Ms. Ho said that it was her cousin who proposed that she help him transfer the cryptocurrency and that she had CCTV footage of him making unusual transactions at her home. Ms. Ho admitted that she had been involved in the scheme before the interview meeting three months earlier and told ByBit that she wished to call the police because she did not own the crypto assets. After the meeting, Ms. Ho refused to sign a single-page statement documenting what had occurred. However, it is undisputed that Ms. Ho made these statements to ByBit. Afterwards, Ms. Ho lost contact with ByBit and WeChat and did not attend subsequent meetings.

14. ByBit commenced this action on October 12, 2022. ByBit successfully obtained several interim reliefs, including a global freezing order against Ms. Ho and an injunction on the ownership of the cryptocurrencies (i.e., crypto assets) in four addresses and the fiat assets in Ms. Ho’s bank accounts. Ms. Ho personally accepted the original claim and order on October 18, 2022. On October 31, 2022, Ms. Ho disclosed in an affidavit that the wallets associated with the four addresses were owned by her cousin Jason Teo (“Jason”). Ms. Ho claimed that she did not have access to any of the wallets, that she deleted her text conversation records with Jason before accepting service of the order, and that she did not turn off the circuit surveillance footage because footage older than seven days would be automatically deleted. Ms. Ho filed her defence on November 11, 2022 and filed a third-party notice against Jason.

15. Ms. Ho fully accepts that the crypto assets belong to ByBit and that she has no right to own it. Ms. Ho’s main defence is that Jason stole ByBit’s crypto assets without her knowledge. She did not benefit from it because the wallets associated with the four addresses were owned and controlled by Jason alone. Her case is that she asked Jason to assist in checking the cryptocurrency Excel file on “many occasions” during his visits to her home from May 2022. Jason then accessed her work laptop without her knowledge or consent, which Ms. Ho discovered by reviewing the CCTV footage at her home after ByBit alerted her to the unusual transactions. She then confronted Jason and he admitted to deliberately replacing the four addresses with several addresses designated by ByBit employees. Despite her repeated requests, Jason refused to return the crypto assets. Ms. Ho’s position is that she was still unaware of the reason for the unusual transactions on September 9, 2022, more than seven days after the last unusual transaction (dated August 31, 2022). She did not explain how she had access to the incriminating video.

16. Unsatisfied with Ms. Ho’s disclosure, ByBit sought and obtained on 7 December 2022 an order for wider disclosure against Ms. Ho and certain third parties, including her father and husband. This was because ByBit discovered that Ms. Ho had made a number of large-scale purchases starting in July 2022, including a freehold penthouse purchased with her husband, a brand new car, and several Louis Vuitton products. Notably, despite initially denying ownership of any real property, Ms. Ho later explained that she had purchased the freehold penthouse using money earned from cryptocurrency trading on MetaMask and crypto.com. This was contrary to her earlier claim that her MetaMask account was completely unused. Ms. Ho did not provide her MetaMask and crypto.com addresses, nor did she provide a statement of account transactions. According to Ms. Ho, she had lost access to her crypto.com account because it was registered to her personal email address, which had been disabled for unknown reasons. Likewise, she was unable to access her MetaMask account because she purchased a brand new phone in October 2022 and was unable to obtain the necessary password from her previous device. I also note that, contrary to the disclosure order, Ms. Ho initially failed to disclose all of her assets, such as her bank accounts, which required further questioning by ByBit.

17. Meanwhile, Ms. Ho applied for and was granted leave for alternative service on Jason. Curiously, Ms. Ho stated in her supporting affidavit that it was Jason who deleted their text conversation history after she told him she had been served with the complaint. Jason did not appear in this lawsuit.

18. On 30 March 2023, ByBit filed this application for summary judgment. Ms Ho did not file any affidavit in rebuttal to the application pursuant to Order 9, Rule 17(3) of the Rules of Court 2021. On 18 April 2023, prior to the hearing, Ms Ho took over her own defence. Ms Ho did not attend any of my previous hearings and did not make any submissions.

19. For completeness, ByBit also applies to amend their claim and make further submissions, which I specify to be made by 19 May 2023. ByBit initially argued that Ms Ho held crypto assets and fiat assets by way of a remedial building trust. Therefore, ByBit seeks to amend so as to present an alternative argument based on an institutional building trust. I allow Ms Ho to make submissions on the amendment and extend the deadline for her to make submissions on summary judgment by 26 May 2023. As before, Ms Ho made no submissions and did not oppose the amendment application.

20. ByBit submits that the amendment is merely clarifying and does not introduce any new facts. The complaint clearly states that it was Ms. Ho who wrongly caused the unusual transactions and Ms. Ho's defense is not affected by the amendment. On the contrary, the amendment enables the real disputed issues to be determined and Ms. Ho will not suffer any damages that are not recoverable by costs.

21. I agree that the proposed amendment is clarifying, adding the institution-building trust's alternative conclusion of law based on the facts already stated, so that the true dispute can be fully and finally determined. Accordingly, I allowed the amendment on June 30, 2023, and commenced the application for summary judgment based on ByBit's Complaint (Amended 2), which was filed on July 5, 2023.

Party Cases

Ms. Ho's case

22. As noted above, Ms. Ho's main argument is that the blame lies entirely with Jason (see supra at [15]). From the affidavit, Ms. Ho appears to claim that she had no way of identifying Jason and did not know his personal information or address. In addition, Ms. Ho argues that it was Jason who accessed her work and personal emails and sent and then deleted emails stating four addresses (see supra at [11]). Jason did this without her authorization and Ms. Ho denies deleting the emails. In addition, Ms. Ho claims that she implied that she had lied to ByBit during an interview on October 4, 2022 (see supra at [13]). According to Ms. Ho, ByBit sternly warned her of the criminal nature of her actions and continued to insist that she was responsible for the unusual transactions. Ms. Ho responded in this way because she wanted to protect Jason, with whom she had a close relationship, and because she needed to rush to care for her sick two-year-old son. Due to her son’s condition, she refused to sign a single-page acknowledgment form after the interview as she did not have time to review its contents, and she also refused to attend subsequent interview meetings.

23. As to the statutory assets, Ms Ho stated that when she was preparing the statutory Excel file, she accidentally entered her data into that of another employee, which resulted in the erroneous payment.

ByBit Case

24. ByBit submits that it is entitled to summary judgment pursuant to Order 9, Rule 17(1)(a) of the 2021 Rules of Court because it has proved a prima facie case and Ms. Ho has no defence to the claim. ByBit’s submissions focus on crypto assets because Ms. Ho accepts that she holds ByBit’s fiat assets on trust.

25. First, ByBit proposes that "Jason" is a complete fiction. Ms. Ho has no evidence to support Jason's existence, and her account of events is inherently implausible. Concurrently with the anomalous transactions, Ms. Ho also went on a suspiciously lavish spending spree. Ms. Ho spent approximately $362,000 on a new car, $30,000 on Louis Vuitton products, and abruptly cancelled her existing pre-sale HDB flat to purchase a penthouse worth approximately $3.7 million. In addition, ByBit obtained incriminating information from the service provider of the wallet associated with Address 1. This proves that Ms. Ho owns the wallet and includes Ms. Ho's ID card and selfie, which she provided during the account registration process. The publicly available transaction records also match the anomalous transactions flowing into Address 1, and the amounts transferred on certain dates appear to indicate that USDT transferred to Address 2 and Address 3 were quickly transferred to Address 1. This proves that Ms. Ho owns and controls the wallet associated with Address 1, and may own and control wallets associated with other addresses.

26. Secondly, ByBit submits that crypto assets consist of options and are therefore property that can be the subject of a trust. This is because USDT gives a certified customer of Tether Limited the right to redeem USDT for the equivalent of fiat currency. ByBit submits that address 3 is associated with a self-custodial wallet, which means that Ms. Ho has direct access to the associated private key and therefore direct control over address 3 and the USDT therein, which can be held as a trust in the form of an option. As for addresses 1, 2 and 4, they are associated with custodial wallets. In the case of custodial wallets, access to the private key is held by the service provider, not the user of the custodial wallet. Instead, the user of the custodial wallet has a contractual right to instruct the service provider to transfer cryptocurrency between addresses. ByBit compares this to a bank account, where the cryptocurrency balance declared in the custodial wallet (equivalent to the account balance) is an option on the service provider (equivalent to the bank). Therefore, the relevant property is also an option, i.e. a right to instruct the service provider about the USDT credit balance.

27. Thirdly, ByBit submits that Ms Ho held the crypto assets and fiat assets on constructive trusts, or that Ms Ho was unjustly enriched in the aggregate of the crypto assets and fiat assets. ByBit submits that Ms Ho obtained the crypto assets by fraud because she manipulated the cryptocurrency Excel file so as to wrongly cause ByBit to pay the crypto assets to four addresses controlled by Ms Ho, thereby creating an institutional constructive trust. Alternatively, ByBit submits that a remedial constructive trust should be recognised in this case because there has been fraud or wrongdoing and Ms Ho’s conscience has been affected. Accordingly, ByBit submits that I should grant a retrospective order because Ms Ho traded the crypto assets and fiat assets in breach of the freezing order. For the fallback claim of unjust enrichment, ByBit relies on the unjust element of mistake of fact, namely that ByBit was misled into believing that the crypto payments should be paid to its employees at the four addresses. Accordingly, ByBit submits that it is entitled to damages for the value of the crypto assets.

Issues to be determined

28. There are two issues for determination in this case:

(a) Whether USDT can be held in trust as property;

and (b) whether ByBit is entitled to summary judgment.

Question 1: Is USDT a property that can be held in trust?

29. Despite their novelty, crypto assets are already not only being transferred for value, but also appear on companies’ balance sheets when held by them, as the accounting industry develops standards for how to value and report these assets. The Monetary Authority of Singapore (“MAS”) recently published a consultation paper on proposed amendments to the Payment Services Regulations that would implement segregation and custody requirements for digital payment tokens: MAS, “Public Consultation Response on Proposed Regulatory Measures for Digital Payment Token Services” published on 3 July 2023. These proposed amendments reflect the reality that it may be possible in practice to identify and segregate such digital assets, and therefore support the view that they should be legally held in trust.

30. Furthermore, the Rules of Court give general recognition to cryptocurrencies as property. In Rule 22 of the 2021 Rules of Court, which relates to the enforcement of judgments and orders, O 22 r 1( 1) defines “movable property” as including “cash, debts, deposits, bonds, shares or other securities, membership of clubs or societies, and cryptocurrency or other digital currency” [emphasis added]. Cryptocurrency is therefore clearly recognised as a form of property that can be the subject of an enforcement order. Although those who framed the 2021 Rules of Court did not specify a specific method for enforcing such an enforcement order (see Report of the Committee on Civil Justice (29 December 2017) (Chairman: Mr Justice Cheng Yongguang)), it is noted in passing that the procedure for serving a notice of attachment on a person or entity who owns or controls movable property (O 22 r 6( 4)( b)) or a person or entity who registers title to intangible movable property (O 22 r 6( 4)( g) of the 2021 Rules of Court) can logically be extended to cryptocurrency or other digital currency.

31. Cryptoassets are not classed as physical assets because we cannot hold them in the same way we hold cars or jewellery. They do not have a fixed physical identity. However, cryptoassets do manifest themselves in the physical world, albeit imperceptibly to humans. The combination of a private key and a public key unlocks the previously cryptographic lock and locks the unspent transaction outputs of the cryptoasset to the holder’s public address on the blockchain. Professor Kelvin Low argues that the rights that a private key holder has through holding the private key “are correctly conceptualised as the narrow right to have the unspent transaction outputs (UTXOs) of the cryptoasset locked to the holder’s public address on the blockchain”: see Kelvin FK Low, “Trusts of Cryptoassets” (2021) 34( 4) Trust Law International 191. This physical manifestation at the level of digital bits and bytes is not permanent and changes with every transaction. Nonetheless, we identify what is happening as a particular digital token, a bit like we give a river a name even though the water in the riverbed is constantly changing.

32. While some are skeptical about the value of crypto assets, it is worth remembering that value is not inherent in objects. Although we say that certain materials are expensive, such as gold is more valuable than wood, this is a judgment made by the collective human mind. It is also a judgment that changes with the environment. On a sinking ship, a wooden chair that can float is more valuable than a golden throne.

33. This description of cryptoassets suggests that modern humans can define and identify them, enabling them to be traded and valued as holdings. They certainly fit the oft-quoted dictum of Lord Wilberforce in National Provincial Bank v Ainsworth (1965, 1 AC 1175 at 1248):

Before a right or interest can be included within the category of property, or of rights affecting property, it must be definable, recognizable by third parties, of a nature assumeable by third parties, and possess a certain permanence or stability.

34. The question then becomes whether USDT can be classified as an action thing. The argument that crypto assets should not be classified as action things is based on the origins of the category as rights enforceable against persons by litigation (in a court of law), such as the right to payment of money or a debt, or contractual rights. There are no separate counterparty rights against crypto holders. But over time the category of action things has expanded to include intangible property rights, documents of title, and ultimately intangible rights such as copyright: see WS Holdsworth, A History of the Common Law Treatment of "Choses" (1920) 33(8) HLR 997. As Holdsworth points out in the introduction to his authoritative article at p998:

It is obvious that the diversity of the things which come under the head of activating things necessarily leads to a diversity of legal cases in the various classes of activating things. Their legal cases are, indeed, very different; and as they are different in themselves, they must necessarily be treated differently by the courts and legislatures. It is impossible to treat the law of activating things in general; and the various classes of activating things are usually treated, not under this general head, but under their more proper branches of law. For instance, if we want to know the law concerning bills and notes, shares, copyrights, or patents, we shall not look for it in a treatise on activating things, but in books on the law of commerce, of companies, or in treatises devoted to these particular things.

35. Holdsworth's historical survey demonstrates the diversity of intangible property that has been classified as action things. This diversity shows that the category of action things is broad, flexible, and not closed. It is these characteristics that explain and justify the oft-quoted dictum of Frye J. in Colonial Bank v. Whinney (1885, 30 Ch D 261 at 285): "All personal things are either held or acted upon. The law knows nothing of the third between the two."

36. I conclude, therefore, that holders of cryptoassets have, in principle, an intangible property right which the common law can identify as a thing in motion and which can therefore be enforced in the courts. While one might say that there is an element of circularity in this conclusion, since it could also be said that the right to enforce in the courts is what makes it a thing in motion, this line of reasoning is not significantly different from the way the law treats other social constructs, such as money. It is only because people generally accept the exchange value of shells or beads or differently printed paper money that they become money. The acceptance of money is due to a collective act of mutual trust. This is reflected in Lord Mansfield's famous observation in Miller v Race (1758, 1 Burr 452, 457), who noted that something that is "generally accepted by all mankind" as money is "endowed with the credit and currency of money to all intents and purposes".

37. ByBit also relies on USDT’s current Terms of Service, which set out the contractual right to redeem. Section 3 includes the following provisions regarding redemption rights:

Tether issues and redeems Tether tokens. Tether tokens can be used, held, or exchanged online, as long as someone is willing to accept Tether tokens. Tether tokens are 100% backed by Tether's reserves. Tether tokens are denominated in a range of fiat currencies. For example, if you purchase EURT, your Tether tokens will be pegged 1:1 to the Euro. If you issue 100.00 EUR of EURT, Tether will hold 100.00 EUR worth of reserves to back those Tether tokens. The composition of the reserves used to back Tether tokens is completely controlled by Tether and is entirely at Tether's discretion. Tether tokens are backed by Tether's reserves (including fiat currencies), but Tether tokens themselves are not legal tender. Tether will not issue Tether tokens for considerations composed of digital tokens (e.g., Bitcoin); currencies will only be accepted at the time of issuance. In order for Tether to directly issue or redeem Tether tokens, you must be a verified customer of Tether. There will be no exceptions to this rule. The right to redeem or issue Tether Tokens is a personal contractual right. Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay becomes necessary due to illiquidity, inaccessibility or loss of any reserves held by Tether to back Tether Tokens, and Tether reserves the right to redeem Tether Tokens by making a physical redemption for securities and other assets held in the reserves. Tether makes no representation or warranty as to whether Tether Tokens will be available for trading on the Website at any time in the future, or even whether Tether Tokens will be available for trading on the Website at all.

38. The Terms of Service are governed by BVI law. ByBit submitted a legal opinion from Sam Goodman, a BVI qualified lawyer, which held that under BVI law, USDT held by “certified customers” of Tether Limited could enforce their contractual right to redeem USDT by bringing an action against Tether Limited. ByBit relied on this to support its argument that USDT is an actionable good.

39. In my analysis, this feature of USDT may constitute another action thing that USDT holders may own, but its existence is not necessary for me to conclude that the rights represented by USDT are themselves action things.

Issue 2: Is ByBit entitled to a judgment?

40. ByBit submits that it has established a prima facie case and has passed the hurdle of proving a good arguable case in order to obtain a worldwide freezing order. In contrast, Ms Ho has failed to prove a real or bona fide defence which there was a fair or reasonable possibility of.

Jason does not exist

41. I accept as more likely the inference that ByBit seeks to draw from all of the evidence that Jason does not exist (or at least does not play the role that Ms. Ho claims he does). There is compelling evidence that Ms. Ho fraudulently transferred crypto and fiat assets to her name. As described above at [25], there is direct evidence that Ms. Ho owned a wallet associated with Address 1, as well as indirect evidence of her unexplained spending behavior. Using her employment relationship at WeChat, which was hired to handle ByBit's payroll account, and abusing the trust placed in her, Ms. Ho manipulated the cryptocurrency Excel file and stole crypto and fiat assets.

Presumed Trust

42. In the case of theft of assets, an institutional constructive trust arises and an equitable remedy is available for the stolen assets. As Lord Browne-Wilkinson observed in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] 1 AC 669 at 716:

I agree that stolen funds may be traced through equity. But in this case the proprietary interest enforced by the equity arises under a constructive trust rather than a consequential trust. Although it is difficult to find clear authority for this proposition, when property is obtained by fraudulent equity, a constructive trust arises in favour of the fraudulent recipient: the property is recoverable and traceable in equity. Thus, an infant who obtains property by fraud is obliged to return it: Stocks v. Wilson [1913] 2 KB 235, 244; R. Leslie Ltd. v. Sheill [1914] 3 KB 607. Funds stolen from a bank account may be traced in equity: Bankers Trust Co. v. Shapira [1980] 1 WLR 1274, 128 2C-E. See also McCormick v. Grogan (1869) LR 4 HL 82, 97.

43. I should also add that the constructive trust may come into effect even if Ms Ho commingles USDT with balances in other online custodial wallets, or commingles fiat assets with other money in her bank accounts: Foskett v McKeown [2001] 1 AC 102.

44. In light of my findings of fact, I declare a constructive trust for the crypto assets and the fiat assets. ByBit is the legal and beneficial owner of the crypto assets. Given my grant of relief based on the institutional constructive trust, I do not need to address the alternative basis of remedial constructive trust and unjust enrichment.

45. ByBit sought a number of property and personal orders pursuant to its investigation, which I now grant, as follows:

(a) Declaring a constructive trust for crypto assets and fiat assets;

(b) order Ms. Ho to pay immediately to ByBit US$647,880 (being the value of the crypto assets in Wallets 3 and 4);

(c) order Ms Ho to pay immediately to ByBit the amount of S$117,238.46 (being legal tender assets);

(d) order Ms. Ho to immediately transfer all remaining funds in Wallet 1 to ByBit until the total reaches US$3,561,840 (being the value of the crypto assets transferred to Wallets 1 and 2);

(e) With respect to the remaining crypto assets transferred to Wallets 1 and 2 after deducting the transfer amount in (d) above (i.e. USDT worth USD3,561,840) (hereinafter referred to as the “Remaining Amount”):

(i) an order against Ms Ho for the remainder of the amount, or any money or funds representing the value of the remainder of the amount already in their possession or received by them, or for the account of any person on their behalf or to their order;

(ii) a recourse order in respect of the Remaining Amount or any part thereof, for ByBit to recover and recover the Converted Assets or the proceeds thereof, if any;

and (iii) an order for the payment by Ms Ho to ByBit of all amounts determined to be due to ByBit upon liquidation of the Accounts.

46. ​​I also assess interest at the standard rate of 5.33% per annum from the date on which Ms Ho transferred the assets in question, payable at [ 45(b)] and [ 45(c)], until the date of judgment.

in conclusion

47. Upon granting summary judgment for ByBit against Ms. Ho, I also award ByBit $45, 000.00 in costs (which are included in view of the legal novelty of the issues at issue and the work done in seeking interim relief) and $11, 500.00 in disbursements.

Philip Jeyaretnam

High Court Judge

Quek Wen Jiang Gerard, Kyle Gabriel Peters, Ling Ying Ming Daniel, Mato Kotwani and Chua Ze Xuan (PDLegal LLC) represented the plaintiff;

The first to sixth defendants were absent and unrepresented.