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1d ago

Crypto-fraud, injunctions against persons unknown and the cost of Exchange non-cooperation Facts Freezing injunction Disclosure Costs Conclusions

In the recent English High Court decision in Wilden v Person Unknown, DHCJ Guy Vassall-Adams KC continued a proprietary and worldwide freezing order against an unknown cryptocurrency fraudster, reaffirming that crypto assets are property to which rights can attach and that exchanges which refuse to cooperate with fraud victims risk adverse costs orders. The Court also granted a Bankers' Trust disclosure order against the cryptocurrency exchange, HTX, on which the assets were held. While Harneys does not advise on the law of England and Wales, this judgment may be considered in other common law jurisdictions such as the BVI, Cayman Islands, Bermuda and Cyprus, where freezing injunctions and disclosure orders in crypto-fraud cases are increasingly common. Mr Wilden, a German businessman, was the victim of a targeted cryptocurrency fraud. A person unknown, using the alias "Brian Smith", contacted Mr Wilden about Bitcoin he considered lost following the closure of the EuropeFX platform. Smith claimed to be a UK-based investment adviser working for a company called LedgerLock, which he said was working with EuropeFX to recover lost Bitcoin and transfer it to new wallets. The person unknown demonstrated detailed knowledge of Mr Wilden's EuropeFX transactions, including specific dates of purchase, account balances, trades, credits and withdrawals. Mr Wilden's forensic investigators subsequently concluded that this information may have been obtained from publicly available blockchain data or purchased databases. Believing the person unknown to be legitimate, Mr Wilden was persuaded to make a series of Bitcoin payments said to be necessary to satisfy technical and regulatory requirements. Between December 2025 and January 2026, Mr Wilden paid approximately EUR 2.5 million, converted into 32.46 BTC. Person unknown transferred a small amount back before locking Mr Wilden out of the LedgerLock platform and ceasing all contact. Forensic investigators traced the funds to the HTX exchange (owned by Huobi Global SA, a company incorporated in Panama). The judge noted that HTX was on the FCA Warning List for operating in the UK without proper authorisation and is the subject of FCA enforcement proceedings for communicating financial promotions contrary to s21 of the Financial Services and Markets Act 2000. The judge held that HTX responded to Mr Wilden's lawyers in a dismissive and formulaic manner, recommending Mr Wilden contact the police. The judge characterised HTX as "unwilling properly to engage with a legitimate request for the return of stolen cryptocurrency and is thereby providing a safe haven for the proceeds of crime". The applicant for a freezing injunction must persuade the Court that: the claimant has a good arguable case on the merits against the defendant; there is a real risk that a judgment or award will go unsatisfied by reason of the unjustified disposal by the defendant of his assets; and it is just and appropriate for the Court to grant the injunction. The Court did not separately assess the requirements for a proprietary injunction although as is well known such injunctions are governed on a justice and convenience test usually applying the American Cyanamid guidelines and do not require risk of dissipation to be proved. England and Wales, like the BVI, treats crypto assets as property to which rights can attach. The judge was satisfied on the basis of Mr Wilden's expert report that the identity of the crypto assets had been preserved. Importantly, following the principle established in D'Aloia v Persons Unknown, it was held that not only the remedy of tracing but also the remedy of following is available where the identity of the crypto asset is preserved despite mixing – a significant point for practitioners. It was held to be self-evident that there was a risk of dissipation, as Mr Wilden's expert evidence showed that person unknown had already attempted to dissipate the funds through "pooling transactions" in whic...
6d ago

At your own risk: the Grand Court reaffirms the costs consequences of winding-up petitions on disputed debts Point 1: Costs follow the event Point 2: Foreign lawyers' fees, a point of general application Point 3: Interest on costs Comment

The recent judgment in China Export & Credit Insurance Corporation v Hyalroute Communication Group Limited (No.3) sets out the costs consequences of a dismissed winding-up petition based on a bona fide dispute. It also clarifies the scope of GCR O62, r18, which governs recovery of foreign lawyers' fees, a point Justice Asif described as "of general application within the Cayman Islands". China Export & Credit Insurance Corporation (the Petitioner) petitioned to wind up Hyalroute Communication Group Limited (the Respondent) to recover approximately US$26 million. The Petitioner claimed to be subrogated to guarantees given by the Respondent over its subsidiary's PRC-law loan facilities with China Development Bank. It had indemnified the bank under its insurance policies prior to bringing that claim. The Respondent successfully resisted the petition on the ground that the debt was bona fide disputed on substantial grounds, and the petition was dismissed in May 2026. The costs decision addressed three issues: 1. whether costs should follow the event or whether exceptional circumstances justified no order; 2. the proper treatment of fees incurred by PRC lawyers who had not been temporarily admitted in the Cayman Islands; and 3. whether the Respondent was entitled to interest on its costs. The Respondent's position was that costs should follow the event under GCR O62, r4, relying on the English case of Re Fernforest and the Cayman Islands Court of Appeal's decision in Aramid Entertainment Fund Ltd v KBC Investments Ltd. The Respondent argued that a contrary result would undermine the deterrent effect of the costs regime and encourage unmeritorious petitions. The Petitioner argued this was an exceptional case warranting no order for costs, relying on the English case of In Re Sykes & Sons Ltd. In doing so, it maintained that it had acted reasonably throughout and argued that the principle derived from Re Fernforest Ltd presupposes that the Respondent's dispute had been articulated to the Petitioner, but that Petitioner elected to pursue the petition in any event. Justice Asif rejected the Petitioner's submissions and ordered costs to follow the event. In considering Re Fernforest, Justice Asif held that the Petitioner's reading was "directly contradicted" by the passages he had set out from that case and the Court of Appeal's explanation of them in Re Aramid. The company in Re Fernforest had not detailed its defence until after the petition was presented, yet Mr Justice Warner still ordered costs against the petitioner, stating that it is "no part of the duty" of a respondent to formulate its defence in advance". On reasonableness, Justice Asif held that whether the Petitioner had behaved reasonably in filing and pursuing the petition was "irrelevant to the question of costs". This followed the principle established by Mr Justice Warner in Re Fernforest – and confirmed by the Court of Appeal's confirmation in Re Aramid – that, save in an exceptional case, a petitioner in a known disputed-debt case presents his petition "at his own risk". The Court also held that the facts did not come "anywhere close" to the circumstances in Re Sykes, where the debtor company had produced documents of questionable authenticity and made untruthful statements about its liability. The conclusion from these findings is that a winding-up petition is not a debt-collection shortcut and treating it as one carries real costs risks. Neither the Petitioner's reasonableness nor the Respondent's failure to formulate its defence before the petition was filed will displace the ordinary costs rule. GCR O62, r18(1) allows work done by foreign lawyers to be recovered on taxation on the standard basis, but only if the foreign lawyer has been temporarily admitted in the Cayman Islands. The Court of Appeal recently confirmed in Al Jomaih Power Limited v IGCF SPV 21 Limited that there is no power to grant a dispensation from r18, closing off the route taken at first in...
Sep 2

Foreign judgment enforcement in the BVI: what you need to know in 2026 Two routes to enforcement A. Statutory registration under the Reciprocal Enforcement of Judgments Act B. Common law enforcement for non-scheduled jurisdictions Defences to enforcemen

The British Virgin Islands (BVI) offers two principal routes for enforcing foreign judgments: (A) statutory registration under the Reciprocal Enforcement of Judgments Act 1922; and (B) common law enforcement by fresh action, each backed by a robust suite of interim remedies and post-judgment enforcement tools that make the jurisdiction a critical venue for cross-border creditors. The right route depends mainly on the jurisdiction of origin, the status of the judgment and the assets available in or through the BVI. Early classification is critical. A creditor should identify the judgment's originating jurisdiction, confirm that the judgment is final and map the debtor's BVI assets before choosing the procedure. That avoids avoidable delay and preserves the option of seeking protective relief before the debtor can move or restructure assets. Registration is available for judgments from scheduled territories. The territories are England and Wales, Northern Ireland, Scotland, the Bahamas, Barbados, Bermuda, Belize, Trinidad and Tobago, Guyana, St Lucia, St Vincent, Grenada, Jamaica, New South Wales and Nigeria. This route is usually more direct because the creditor does not need to start a new claim on the underlying debt. An application must be made within 12 months of the date of the judgment unless the BVI Court allows a longer period. The application proceeds under Eastern Caribbean Supreme Court Civil Procedure Rules (Revised Edition) 2023 (EC CPR) Part 74 and should be supported by affidavit evidence and a verified or certified copy of the judgment. The judgment must be final and must order payment of a definite sum. The BVI Court must also consider it just and convenient to enforce the judgment. For statutory registration, the debtor must not be appealing or have the right and intention to appeal. A pending appeal can therefore justify opposition or an application to set aside statutory registration. The BVI Court will not use enforcement proceedings to conduct a general review of the foreign decision, but it will examine whether local enforcement requirements are met. Before filing, the creditor should: Confirm the judgment is final and enforceable in the originating jurisdiction. Check whether any appeal is pending or intended and obtain evidence of the position. Evidence the foreign court's jurisdiction, service and amount outstanding. Arrange a certified English translation where the judgment is not in English. Once registered, the judgment can be enforced as if it were a BVI judgment. Registration is not the end of the process. The order must be served and the debtor may apply to set it aside. A pending appeal can prevent registration and enforcement, so the creditor should obtain clear evidence of whether an appeal has been filed or is intended. For a judgment from a non-scheduled jurisdiction, the creditor normally starts a fresh BVI proceeding to enforce the foreign judgment as a debt. The claim is not a re-trial. It relies on the foreign judgment as the source of the obligation and seeks a BVI judgment that can then be executed against local assets. The creditor must show that the judgment is final and conclusive, is in personam and is for a definite sum. It must also show that the foreign court had jurisdiction under principles recognised by the BVI Court. The usual gateways are submission to the foreign court's jurisdiction or residence or business in that jurisdiction together with due service. Those issues should be addressed directly in the evidence: Finality: Confirm the judgment is not subject to further decision or an unresolved appeal. Personal liability: Show that the judgment binds the debtor personally rather than operating only in rem. Jurisdiction and service: Exhibit the jurisdiction clause, evidence of submission or presence and proof of service. Where the evidence is clear, the creditor can seek summary judgment rather than proceed to a full trial. The BVI Court focuses on the recognised require...
Jun 16

SFDR Article 6 funds What is an SFDR Article 6 fund? Where are SFDR Article 6 funds commonly established? How Article 6 differs from SFDR Articles 8 and 9 Interaction between SFDR and non-EU fund structures How Harneys can help

The Sustainable Finance Disclosure Regulation (SFDR) is one of the most consequential pieces of EU financial regulation to emerge in recent years. It establishes a classification framework for financial products based on their sustainability characteristics, dividing them broadly into three categories under Articles 6, 8 and 9. While much of the market's attention has focused on the higher-tier classifications - Article 8 (products that promote environmental or social characteristics) and Article 9 (products with sustainable investment as their objective) - the reality is that the vast majority of funds in the market sit within Article 6. This article explains what an SFDR Article 6 fund is, where they are typically established, how they differ from Articles 8 and 9 products, and how SFDR interacts with non-EU fund structures - a question of particular significance for managers domiciling funds in offshore jurisdictions such as the Cayman Islands, the British Virgin Islands and Bermuda. An SFDR Article 6 fund is a financial product that does not promote environmental or social characteristics (Article 8) and does not have sustainable investment as its objective (Article 9). In practical terms, Article 6 is the default classification: any fund that does not make specific ESG commitments in its investment process falls within this category. Article 6 does not mean a fund ignores sustainability risks entirely. Under Article 6(1) of the SFDR, managers of Article 6 products must still disclose the manner in which sustainability risks are integrated into their investment decisions, or explain why sustainability risks are not considered relevant. This is a disclosure obligation, not an investment mandate — the fund is not required to adopt any ESG strategy, but it must be transparent about its approach. Article 6 funds must also comply with pre-contractual disclosure requirements under Article 6(2), including a statement in offering documents on whether and how the product considers principal adverse impacts (PAIs) on sustainability factors. Where PAIs are not considered, an explanation must be provided. A common misconception is that Article 6 funds are "non-ESG" or sit outside the SFDR framework. This is incorrect. Every financial product offered by an EU-regulated financial market participant falls within the scope of the SFDR and must be classified. Article 6 is simply the baseline category for products that do not make affirmative ESG commitments beyond the minimum disclosure requirements. Article 6 funds are established across a wide range of jurisdictions, both within and outside the EU. The SFDR classification itself does not dictate where a fund must be domiciled - it is a disclosure regime that applies to the manager (or, more precisely, to the financial market participant making the product available), not to the fund vehicle itself. Within the EU, Article 6 funds are commonly structured in Luxembourg, the largest European fund domicile. Luxembourg offers well-established regulatory frameworks and is home to the majority of UCITS and EU-regulated alternative investment funds. Many managers without an ESG-specific strategy will establish their funds in Luxembourg and classify them as Article 6 funds by default. Outside the EU, a significant number of funds that are classified as Article 6 — or that would be classified as such if marketed into the EU — are domiciled in offshore jurisdictions. The Cayman Islands remains the dominant global fund domicile for alternative investment funds, particularly hedge funds, private equity vehicles and venture capital structures. The British Virgin Islands and Bermuda are also well-established fund jurisdictions. These offshore fund structures do not fall directly within the scope of the SFDR, but SFDR classification becomes relevant when the fund is marketed to EU investors by an EU-regulated manager or distributor, or where a non-EU manager delegates to or is managed by an EU-regulat...
06/16/2020

Luxembourg: an Investment Funds giant

In the fourth episode of our Funds Download podcast series our host and global head of Funds and Regulatory, Philip Graham, is joined by the head of our Luxembourg Investment Funds team, Vanessa Molloy, to take a closer look at the reasons why Luxembourg is such a successful investment funds jurisdiction, and the main factors to consider if you are thinking of establishing a Luxembourg structure.
10/10/2019

The Rules

Classify, Classify, Classify In the tenth instalment of Harneys’ Substance on Substance series, Philip Graham and Josh Mangeot discuss the release of the final version of the guidance formerly known as the “Code”, which was published by the ITA on 9 October 2019 as its newly-titled Rules and explanatory notes (the Rules). Key Takeaways • With the certainty provided by the final Rules, it is vital that all directors and operators of BVI entities classify their entities as a matter of priority, if they have not already done so. There is an ongoing legal obligation on BVI entities under the Beneficial Ownership (Secure Search System) Act 2017, as amended with effect from 1 October 2019, to determine whether they are carrying on a relevant activity and the first compliance periods have started for all companies and other relevant legal entities. •Harneys online economic substance classification solution remains available for use at https://economicsubstance.vg and provides formal legal advice for a fixed fee – the solution reflects the final Rules and classifications received by users who have previously classified their entities using the solution are unaffected, subject to some minor cross-references to the numbering used in the final Rules. • the ITA released a useful summary document of the relatively minor amendments made to the last public published by the ITA. The key changes include: o where an entity wishes to be treated as provisionally “non-resident” due to its tax status under foreign laws, the “reasonable period” in which to provide the ITA with evidence of such status will be two “financial periods” o BVI entities in liquidation are still generally expected to comply with the substance requirements o the presumptions of non-compliance for BVI entities that are carrying on IP business have been made more difficult to rebut (ie disprove) and are subject to expanded reporting and evidentiary requirements • Economic substance reporting for each BVI entity will generally begin in 2020 at the end of the current financial period, so all BVI entities should determine any economic substance compliance requirements for the current period. This episode was recorded on 10 October 2019.
07/31/2023

Sanctions on Russia: At 18 months following the invasion (part 2)

In this episode, Global Head of Regulatory & Tax Aki Corsoni-Husain and guest expert Rachel Barnes KC of Three Raymond Buildings go into more detail about the state of play as of June 2023 regarding sanctions on Russia after the invasion of Ukraine, with a specific focus on professional services in the trust sectors. Key Takeaways: Outlining and reflecting on, the new UK sanctions on Russia impacting professional and financial services, trust industry restrictions and exemptions and the Overseas Territories’ inclusion to those sanctions.Providing an overview of new prohibitions in providing business services and their updates.Comparing sanctions imposed by EU, UK, and US on the professional services industry, legal advisory services and trust industry (as at June 2023).Examining the impact of sanctions on transactional lawyers, particularly in relation to the provision of legal advisory services on related matters (as at June 2023).Discussing the rule of law concerning sanctions and their application to asset movement of designated individuals.
07/28/2022

International transfer of personal data: Frictions and a dynamic road ahead

In this episode, Senior Associate Elina Mantrali is joined once again by guest expert Phil Lee, discuss the scope and practical implications of the EU’s rules on international transfers of personal data under the EU’s General Data Protection Regulation and, more recently, the European Court of Justice’s decision in Schrems II. Phil is a leading data protection expert and is a partner in Fieldfisher's leading Privacy, Security and Information law group in London, with experience on both sides of the Atlantic, having previously set up Fieldfisher’s office in Silicon Valley.
06/17/2022

International transfers of personal data: Theory and practice

In this episode, Senior Associate Elina Mantrali and guest expert Phil Lee, discuss the scope and practical implications of the EU’s rules on international transfers of personal data under the EU’s General Data Protection Regulation and, more recently, the European Court of Justice’s decision in Schrems II. Phil is a leading data protection expert and is a partner in Fieldfisher's leading Privacy, Security and Information law group in London, with experience on both sides of the Atlantic, having previously set up Fieldfisher’s office in Silicon Valley.
08/25/2023

Unravelling digital asset challenges: Examining the issues

In this episode, Global Head of Regulatory & Tax Practice Aki Corsoni-Husain, introduces Counsel Marc Piano, and guest expert Brett Hillis from Reed Smith in London. Together, they delve into the complex web of issues at the forefront of anyone exploring the digital asset industry. Key takeaways: Trends in the digital asset space Global regulatory developments in respect of digital assets and the response from offshore jurisdictionsThe UK Government's recent regulatory position of digital assets and its role in the wider economy

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