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When can you obtain judgment against an ‘unknown’ defendant? Mooij v Persons Unknown

Posted: 27/06/2024

In a recent High Court case, Mooij v Persons Unknown, the court granted summary judgment for a monetary amount against unknown crypto-fraudsters. This decision is significant because it confirms that while enforcing a judgment against an unknown defendant may be difficult, it is not a reason not to grant it. The case also highlights the crucial importance of properly effecting service on ‘unknown’ categories of defendant. Here, if alternative service in the form of an NFT airdrop was sufficient to establish jurisdiction over the defendants, the court held it should also be sufficient to enforce any ultimate judgment.

Pursuing crypto-fraudsters has its practical challenges. However, this decision potentially removes at least one legal obstacle from the path of would-be claimants. Where alternative service is permitted for the purpose of commencing proceedings, this decision suggests it should also be sufficient for granting judgment. While this decision is consistent with earlier judgments[1], it can be contrasted with a recent High Court authority on the topic in Boonyaem v Persons Unknown[2], in which (on similar facts including service via NFT) judgment was not granted because of the potential difficulties of enforcing against unknown parties. For more information on that case and the court’s approach, see an analysis from the commercial dispute resolution team here.

Key takeaways

When considering proceedings against crypto-fraudsters, speed is of the essence. However, it is crucial to focus on service, not just as a means of obtaining interim injunctive relief but also to facilitate enforcement of any judgment. 

In crypto disputes, service via NFT is now an established and effective mechanism to commence proceedings and secure the jurisdiction of the English courts over a dispute. As a back-up, alternative service by filing the relevant documents at court has now been approved in at least two cases[3].

Where the court has permitted alternative service, it may not be necessary to distinguish between anonymous defendants who are unidentifiable and those who may be identifiable in the future. Claimants may therefore have a better chance at targeting a wider range of defendants, a factor which can prove invaluable in complex crypto disputes.

The claim and judgment

Mr Mooij held bitcoin in an account on a bitcoin exchange called Kraken. Subsequently, fraudsters persuaded him to transfer his bitcoin holding to a trading platform operating under the name of MegaMarkets. He also transferred a total of €330,000 to a bank in Spain in connection with a further bitcoin investment. However, this sum never reached the Spanish account.

When Mr Mooij realised he had been the victim of fraud, he obtained a freezing injunction and then brought claims against a total of 11 defendants. Claims against two defendants (Binance Holdings Limited and Megamarkets Trading Limited) were discontinued after they engaged with the litigation and provided information relevant to his claim.

The other defendants were connected with the transfer of the bitcoin and the alleged misappropriation of Mr Mooij’s funds into the Spanish account. Of relevance is the way in which Mr Mooij characterised the first three defendants, all different categories of anonymous alleged fraudsters:

  • persons unknown, described as ‘the individuals or companies who obtained access to the Applicant’s BTC between about 21 March 2023 and carried out the transactions on or about the same dates as a result of which the cryptocurrencies held in those accounts were transferred to other accounts’ (the perpetrators of the fraud);
  • persons unknown, described as ‘the individuals or companies who own or control the accounts into which the Transferred Assets were transferred other than purchasers for full-value’ (the beneficiaries of the fraud); and
  • persons unknown, described as ‘the individuals or companies who are innocent receivers who have no reasonable grounds for thinking that what has appeared in their account belongs to the Applicant/Claimant’ (the innocent receivers).

Mr Mooij applied for summary judgment and sought proprietary relief against all of the defendants apart from the Category 3 ‘persons unknown’ (the ‘innocent receivers’). Additionally, against the first two categories of unknown defendants, Mr Mooij sought non-proprietary relief in the form of a money judgment for the value of the bitcoin and for payment of the sums transferred to the Spanish account.

None of the remaining defendants engaged with the litigation (or acknowledged service) and so had no real prospect of successfully defending the claim. The court’s analysis was therefore focused on its ability to award summary judgment against unidentified and potentially unidentifiable defendants. 

In concluding that it could, the court was particularly swayed by the fact that alternative service had been authorised and effected against both the first and second defendants. That, it held, was sufficient for the court to grant judgment using the same method of service. The court also continued the interim injunctions.

Next steps for crypto disputes

The world of crypto disputes is fast-paced and the barrier to obtaining judgment against unknown defendants created by the decision in Boonyaem had caused difficulties for claimants. With this latest High Court decision, the position appears to have been reversed. However, judgment is not the final stop on the journey to redress. Challenges remain in relation to enforcement against unknown and unidentifiable defendants.

Given the emphasis placed by this judgment on the value and status of an order for alternative service, it will be crucial for claimants to think creatively about methods of effecting service on anonymous fraudsters. While fraudsters may not leave their real names and addresses, they frequently leave digital traces behind. With early and appropriate advice, potential claimants can ensure that they maximise their prospects of recovery.

[1] Jones v Persons Unknown [2022] EWHC 2543 (Comm) and Mannarino v Persons Unknown [2023] EWHC 3176 (Ch)

[2] [2023] EWHC 3180 (Comm)

[3] Mooij and AA v Persons Unknown [2019] EWHC Comm 3556

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