Cryptoasset Theft Without Conversion: Rethinking Litigation Strategy After Ping Fai Yuen v Fun Yung Li

The rapid growth of digital assets continues to highlight a fundamental tension in English law: while cryptoassets are now clearly recognised as property, the legal tools available to recover that property have not evolved at the same pace. The High Court’s recent decision in Ping Fai Yuen v Fun Yung Li & Anor [2026] EWHC 532 (KB) (Yuen v Li) brings this issue into sharp focus and provides important guidance for practitioners dealing with cryptoasset disputes.

In short, cryptoassets are “property”, but not “goods”, and that distinction has significant consequences for litigation strategy on which causes of action should be pleaded to recover crypto assets.

The Limits of Traditional Torts

The case concerned the alleged misappropriation of 2,323 Bitcoin, valued at approximately £160–180 million, which had been stored in a Trezor cold wallet. The claimant initially pursued claims in conversion and trespass, seeking to characterise the wrongful transfer of cryptoassets as a direct interference with goods. The attraction of these torts, particularly conversion, lies in their status as strict liability claims, allowing a claimant to seek a money judgment for the full value of the assets without needing to rely on complex tracing or equitable claims.

However, the High Court firmly rejected this approach. It confirmed that the tort of conversion is historically and conceptually limited to tangible property and does not extend to cryptoassets, which are inherently intangible. In doing so, the court reaffirmed that it remains bound by the House of Lords decision in OBG Ltd v Allan [2007] UKHL 21, and that the recognition of digital assets as a “third category” of property under the Property (Digital Assets etc) Act 2025 (Digital Assets Act) does not expand the scope of traditional tort remedies. The court was equally reluctant to accept the trespass claim, noting that trespass requires physical interference, a requirement that cannot be satisfied by the mere alteration of digital data.

A Structural Gap in the Law

This creates a notable structural gap in the law. Cryptoassets are now accepted as a distinct form of property, yet because they do not fall within the category of “things in possession”, they lack access to familiar tort-based protections. In other words, while the law recognises ownership, it does not provide access to the most straightforward enforcement mechanisms.

While the court acknowledged that the common law might, in time, develop a new “conversion-like” tort to address interference with this third category of property, Mr Justice Cotter declined to take that step, indicating that such development is more appropriately left to appellate courts or Parliament.

The Shift to Proprietary and Equitable Remedies

In practical terms, Yuen v Li confirms that claimants must instead rely on proprietary and equitable remedies when seeking to recover stolen cryptoassets. In this case, the claimant ultimately applied to amend his pleadings to include causes of action such as unjust enrichment, breach of confidence, and proprietary restitution or constructive trust.

This reflects a broader trend in digital asset litigation, where proprietary claims supported by early-stage proprietary injunctions and disclosure orders (often referred to as “Sweeting Orders”) have become the primary mechanism for recovery. These remedies allow claimants to trace assets, assert continuing ownership, and obtain urgent relief to prevent dissipation, tools that are far better suited to the nature of cryptoassets than traditional tort claims.

Lessons for Practitioners

One of the most important practical lessons from the case is the necessity of getting the pleadings right from the outset. The claimant’s initial reliance on conversion and trespass led to a strike-out application and the need for subsequent amendments. The decision underscores that, in complex cryptoasset litigation, claims must be structured carefully to avoid outdated analogies with physical goods and instead focus on proprietary and restitutionary principles.

The case also sits within a broader and evolving legal context. In Tulip Trading Ltd v Bitcoin Association for BSV & Ors [2023] EWCA Civ 83 (Tulip Trading), the Court of Appeal held that it is at least arguable that blockchain developers may owe fiduciary duties to cryptoasset owners, potentially including a duty to take steps to safeguard assets. While Yuen v Li limits the availability of traditional tort claims, Tulip Trading illustrates the courts’ willingness to explore new legal relationships to ensure that digital asset owners are not left without recourse.

The Gibraltar Context

For Gibraltar-based practitioners, the implications are particularly significant. As a jurisdiction with a well-established DLT regulatory framework, Gibraltar is likely to see an increasing number of disputes involving digital assets, including cases of misappropriation, custody failures, and cross-border recovery.

Given the close alignment between Gibraltar and English common law, Yuen v Li is likely to be highly persuasive in local proceedings. The decision provides clear guidance on how such disputes should be approached, emphasising the importance of proprietary claims, early interim relief, and carefully structured pleadings.

Conclusion

Yuen v Li provides a clear and authoritative statement of the current position: while cryptoassets are recognised as “property”, they are not “goods”, and traditional tort claims such as conversion are not available.

As a result, litigation strategies must prioritise equitable tracing and proprietary restitution, which remain the most effective tools for recovering stolen digital assets in this evolving legal landscape.

At Ramparts, we regularly advise on complex, cross-border disputes involving digital assets and emerging technologies. As this area of law continues to develop, a clear understanding of the appropriate causes of action and available remedies is critical to achieving effective recovery and protecting client interests.