Pursuing legal remedies to recover stolen cryptoassets is generally complex, time-consuming - and therefore, costly.

For these reasons it’s common for individual litigants to only pursue cases in relation to the loss of large sums.

However, many cases of crypto fraud involve the misappropriation of relatively smaller amounts from a larger number of individuals.

In such cases, an opportunity presents for groups of claimants to share both legal costs and case specific ‘intel’, thereby increasing the prospects of recovery.

An example can be found in the case of Sally Danisz v Matic Markets and Huobi Global Ltd [2022] EWHC 280 (QB).

Matic Markets

In 2021, a firm known as Matic Markets, registered in both the UK and Switzerland, set up websites in the form of a cryptocurrency investment platform at the domains ‘maticm.io’, ‘clientslogintrade.com’, and ‘maticm.co.uk’.

We understand that investors, who were largely UK based, were persuaded to deposit sums to the platform by the offer of high returns on Bitcoin and other cryptocurrency investments.

Sizeable profits were duly reported soon after the investments were made; however, when investors sought to withdraw their money they were asked to pay hefty ‘management’ and other fees.

Attempts to communicate with Matic Markets to try and resolve matters were unsuccessful, and in many cases, investors’ funds were not returned.

The Matic Markets websites have subsequently been shut down, and in January 2022 the Financial Conduct Authority reported that the firm was unauthorised, and investors should be wary of it.

Sally Danisz v Matic Markets and Huobi Global Ltd

Sally Jayne Danisz, a retail investor, made deposits totalling £26,988.88 to Matic Markets between October and November 2021, and directed her funds to be invested into Bitcoin.

As in other cases, the Matic Markets platform showed profits on the investments, but Ms Danisz’s attempts to withdraw her funds were unsuccessful. She therefore sought legal redress.

Blockchain analytics evidence was commissioned, and this revealed a good arguable case that the Matic Markets operation was “wholly fraudulent and, it seems, run by organised criminals”.

The identity of the individuals who controlled the Matic Markets platform couldn’t be ascertained, but the evidence showed that some of Ms Danisz’s Bitcoin had been transferred to a wallet hosted at Huobi, a Seychelles based cryptocurrency exchange.

Court application for interim remedies

On 5 January 2022, Ms Danisz made a court application to the High Court in London, where she sought interim remedies against both the ‘persons unknown’ who controlled the Matic Markets platform, and Huobi.

These interim remedies included a proprietary freezing injunction and a Bankers Trust order, which required Huobi to freeze the wallet containing the stolen Bitcoin, and provide details of the identify of the account holder connected to the wallet from the ’KYC’ information it is required to collect.

Counsel for Ms Danisz presented the grounds for making the orders to the satisfaction of the court: the case was of exceptional urgency, there was a serious issue to be tried (probable fraud), and a genuine risk of dissipation of the Bitcoin.

Ms Danisz was able to bring her case in the English court because she was domiciled in the jurisdiction.

Ongoing litigation

Following the granting of interim remedies in January 2022, Ms Danisz’s next steps were to seek disclosure from Huobi, further investigate her claim, and commence substantive litigation to attempt to recover her money.

At the time of publication of this article, these steps are likely to be progressing.

Group claims: a cost efficient route to recovery

The sum of Ms Danisz’s loss is less than £27,000, and it’s therefore likely that her legal costs to pursue a claim will amount to a large percentage of this amount, or possibly exceed it.

However, it’s apparent from information published online that numerous other investors’ deposits of similar or larger amounts have been fraudulently misappropriated by the individuals who controlled the Matic Markets platform.

In these circumstances, a group-based recovery action would make it more feasible for the necessary legal resources to be deployed to achieve a successful recovery: litigants would share both the legal costs involved in making a claim, and ‘intel’ from their case specific circumstances, thereby increasing the prospect of success.

Paradigm Legal is interested in assisting the victims of crypto-fraud to access justice and achieve legal redress by cost-effective means.

We invite enquiries in relation to Matic Markets and other crypto-fraud cases where numerous individuals may have been affected.

Following receipt of enquiries, in appropriate circumstances we will take steps to identify other group claimants and invite their participation in recovery action on a ‘class action’ basis.

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