Conversion and Cryptoassets: High Court draws the line

In an important decision handed down in Ping Fai Yuen v Fun Yung Li & Anor [2026] EWHC 532 (KB), the High Court has clarified the scope of tortious remedies available to parties in connection with misappropriated cryptoassets.

The ruling reaffirmed that cryptoassets qualify as a third type of personal property under English law (outside choses in possession and action, following the Property (Digital Assets etc) Act 2025 (the Act)), and that proprietary claims remain available to aggrieved owners. However, the Court refused to extend the traditional torts of conversion and trespass to goods (which require interference to physical possession) to cryptoassets.

The practical upshot: for now, victims of cryptocurrency fraud face a narrower toolkit of remedies than in disputes over tangible property.

 

The claim

The Claimant, an owner of Bitcoin, alleged that his estranged wife and sister transferred 2,323 Bitcoin – valued between GBP160 and 180 million – from his password-protected Trezor cold wallet to over 70 different addresses. The Claimant advanced proprietary and restitutionary claims, including for breach of confidence and misuse of private information (after his wife had obtained the seed phrase protecting his Trezor wallet) and causing loss by unlawful means, as well as seeking injunctive relief to freeze the misappropriated Bitcoin.

Critically for present purposes, the Claimant also sought to rely upon the traditional torts of conversion and trespass to goods to ground a damages claim.

 

The tortious claims

Conversion is a strict liability tort arising where a defendant interferes with another's property. It requires proof of a superior possessory right, deprivation of that right, and the defendant's assumption of it. Trespass to goods protects similar interests. Both torts offer victims of fraud a more direct route to a damages award than other restitutionary claims, which is precisely what makes their potential application to cryptoasset disputes so significant.

Mr Justice Cotter in Ping Fai Yuen allowed the Claimant's proprietary and restitutionary claims to proceed. However, the court refused to extend traditional torts of conversion and trespass to goods in the context of cryptocurrency, and refused to develop the common law as to the third type of personal property; this was despite Cotter J recognising that the central purpose of the Act was to facilitate the development of a robust framework of personal property rights for digital assets. In the court's view, those traditional torts protect possessory rights in tangible chattels (per OBG v Allan [2007] UKHL 21) and do not extend to intangible, digital assets, such as Bitcoin. The court reaffirmed the settled position in England that conversion requires interference with physical possession and the court declined to treat cryptoassets in this way without prior legislative reform. The claim for trespass to goods faced the same conceptual hurdle.

 

Practical implications

This judgment reaffirms the now well-established principle that cryptoassets constitute a third category of personal property, and that victims of fraud retain the right to pursue proprietary and restitutionary claims. However, the court was unequivocal: the Act was not intended to extend traditional torts to cryptoassets.

This issue was considered, at length, in the Law Commission of England and Wales's Final Report on Digital Assets published in 2023 (Report). In the Report, the Law Commission explored the possible extension of conversion claims to cryptoassets to ensure that legal protection is afforded to those objects in the same way as for tangible property, where the same interests are at stake, which our team considered here (in the context of in-game digital assets). The Report ultimately concluded that an extension of the tort of conversion through statutory reform was not presently recommended and a better approach “would be for the law to develop specific and discrete principles of tortious liability by analogy with, or which draw on some elements of, the tort of conversion to deal with wrongful interferences with third category things such as digital objects, rather than applying conversion in its current form to those things”.

Despite striking out the claim pleaded in conversion, Cotter J did recognise, in line with the Law Commission's views above, that there may indeed be certain circumstances in the future where the English Courts develop a cause of action by analogy with, or which draw on some elements of, the tort of conversion, to specifically address wrongful interferences with third category things such as digital objects. Cotter J also accepted that, in assessing the parties' evidence, “bitcoin storage is not a familiar area to me”.

While Ping Fai Yuen is the first English judgment to test, and fail to cross, this threshold, it will be interesting to see how the Courts deal with this issue in the future, particularly as cryptocurrency disputes continue to be litigated before the courts and judicial knowledge of these novel technologies further improves. The UK Jurisdiction Taskforce's recent Report on the Control of Digital Assets (published on 19 March 2026, which provides technical guidance for courts on how digital assets are controlled in practice), is a noteworthy step in the right direction.

A related question arises in respect of possessory instruments issued in electronic form under the Electronic Trade Documents Act 2023 (ETDA). The ETDA permits certain trade documents (such as promissory notes and bills of exchange) to exist entirely in digital form whilst retaining their character as things in possession. Had the digital asset at the centre of Ping Fai Yuen been an ETDA-qualifying instrument rather than Bitcoin, there is an argument that it would have remained capable of possession and, accordingly, susceptible to a claim in conversion, notwithstanding its digital nature. Whether conversion and related tortious remedies will be held to extend to ETDA possessory instruments remains an open question; in our view, this represents a plausible route by which the courts may yet recognise such claims in respect of certain categories of digital asset.

 

Conclusion

With cryptoassets now firmly embedded in commercial life, Ping Fai Yuen lays bare the gap that remains in English law. Absent legislative intervention – which appears unlikely in the near term – the courts appear ready to develop tortious protection for digital assets by analogy with existing principles. For practitioners advising victims of cryptoasset fraud, proprietary and restitutionary claims remain the primary avenues of recourse. Whether the courts will develop new tortious principles by analogy remains to be seen.