knowledge 10 May 2021 |

Norwich Pharmacal Order Deployed to Track Missing Cryptocurrency

Background

Where wrongful behaviour happens under the cloak of online anonymity, a victim of fraud, defamation or another wrong may be unable to identify the responsible person from whom they should seek redress. In such circumstances, it is open to the victim to seek a “Norwich Pharmacal” order.

Norwich Pharmacal orders are orders obtained against innocent third parties who know the identity of a wrongdoer or potential wrongdoer. The order directs the innocent party to disclose this information to the victim. Such orders are granted against innocent third parties on the basis that they have become mixed up in the wrongdoing and so come under a duty to disclose this information to the victim.¹ The order will only be granted where the victim makes out a prima facie² or strong prima facie³ case of wrongdoing, and the Irish courts describe the jurisdiction as one that should be used sparingly.

Williams v Coinbase Europe Ltd

In the recent case of Williams v Coinbase Europe Ltd,⁴ the plaintiff was an American businessperson who purchased a large amount of cryptocurrency in late February 2021 and transferred it to his blockchain account, only for it to disappear later that day. Using a cryptographic tracing firm, he ultimately established that a portion of his bitcoin had found its way to an account hosted with the Irish-based defendant. This account was held by an unknown person.

Following representations made by the plaintiff, the account was frozen.  However, having regard to its obligations under contract and GDPR, the defendant could not disclose the identity of the account holder without a court order. On that basis, proceedings were issued against the defendant seeking an urgent Norwich Pharmacal order.

The High Court granted the order. Allen J ordered the defendant to disclose to the plaintiff within 5 days all information in its possession that would identify or assist in identifying the person(s) unknown who owned or had access to the relevant account including but not limited to the names, e-mail addresses, telephone numbers and IP addresses associated with all log-ins and log-outs relating to the account.

Referring to his judgment in Parcel Connect v Twitter International Company,⁵ Allen J was satisfied that the plaintiff had made out a strong prima facie case of wrongdoing. The order was granted subject to the plaintiff undertaking to only use the information disclosed to seek redress in relation to the wrongdoing complained of.

Comment

This decision, in which we acted for the plaintiff, is one of the first decisions in this jurisdiction granting Norwich Pharmacal relief for the purpose of identifying the owner of a cryptocurrency wallet.

This decision is significant as it demonstrates the continuing willingness of the Irish courts to apply existing remedies to emerging technologies. In a similar way, the High Court has previously granted Mareva relief against a defendant which prevented his disposing of his cryptocurrency on the basis that it formed part of the defendant’s property in that case. The Irish courts were ahead of other jurisdictions in taking this step.

Also contributed by Darragh Caldwell.