In this article, Leo Meredith, Ivana Mensah and Nicola Thompson of Lewis Silkin examine the important decision in Ping Fai Yuen v Fun Yung Li & Anor [2026] EWHC 532 (KB), which clarifies the limited application of traditional tort law to cryptoassets.
This article first appeared on the Practical Law Dispute Resolution column on 18 May 2026. Reproduced from Practical Law with the permission of the publishers. For further information visit www.practicallaw.com.
The High Court's decision in Ping Fai Yuen v Fun Yung Li & Anor [2026] EWHC 532 (KB) provides important clarification on the interaction between traditional tort law and emerging digital assets. Whilst cryptoassets such as Bitcoin can constitute property under English law, the decision laid bare the limits of tortious causes of action, in particular the tort of conversion, with regard to such assets.
Background
The claim arose from the alleged misappropriation of 2,323 Bitcoin (valued at approximately £160 to £180 million). The claimant issued proceedings on the basis that the defendants had unlawfully obtained access to his Bitcoin.
The claimant stored his Bitcoin using a private key held on a "cold wallet" device (offline), protected by a six-digit PIN. However, anyone who possessed the claimant's "seed phrase" (24 randomly generated words) could use it to recreate the wallet on a separate device. The claimant alleged that the first defendant (his estranged wife) had acquired and used this seed phrase without consent (either acting alone or with her sister, the second defendant), enabling the transfer of the Bitcoin.
Amongst several causes of action, the claimant claimed that the defendants' actions constituted the tort of conversion and that they had also committed trespass to goods. Both torts are concerned with wrongful interference with property. The first defendant sought to strike out the claims in conversion and trespass to goods on the basis that they cannot apply to "intangibles" such as Bitcoin and that no physical interference with the claimant's property was alleged.
Conversion and the intangibility barrier
A central issue was whether Bitcoin was capable of being converted. As set out in Clerk & Lindsell on Torts 24th edition, "conversion is an act of deliberate dealing with a chattel in a manner inconsistent with another's right whereby that other is deprived of the use and possession of it". For example, when property is wrongfully taken by someone not entitled to do so.
The claimant argued that this question should not be determined on a summary basis. It was noted that the law was currently in a state of flux given that the Property (Digital Assets etc) Act 2025 (Digital Assets Act) now permits the recognition of a third category of property and given the possibility that the tort of conversion could be developed through common law to recognise this.
However, the High Court concluded that, as the law currently stands, claims in conversion cannot apply to cryptocurrency.
Whilst recognising that the purpose of the Digital Assets Act was to "remove uncertainty as to the existence of a third category of property" and "to allow the common law to develop a robust framework of personal property rights for digital assets", the court concluded that the decision in OBG Ltd v Allan [2007] UKHL 21 was a "clear block" to the extension of the law of conversion for this purpose. In this case, the House of Lords decided that conversion applied only to an interest in tangible chattels. Bitcoin, although recognised as property, therefore falls outside the scope of the tort.
The claimant pointed to the fact that, in other jurisdictions including parts of the United States, Canada and New Zealand, courts have been willing to extend conversion to digital assets. Whilst acknowledging these submissions, the court remarked that authorities from other jurisdictions did not allow the claimant to "get around the roadblock".
The claim in conversion was therefore struck out. The court did, however, allow the claimant's application to amend his claim to include other causes of action and noted that the need for the conversion claim wasn't clear, given the scope of other causes of action and remedies.
The claim for trespass to goods suffered similar difficulties. The judge could not see how this cause of action could be successful on the facts as alleged but granted seven days from the handing down of the judgment for the claimant to consider whether to amend the claim, failing which the claim as to trespass to goods would be automatically struck out.
Cryptoassets as property
The question of whether cryptoassets constitute "property" under English law has historically been the subject of considerable debate. The question is significant, as the classification of an asset as property directly affects the causes of action and remedies available to victims of fraud, as well as broader questions of jurisdiction and choice of law.
English law has traditionally recognised only two forms of personal property: choses in possession (tangible items capable of physical possession) and choses in action (rights enforceable through legal action rather than taking physical possession, such as debts or rights under a contract). Cryptoassets do not fit neatly into either category.
Even before Parliament intervened, the courts had begun to recognise cryptoassets as property. The position has now been placed on a statutory footing by the Digital Assets Act, which came into force on 2 December 2025 and permits the recognition of a category of personal property rights capable of accommodating certain digital assets, including cryptoassets: the "third category". The Digital Assets Act does not exhaustively define the scope of this category; rather, it will be for the courts to develop its boundaries and determine how in-scope assets should be treated.
A developing area: should property status dictate remedies?
Following this decision, we have a divergence between status and remedy: cryptoassets are recognised as property, however the full suite of proprietary torts does not automatically follow.
There is also an uncomfortable tension between the civil and criminal law. In R v Lakeman [2026] EWCA Crim 4, which concerned the theft of "gold pieces" as a form of wealth in a video game, the Court of Appeal confirmed that the gold pieces fell within the definition of "property" under the Theft Act 1968, which expressly includes "other intangible property". A person can therefore be convicted of stealing a digital asset, yet a victim of the same conduct cannot pursue a civil claim in conversion.
Looking ahead
The judgment does, however, acknowledge the possibility of future reform. Notably, the court recognised that a cause of action or remedy tailored to digital assets, with elements similar to the law of conversion, may emerge.
This aligns with the recommendation of the Law Commission in its 2023 Final Report on Digital Assets, which favoured development of the law via common law rather than law reform, and concluded that it would be possible for the courts 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".
The UK Jurisdiction Taskforce published its Report on Control of Digital Assets in March 2026, providing practical, technically informed guidance for the judiciary and court users on how the legal concept of control applies to digital assets. This will be an important reference point as the courts develop the boundaries of this new category of personal property.
As cryptoassets continue to integrate into commercial life, pressure will grow on the law to reconcile the inconsistency between property status and available remedies.
To discuss the issues raised by this decision, please contact Leo Meredith.
With thanks to Ivana Mensah, Trainee Secondee, for co-authoring this article.