From: Duncan Sheehan
<D.K.Sheehan@leeds.ac.uk>
Sent: Thursday 13 February 2025 09:45
To: Neil Foster; obligations@uwo.ca
Subject: RE: Bitcoin and Restitution
Dear all,
It’s clearly wrong, but I
think it important to highlight the fallacy the judge has fallen into. Chattel
torts like conversion protect rights to possession. The judge here, having had
a quick flick through, obviously believed that you can possess bitcoin, despite
its being intangible. That is a view that has been touted around here and
there, and if you think that bitcoin are possessable then potential liability
for conversion follows as night from day.
The fallacy derives from
noting that possession involves factual control of a thing coupled with an
intention to possess it. What control amounts to depends on what the thing is
and how big it is and so forth. I can more easily demonstrate sufficient control
of a pencil in my hand than a great big sunken ship I’m trying to salvage, but
the point is I’m assessing a degree of control. The private key gives me a
degree of control over the crypto asset (I say a degree, because a 51% attack
might wrest control off me). Then the question is do I intend to possess it? Do
I know I control it? I can intend to control a bitcoin just as I intend to
control or possess this laptop. Aha, say the possession-proponents, it’s the
same thing and so we should be able to convert them etc.
No, it isn’t the same
thing. I demonstrated – at least to my own satisfaction in last year’s Journal
of Business Law (‘Digital Assets, Blockchains and Relativity of Title’
[2025 JBL 78) – that the policy reasons why we have the possessory title
conversion protects simply do not apply to crypto-assets. Possession (or
control) is not needed as a proxy for ownership. The link between the bitcoin
and the public address is that proxy link. I cannot find a bitcoin lying around
an airport lounge, like the ring was found in BAB v Parker, so there’s no need
to protect my title to assets I find lying around while I look for the owner or
have my title “upgraded” when the limitation runs out.
Duncan
From: Neil Foster <neil.foster@newcastle.edu.au>
Sent: 13 February 2025 04:19
To: Lucas Clover Alcolea <lucas.cloveralcolea@monash.edu>;
Kelvin F.K. Low <kelvin.low@gmail.com>
Cc: Wilde, Mark <Mark.Wilde@city.ac.uk>;
Steve Hedley <S.Hedley@ucc.ie>; obligations@uwo.ca; Daniel Seng <danielseng@nus.edu.sg>
Subject: Re: Bitcoin and Restitution
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Dear Colleagues;
Since this post is about bitcoin… I would not
usually post a single judge decision but those who are interested in this area
may be interested to read this decision handed down recently in Tasmania: Poulton
v Conrad [2025] TASSC 2 (7 February 2025). Appellant was given some
money to buy Bitcoin for the respondent, agreed he would be paid for his
services but the amount not settled. Later the appellant claimed that he should
be entitled to keep one of the Bitcoins by way of payment (it had gone up in
value since purchased). The respondent succeeds in a claim for conversion and
detinue of the Bitcoin.
I have to say I think the decision is wrong.
Even if we concede that Bitcoin is “property” (see [6]), we have clear
authority in Australia that conversion is not available for intangible
property. See eg Joukhador v Commissioner of Police [2020] NSWSC 227 at
[55]; Chandrasekaran v Commonwealth of Australia [2021] FCA 481at [25].
(And of course the decision in OBG Ltd v Allan [2007] UKHL 21, [2007] 2
WLR 920 though that is not binding in Australia.)
But it seems neither counsel nor the judge
were aware of the authority.
Regards
Neil
NEIL FOSTER
Associate Professor, Newcastle School
of Law and Justice
College of Human and Social Futures
E: neil.foster@newcastle.edu.au
Further details: http://www.newcastle.edu.au/profile/neil-foster
My publications: http://works.bepress.com/neil_foster/
, http://ssrn.com/author=504828
Blog: https://lawandreligionaustralia.blog
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