The Hong Kong Court of First Instance in Yan Yu Ying v Leong Wing Hei [2021] HKCFI 3160 granted a temporary proprietary injunction to restrain 999 bitcoins (value close to US$50 million) being the subject matter of a dispute between the parties.
This case shows the consistent trend of Courts treating cryptocurrency such as Bitcoin as ‘property’ that can be subject to an injunction.
In this case, the Court granted what is known in Hong Kong as an “interim-interim injunction”. It is similar to what is known in Malaysia as an ad interim injunction. It is a temporary measure to balance the fairness before the full arguments are heard on whether to grant the full interim injunction. Interim-interim injunctions or reliefs are a very short-term stop-gap measure.
In Yan Yu Ying, there was a dispute between the parties. The Plaintiff claimed that the Defendant had misappropriated the 999 bitcoins. On the other hand, the Defendant claimed that the Plaintiff transferred them to him in exchange for another type of cryptocurrency known as The Public Coin.
The same dispute had been subject to a criminal charge but where the criminal court ruled in favour of the Defendant.
The Plaintiff now sought urgent proprietary relief to freeze the 999 bitcoins which the Plaintiff said it was the Plaintiff’s property. The Plaintiff also sought for a Mareva freezing injunction to freeze the Defendant’s assets up to the value of more than HK$328 million.
In balancing the fairness, the Court granted only the interim-interim proprietary injunction so that the subject matter of the dispute is preserved. The scope of the proprietary injunction and the disclosure obligations would only be the bitcoins still remaining in the possession, custody and control of the Defendant. The Mareva freezing injunction relief was not allowed on that interim-interim basis.