Bybit Payroll Manager Steals Large Amounts of USDT, Singapore Court Elaborates on Cryptocurrency Property Attributes

Bybit Payroll Manager Steals USDT, Singapore Court Discusses Cryptocurrency Property Attributes

The cryptocurrency exchange Bybit has sued Ms. Ho, who is responsible for paying salaries within the company, for abusing her authority and transferring a large amount of USDT to an address that she secretly owns and controls. The Singapore High Court upheld the ruling on July 25th, stating that cryptocurrencies are universally recognized as property, and the holders of crypto assets have intangible property rights recognized under common law. Therefore, they can be enforced in court as assets in litigation. The court ruled that Ms. Ho must immediately pay Bybit all the transferred funds and interest.

Below is the full translation of the judgment (original link).

Introduction

1. This case involves a type of cryptocurrency called Tether, which is an example of a stablecoin. This means that its issuer claims to support each issued stablecoin with the equivalent value of fiat currency or other reserves. The issuer usually provides terms of service, under which verified holders of stablecoins have the right to exchange them for fiat currency with the issuer. This link to fiat currency (in this case, the US dollar) is reflected in the common name of Tether, namely USDT, which stands for US dollar Tether. In this judgment, I will use this abbreviation.

2. In this application, ByBit Fintech Limited (“ByBit”) seeks a judgment against the first defendant, named Ho Kai Xin (“Ms. Ho”). She is accused of violating her employment contract, abusing her position, transferring some USDT to an “address” secretly owned and controlled by her, as well as transferring some fiat currency to her own bank account. The main relief sought is the declaration of Ms. Ho as the custodian of USDT and fiat currency for ByBit. Therefore, ByBit requests the return of the same or traceable profits or payment of an equivalent amount.

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3. Courts in Singapore and elsewhere have already recognized, in granting interim injunctions, that there is at least a serious issue to be tried or a good arguable case that cryptocurrency can be property held on trust. In doing so, it is not yet necessary to determine whether these cryptocurrencies are things in action or a new type of intangible property. In order to grant the judgment and ultimately declare a trust, this court must further determine whether the cryptocurrency in question in this case, namely USDT, is indeed property that can be held on trust and, if so, what type of property it is.

4. In this case, I find that USDT, even without the assistance of the legal system, can be transferred from one holder to another through cryptography, but it is still a thing in action. In this judgment, I mostly use the phrase “thing in action,” which has the same meaning as “thing in action.” Although USDT also carries the right to exchange it for an equivalent amount of US dollars from Tether Limited, a company based in the British Virgin Islands (BVI), which makes it more like a traditionally recognized thing in action, I consider this characteristic not to be a necessary condition for classifying a cryptocurrency as a thing in action. Like any other thing in action, USDT can be held on trust.

5. I further find that ByBi has established its case for the relief sought and therefore I grant the declaration sought on the basis of constructive trust.

6. I now explain the reasons for my conclusions.

Background

7. The Seychelles company ByBit owns a cryptocurrency exchange named after itself. ByBit pays its employees’ salaries in traditional currency, cryptocurrency, or a combination of both. WeChain Fintech Pte Ltd (“WeChain”), a Singaporean company, provides payroll services to ByBit and related entities. Ms. Ho is an employee of WeChain and is responsible for handling the salary calculations of ByBit employees.

8. As part of her duties, Ms. Ho maintains a Microsoft Excel spreadsheet that records the cash and cryptocurrency payments (referred to as “fiat Excel file” and “cryptocurrency Excel file,” respectively) to be paid to ByBit employees each month. The cryptocurrency Excel file lists the “addresses” used by ByBit employees to receive cryptocurrency payments. An “address” can be understood as an encrypted digital “folder” that can “receive” and “store” cryptocurrency. Each address is a unique alphanumeric string. The corresponding “private key” is required to access and authorize transfers between addresses. These private keys are stored in “wallets,” which can be understood as the means of interacting with cryptocurrencies. Wallets hosted online by service providers (typically cryptocurrency exchanges) are known as “custodial wallets.” Custodial wallets usually exist in the form of user interface applications. Offline wallets are known as “self-custodial wallets” and can be as simple as a piece of paper with the private key written on it or as complex as encrypted software that restricts access to the private key. In short, accessing a wallet means obtaining the stored private key, thereby gaining control over the address and the cryptocurrency stored within it. ByBit employees can and indeed often change their designated address by communicating the new address to Ms. Ho, who then updates the cryptocurrency Excel file. Only Ms. Ho has the ability to update the cryptocurrency Excel file, and she is the only person who can access these files, except for the requirement to submit the cryptocurrency Excel file to her immediate superior, Casandra Teo, for approval every month.

9. On September 7, 2022, ByBit discovered eight unusual cryptocurrency payments (“anomalous transactions”) that occurred between May 31, 2022, and August 31, 2022, involving a significant amount of USDT transferred to four addresses (referred to as addresses 1, 2, 3, and 4). A total of 4,209,720 USDT (“cryptocurrency assets”) were transferred. USDT is named as such because its value is pegged to the US dollar, and each USDT grants its holder (known as a “verified customer” of the issuer Tether Limited) contractual rights to exchange their USDT for US dollars. These anomalous transactions were recorded in a spreadsheet (“reconciliation Excel file”), and Ms. Ho was assigned the task of explaining these discrepancies. Initially, Ms. Ho attributed the anomalous transactions to inadvertent errors or technical mistakes and proposed calculations for the amount to be recovered from ByBit employees.

10. From September 9th to 22nd, 2022, Ms. Ho still failed to provide any explanation about the abnormal transactions. When asked why payments to different employees were sent to the same address, namely address 1, Ms. Ho suggested that it might have been a mistake on her part. Ms. Ho continued to provide status updates in the reconciliation Excel file, describing the abnormal transactions as “overpayments” to ByBit employees.

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

12. ByBit also discovered that in May 2022, Ms. Ho caused 117,238.46 US dollars (“fiat assets”) to be paid into her personal bank account. It is undisputed that Ms. Ho has no right to the fiat assets, and she explicitly acknowledged that she held the fiat assets in trust for ByBit. However, to date, Ms. Ho has taken no steps to return the fiat assets.

13. On September 29th and October 4th, 2022, ByBit conducted face-to-face meetings with Ms. Ho. In the first meeting, Ms. Ho claimed she could not recall the details of the abnormal transactions. In the second meeting, Ms. Ho was confronted with the results of ByBit’s investigation. Ms. Ho told ByBit that she did not own the wallets associated with the four addresses, which belonged to her cousin. She claimed she could not access them. Ms. Ho said it was her cousin’s idea for her to help him transfer cryptocurrencies, and she had surveillance footage recording him engaging in abnormal transactions at her house. Ms. Ho admitted that she had been involved in this plan before the meeting three months ago and told ByBit that she wanted to report to the police because she did not own any cryptocurrency assets. After the meeting, Ms. Ho refused to sign the single-page statement documenting the events. However, it is undisputed that Ms. Ho made these statements to ByBit. Subsequently, Ms. Ho lost contact with ByBit and WeChain and did not attend any further meetings.

14. ByBit initiated this lawsuit on October 12th, 2022. ByBit successfully obtained several interim remedies, including a worldwide freezing injunction against Ms. Ho and ownership injunctions over the cryptocurrencies (i.e., crypto assets) in the four addresses and the fiat assets in Ms. Ho’s bank account. On October 18th, 2022, Ms. Ho personally accepted the originating claim and orders. On October 31st, 2022, Ms. Ho disclosed in an affidavit that the wallets associated with the four addresses belonged to her cousin, Jason Teo (“Jason”). Ms. Ho claimed she could not access any of the wallets and had deleted text message conversations with Jason before accepting the service of the orders, and she had not turned off the surveillance footage as recordings older than seven days would be automatically deleted. Ms. Ho submitted her defense on November 11th, 2022, and served third-party notice on Jason.

15. Ms. Ho fully acknowledges that the encrypted assets belong to ByBit and she has no right to own them. Ms. Ho’s main defense is that Jason stole ByBit’s encrypted assets without her knowledge. She did not benefit from it because the wallets associated with the four addresses were solely owned and controlled by Jason. Her case is that starting from May 2022, she had asked Jason for assistance in checking the cryptocurrency Excel file “many times” when he visited her home. Afterwards, without her knowledge or consent, Jason accessed her work laptop, which Ms. Ho only discovered through viewing the home’s closed-circuit surveillance footage after being alerted by ByBit about abnormal transactions. She then questioned Jason, who admitted to intentionally replacing several addresses designated by ByBit with the four addresses. Despite her repeated requests, Jason refused to return the encrypted assets. Ms. Ho’s position is that as of September 9, 2022, she still did not know the reason for the abnormal transactions, which occurred more than seven days after the last abnormal transaction on August 31, 2022. She did not explain how she was able to view the alleged footage.

16. Dissatisfied with Ms. Ho’s disclosures, ByBit sought and obtained an order on December 7, 2022, for broader disclosures involving Ms. Ho and some third parties, including her father and husband. This is because ByBit discovered that Ms. Ho had engaged in some large-scale purchases since July 2022, including a top-floor apartment with permanent ownership purchased together with her husband, a brand-new car, and several Louis Vuitton products. It is worth noting that despite initially denying ownership of any real property, Ms. Ho later explained that she purchased the top-floor apartment with permanent ownership using money earned from cryptocurrency transactions with MetaMask and crypto.com. This contradicts her previous claim that her MetaMask account was completely unused. Ms. Ho did not provide her MetaMask and crypto.com addresses, nor did she provide account transaction statements. According to Ms. Ho, she lost access to her crypto.com account as it was registered to her personal email, which has been disabled for unknown reasons. Similarly, she cannot access her MetaMask account because she purchased a new phone in October 2022 and cannot retrieve the necessary password from her previous device. I also note that contrary to the disclosure order, Ms. Ho initially failed to disclose all her assets, such as her bank accounts, which required further inquiries from ByBit.

17. At the same time, Ms. Ho applied for and obtained a license for substitute service for Jason. Interestingly, in her supporting affidavit, Ms. Ho stated that it was Jason who deleted their text message history after she informed him that she had been served with the lawsuit. Jason did not appear in this lawsuit.

18. On March 30, 2023, ByBit filed this application for summary judgment. Ms. Ho did not submit a sworn statement in response to Rule 17(3) of the 2021 Court Rules. On April 18, 2023, prior to the hearing, Ms. Ho took over her own defense. Ms. Ho did not attend any of my previous hearings or submit a statement.

19. For completeness, ByBit also applied to amend their claim and submit further statements, which I specified must be submitted by May 19, 2023. ByBit originally argued that Ms. Ho held crypto and fiat assets in remedial constructive trust. Therefore, ByBit seeks to amend to put forward an alternative argument based on institutional constructive trust. I allowed Ms. Ho to provide her views on the amendment and extended the deadline for her to submit her views on summary judgment by May 26, 2023. As before, Ms. Ho did not submit any views or oppose the amendment application.

20. ByBit submitted that the amendment is merely clarifying and does not introduce any new facts. The statement of claim has already made it clear that Ms. Ho caused the abnormal trades, and Ms. Ho’s defense will not be affected by the amendment. On the contrary, the amendment allows the true issues in dispute to be determined and prevents Ms. Ho from suffering any damages that cannot be compensated for by costs.

21. I agree that the proposed amendment is clarifying and adds alternative legal conclusions based on the stated facts, allowing the true issues in dispute to be fully and finally determined. Therefore, on June 30, 2023, I allowed the amendment and commenced the application for summary judgment based on ByBit’s amended statement of claim, which was filed on July 5, 2023.

Parties’ Cases

Ms. Ho’s Case

22. As mentioned earlier, Ms. Ho’s main contention is that the full responsibility should be borne by Jason (see paragraph [15] above). From the sworn statement, it appears that Ms. Ho claims she has no way of identifying Jason or knowing his personal information or address. Furthermore, Ms. Ho believes that Jason accessed her work and personal emails, sent and then deleted emails stating four addresses (see paragraph [11] above). Ms. Ho denies deleting these emails without authorization. In addition, Ms. Ho claims that she implied in an interview on October 4, 2022, that she lied to ByBit (see above [13]). According to Ms. Ho, ByBit strongly warned her that her actions were criminal and consistently insisted that she was responsible for the abnormal trades. Ms. Ho responded in this way to protect Jason, with whom she has a close relationship, and because she needed to take care of her sick two-year-old son. Due to her son’s illness, she refused to sign a single-page confirmation form after the interview because she did not have time to review its contents and also refused to attend subsequent interview meetings.

23. Regarding the statutory assets, Ms. Ho stated that while preparing the statutory Excel document, she accidentally input her data into another employee’s data, resulting in incorrect payment.

ByBit Case

24. ByBit argues that, under Rule 17(1)(a) of the 2021 Court Rules, it is entitled to summary judgment as it has established a prima facie case and Ms. Ho has not defended the claim. ByBit’s submission focuses on the cryptographic assets, as Ms. Ho accepted that she held ByBit’s statutory assets in trust.

25. Firstly, ByBit argues that “Jason” is entirely fictional. Ms. Ho has no evidence to support the existence of Jason, and her description of the events is inherently incredible. Concurrent with the suspicious transactions, Ms. Ho also indulged in a questionable spending spree. She spent approximately $362,000 on a new car, $30,000 on Louis Vuitton products, and abruptly cancelled her existing pre-sale HDB apartment to purchase a penthouse worth about $3.7 million. Additionally, 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 her ID card and selfie, which she provided during the account registration process. The public transaction records also match the abnormal transactions flowing into Address 1, with certain transfer dates suggesting that the USDT transferred to Addresses 2 and 3 were quickly moved to Address 1. This demonstrates 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 argues that cryptographic assets consist of options and can therefore be held as trust property. This is because USDT grants certified customers of Tether Limited the right to exchange USDT for an equivalent value of fiat currency. ByBit contends that Address 3 is associated with a self-custodial wallet, meaning Ms. Ho can directly access the relevant private key and therefore exercise control over Address 3 and the USDT within it, which can be held as an option in trust. As for Addresses 1, 2, and 4, they are associated with custody wallets. In the case of custody wallets, the access rights to the private key are held by the service provider, not the user of the custody wallet. On the contrary, users of custody wallets have contractual rights to instruct the service provider to transfer cryptocurrencies between addresses. ByBit likens this to a bank account where the declared cryptocurrency balance in the custody wallet (equivalent to an account balance) is an option against the service provider (equivalent to a bank). Therefore, the relevant property is also an option, namely the right to instruct the service provider regarding the USDT credit balance.

27. Thirdly, ByBit argues that Ms. Ho holds cryptographic assets and statutory assets in a constructive trust or, alternatively, has been unjustly enriched in the sum of the cryptographic assets and statutory assets. ByBit submits that Ms. Ho obtained the cryptographic assets through fraudulent means by manipulating the cryptographic currency Excel file, resulting in ByBit mistakenly paying the cryptographic assets to four addresses under Ms. Ho’s control, thereby creating an institutional constructive trust. Alternatively, ByBit submits that a remedial constructive trust should be recognized in this case as there has been fraud or wrongdoing and Ms. Ho’s conscience has been affected. Therefore, ByBit submits that I should grant a tracing order as Ms. Ho traded the cryptographic assets and statutory assets in breach of the freezing order. For the alternative claim of unjust enrichment, ByBit relies on the factor of factual mistake and unfairness, namely that ByBit was misled into believing that the cryptographic payment should be made to its employee at the four addresses. Thus, ByBit submits that it is entitled to compensation for the value of the cryptographic assets.

Pending Issues

28. There are two pending issues in this case:

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

(b) Whether ByBit has the right to obtain summary judgment.

Issue 1: USDT can be held as trust property

29. Although cryptocurrencies are novel, they have not only been transferred in value, but also appear on the balance sheets of companies when held by them, as the accounting industry is developing standards for valuing and reporting these assets. The Monetary Authority of Singapore (“MAS”) recently published a consultation paper proposing amendments to the Payment Services Act, which would implement segregation and custody requirements for digital payment tokens: MAS, “Response to Consultation on Proposed Regulatory Measures for Digital Payment Token Services” published on July 3, 2023. These proposed amendments reflect the reality of identifying and segregating such digital assets in practice, thus supporting the view that they should be legally held as trusts.

30. In addition, cryptocurrencies are widely recognized as property under the court rules. In Rule 22 of the 2021 Court Rules, which relates to the enforcement of judgments and orders, O 22 r 1(1) defines “chattels” to include “money, debts, deposits, bonds, shares or other securities, membership of clubs or societies, and cryptocurrencies or other digital currencies” [emphasis added]. Therefore, cryptocurrencies are explicitly recognized as a form of property that can be the subject of an enforcement order. Although the framers of the 2021 Court Rules did not specify the specific methods for enforcing such orders (see Civil Justice Commission Report (29 December 2017) (Chairman: Judge Cheng Wing-Kwan)), it is worth noting in passing that the procedures for serving a notice of seizure on an individual or entity that owns or controls chattels (O 22 r 6(4)(b)) or registering ownership of intangible chattels (2021 Court Rules O 22 r 6(4)(g)) could logically extend to cryptocurrencies or other digital currencies.

31. Cryptocurrencies are not classified as tangible assets because we cannot hold them like cars or jewelry. They do not have a fixed physical identity. However, cryptocurrencies do manifest in the physical world, albeit imperceptible to humans. The combination of private and public keys unlocks the previous cryptographic lock and locks the unspent transaction outputs of the cryptocurrency to the holder’s public address on the blockchain. Professor Kelvin Low argues that the right of the private key holder is “properly conceptualized as the narrow right to the unspent transaction outputs (UTXOs) of the cryptocurrency being 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 digital bit and byte level is not permanent and changes with each transaction. Nevertheless, we identify the specific digital tokens that are being transacted, similar to how we name rivers even though the water in the river is constantly changing.

32. Although some people hold a skeptical attitude towards the value of cryptocurrencies, it is worth remembering that value is not inherent in objects. Although we say that certain materials are expensive, such as gold being more valuable than wood, this is a judgment made by collective human thinking. It is also a judgment that changes with the environment. On a sinking ship, a floating wooden chair is more valuable than a golden throne.

33. This description of cryptocurrencies suggests that modern humans can define and identify them, enabling them to be traded and evaluated as holdings. They undoubtedly meet the maxim frequently cited by Lord Wilberforce in the case of National Provincial Bank v Ainsworth (1965, 1 AC 1175, p. 1248):

“Before a right or interest can be admitted into the category of property, or of rights affecting property, it must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability.”

34. The next question is whether USDT can be classified as an actionable thing. The argument that cryptocurrencies should not be classified as actionable things is based on the origin of this category being rights enforceable against individuals through litigation, such as the right to obtain payment of money or debts, or contractual rights. There is no separate counterparty right against cryptocurrency holders. However, over time, the category of actionable things has expanded to include documents of title to incorporeal property and ultimately incorporeal rights, such as copyright: see W.S. Holdsworth, “The Handling of ‘Choses’ in the Common Law” (1920), 33(8) Harvard Law Review 997. As Holdsworth points out in the introduction to his authoritative article on page 998:

“Obviously, the diversity of things included in the category of actionable things must lead to a corresponding diversity of legal incidents of the various classes of actionable things. Indeed, their legal incidents are very different; because they are different in themselves, they must necessarily be dealt with differently by the courts and the legislature. It is impossible to treat the law of actionable things as a whole; the various classes of actionable things are usually dealt with not under this general head, but under the more appropriate branches of the law to which they respectively belong. If, for instance, we wish to learn the law concerning bills and notes, shares, copyright or patents, we do not look for it in the discussion of actionable things, but in books on commercial law, company law, or special treatises dealing with these particular subjects.”

35. Holdsworth’s historical survey shows the diversity of incorporeal property classified as actionable things. This diversity demonstrates that the category of actionable things is broad, flexible, and not closed. It is these characteristics that explain and prove the maxim frequently cited by Justice Fry in the case of Colonial Bank v Whinney (1885, 30 Ch D 261, p. 285): “All personal things are either in possession or in action. The law knows no tertium quid between them.”

36. Therefore, my conclusion is that, in principle, holders of encrypted assets have an intangible property right recognized under common law, which can be enforced in court. Although someone may argue that this conclusion has elements of circular reasoning, as it can also be said that the right to enforce in court is what makes it an intangible property right, this mode of reasoning is not significantly different from how the law treats other social structures, such as currency. Only because seashells or beads or differently printed paper money are universally accepted as having exchange value do they become currency. The acceptance of currency is due to collective acts of mutual trust. This is reflected in the famous observation by Lord Mansfield in Miller v. Race (1758) 1 Burr 452, 457, where he pointed out that something “universally accepted by mankind” as currency is endowed with “the credit and circulation of money” for “all intents and purposes”.

37. ByBit also relies on the current terms of service of USDT, which provide for the right of redemption. Article 3 includes the following provisions regarding the right of redemption:

Tether issues and redeems Tether tokens. Tether tokens can be used, held or exchanged online as long as someone is willing to accept them. Tether tokens are fully backed by Tether’s reserves. Tether tokens are priced against 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 EURT worth 100.00 Euros, Tether will hold reserves worth 100.00 Euros to back those Tether tokens. The composition of the reserves used to support Tether tokens is entirely controlled and determined by Tether. Tether tokens are backed by Tether’s reserves, including fiat currency, but Tether tokens themselves are not fiat currency. Tether does not issue Tether tokens against considerations made up of digital tokens (such as Bitcoin); only fiat currency is accepted at issuance. To be able to issue or redeem Tether tokens directly, you must be a verified customer of Tether. This provision is not subject to any exceptions. The right to redeem or issue Tether tokens is your individual contractual right. If, due to the illiquidity, unavailability, or loss of any reserves held by Tether to support Tether tokens, it becomes necessary to delay the redemption or withdrawal of Tether tokens, Tether reserves the right to delay the redemption or withdrawal of Tether tokens and reserves the right to redeem Tether tokens by physically exchanging the securities and other assets held in its reserves. Tether makes no representation or warranty as to whether or when Tether tokens may be traded on the website, or even whether Tether tokens may be traded on the website at any time in the future.

38. The terms of service are governed by BVI law. ByBit has submitted a legal opinion from BVI qualified lawyer Sam Goodman, which concludes that, under BVI law, the right to redeem USDT held by “verified customers” of Tether Limited can be enforced by suing Tether Limited. ByBit relies on this to support its argument that USDT is an intangible property right.

39. In my analysis, this feature of USDT may constitute another actionable thing that USDT holders may have, but its existence is not necessary for the conclusion that the rights represented by USDT are actionable things.

Question 2: ByBit has the right to a judgment

40. ByBit argues that it has established a prima facie case that has overcome the hurdle of proving a good arguable case in order to obtain a worldwide freezing order. On the other hand, Ms. Ho cannot prove a genuine or sincere defense with a fair or reasonable possibility.

Jason does not exist

41. The inference that ByBit is trying to draw from all the evidence, namely that Jason does not exist (or at least did not play the role that Ms. Ho claimed), is the most probable one that I accept. There is indeed persuasive evidence that Ms. Ho fraudulently transferred the cryptocurrency and fiat assets to her own name. As stated in [25] above, there is direct evidence that Ms. Ho owns the wallet associated with address 1, as well as indirect evidence of her unexplained lavish spending. Using her employment relationship at WeChain, the company hired to handle ByBit’s payroll accounts, Ms. Ho abused the trust placed in her, manipulated the cryptocurrency Excel file, and stole the cryptocurrency and fiat assets.

Inferred trust

42. A constructive trust arises when assets are stolen, and a remedy of equitable tracing can be used for the stolen assets. As Lord Browne-Wilkinson stated in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] 1 AC 669 at 716:

I agree that stolen funds can be traced through equity. But in this case, the proprietary interest enforced by the tracing is a constructive trust, not a resulting trust. Although it is difficult to find a clear authority for this proposition, when property is obtained by fraud, there is an inferred trust in favor of the recipient of the fraud: the property is recoverable and can be traced in equity. Therefore, the infant who obtains property by fraud has an obligation 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 can 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 even if Ms. Ho mixes USDT with USDT balances in other online custodial wallets, or mixes fiat assets with other money in her bank account, a constructive trust may still be enforced: Foskett v McKeown [2001] 1 AC 102.

44. Based on my findings of fact, I declare a constructive trust over the cryptocurrency and fiat assets. ByBit is the legal and beneficial owner of the cryptocurrency assets. Given the relief granted based on the constructive trust, I do not need to address the alternative bases of remedial constructive trust and unjust enrichment.

45. ByBit sought a series of orders in relation to its proprietary and personal claims and I now grant the following orders:

(a) Declaring constructive trusts over the crypto assets and fiat assets;

(b) Ordering Ms. Ho to immediately pay ByBit USD 647,880 (being the value of the crypto assets in wallets 3 and 4);

(c) Ordering Ms. Ho to immediately pay ByBit SGD 117,238.46 (being the value of the fiat assets);

(d) Ordering Ms. Ho to immediately transfer all remaining funds in wallet 1 to ByBit, up to a total of USD 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) (referred to as the “remaining amount” with a value of USD 3,561,840 USDT):

(i) Ordering Ms. Ho to account for the remaining amount, or any money or funds she already owns or receives representing the value of the remaining amount, or any account of a person who receives them or on their behalf;

(ii) Ordering for a tracing order in relation to the remaining amount or any part thereof for ByBit to trace and recover the converted assets or their proceeds (if any);

(iii) Ordering Ms. Ho to pay all amounts determined to be owed to ByBit after the liquidation of the accounts.

46. I also award interest on the amounts paid in [45(b)] and [45(c)] at a standard annual interest rate of 5.33% from the date of transfer of the disputed assets by Ms. Ho to the date of judgment.

Conclusion

47. Following the summary judgment in favor of ByBit against Ms. Ho, I also award ByBit costs in the sum of USD 45,000.00 (taking into account the novel legal issues raised and work done in seeking interim relief, with costs to be taxed) and disbursements in the sum of USD 11,500.00.

Philip Jeyaretnam

High Court Judge

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

The first to sixth defendants were absent and not represented.

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