The Cambridge Dictionary definition of “conversion”, when used in a legal context, is “the illegal act of giving away or selling property that belongs to someone else”. In Yuen v Li [2026] EWHC 532, Cotter J found that neither the passing of the Property (Digital Assets etc) Act 2025 (the “2025 Act”), nor the findings in Tulip Trading Ltd v Bitcoin Association for BSV & Ors [2023] EWCA Civ 83, changed the position that a person cannot convert intangible property, in this case, cryptocurrency.

Summary of the facts

With divorce “in contemplation”, the Claimant’s now-estranged wife obtained his seed phrase, gained access to and transferred the equivalent of £160m-£180m of bitcoin. The Claimant traced the bitcoin to 71 addresses. When he became aware that these addresses had been subject to a crypto dusting attack – potentially exposing wallet identities and making them targets for third parties – the Claimant applied for and obtained a proprietary asset preservation injunction and a disclosure order. The Defendant’s position, set out by way of an affidavit in response to the disclosure order, was a bare denial.

In his Claim Form and Particulars of Claim, the Claimant sought damages for, amongst other things, conversion and trespass to goods.

The effect of OBG v Allan [2008] 1 AC 1

In 2008, when Bitcoin was a mere twinkle in Satoshi Nakamoto’s eye, the House of Lords confirmed that strict liability for conversion applied only to an interest in chattels, not to choses in action and that to extend the law in that way would be too drastic. Whilst the ruling in OBG was principally concerned with choses in action, Hoffman LJ considered a US Federal Court of Appeals decision, which held that a domain name was intangible property which could be converted in the same way as a chattel. Whilst he agreed that a domain name could be intangible property, Hoffman LJ thought the notion that it could be the subject of a conversion “foreign to English law” (and likely part of the “profligate extension of tort law” in the US, of which Hoffman LJ did not appear to approve).

Tulip Trading and the 2025 Act

Fast forward to 2023 and the judgment in Tulip Trading, where the Court of Appeal approved a judgment in AA v Persons Unknown [2019] EWHC (Comm) 3556 that a crypto asset such as bitcoin is property.

The judgment in Tulip Trading was widely referenced in the 2023 Law Commission Report on Digital Assets, which preceded the 2025 Act. While acknowledging that “third category things” (like crypto assets) could not be the subject matter of the tort of conversion, the Law Commission did not recommend statutory law reform to extend it.

The 2025 Act contains two sections, of which the second sets out its extent, commencement and title. The first states that: “A thing (including a thing that is digital or electronic in nature) is not prevented from being the object of personal property rights merely because it is neither (a)a thing in possession, nor (b)a thing in action.”

Time for change?

Cotter J said the purpose of the 2025 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. However, he continued, the decision in OBG was a “crystal clear” block to the extension of the law of conversion for this purpose. This did not, however, mean the end of the claim, as Cotter J saw no reason why the Claimant could not seek to use other causes of action such as those relied upon in AA and Jones v Persons Unknown [2022] EWHC 2543 (Comm), namely restitution, constructive trust, deceit and unjust enrichment.

A Consultation Paper, released in advance of the Law Commission Report, cites good policy reasons why the tort of conversion should be extended to property such as crypto assets. For example, the Consultation Paper notes that a person has a cause of action available to them in respect of physical object that they do not in respect of a crypto asset, when that person’s property interests seem to be the same in both cases. The distinction between crypto assets and physical assets in this context therefore appears unnecessarily abstract. If the common law is unwilling to countenance widening the tort, on the basis of the 2025 Act, it seems there may be a good argument for further statutory development in this space.