Yuen v Li [2026] EWHC 532 (KB) (‘Yuen’) is the first English decision to consider digital assets after the enactment of the Property (Digital Assets etc) Act 2025. The case is important not because it confirms that digital assets may be property—English courts had already been moving in that direction—but because it shows how little that conclusion resolves.
The claimant alleged that his estranged wife had obtained the seed phrase to his Trezor cold wallet and used it to recreate his private key, enabling the transfer of more than 2,300 Bitcoin from his blockchain address. He sought, among other things, damages and proprietary remedies, including claims in conversion and trespass to goods. The 2025 Act permits courts to recognise digital assets as a possible ‘third thing’: neither a thing in possession nor a thing in action. But the Act does not say what rights follow from that classification, against whom those rights operate, or what remedies should be available when they are infringed. Yuen exposes precisely those gaps.
The conversion claim was struck out. Cotter J held that the Supreme Court’s decision in OBG v Allan, which rejected conversion of pure intangibles, remained a ‘clear block’ ([66]) to extending conversion to digital assets. This is significant. Some may have assumed that once digital assets were recognised as a new category of property, conversion would naturally follow. Yuen shows that this does not follow. Yet Cotter J also accepted that the common law might develop ‘specific and discrete principles of tortious liability’ ([75]) by analogy with conversion. That possibility raises more questions than it answers. Would such liability be strict, like orthodox conversion? Or would it require fault, notice, or knowledge? Would it apply to every person who deals with a misappropriated digital asset, including innocent recipients?
There is a deeper problem with reasoning from the label ‘property’ to the conclusion that there must be a conversion-like tort. Digital assets are not independent physical things. They are entries, relationships, and permissions within a ledger system maintained across computers: see work by Kelvin F.K. Low. If all copies of a ledger were deleted by those who owned the computers hosting it, the relevant asset might effectively cease to exist. Is that a tort against the digital asset holder? If yes, the law would significantly restrict what owners may do with their own machines. If no, the law would treat a complete destruction of the asset as lawful while potentially treating lesser interferences, such as transferring tokens to a burn address, as wrongful.
Similar problems arise with hardware wallets. Suppose stolen Bitcoin is transferred to a new address, the private key is stored on a hardware wallet, and that wallet is later destroyed by an innocent donee. Has the donee committed a wrong against the original Bitcoin holder? The physical wallet is the donee’s chattel, but the destruction may render the Bitcoin practically inaccessible. As Howells v Newport City Council reminds us in another context, the device and the asset accessed through it are distinct. Treating interference with one as necessarily interference with the other risks serious overreach.
The trespass claim in Yuen illustrates the same difficulty. The claimant did not allege trespass to the Bitcoin itself, but to the Trezor wallet. That is understandable: trespass to goods traditionally concerns tangible property. But the pleaded case was that the defendant did not need to touch the wallet or alter data on it. Rather, she allegedly obtained and used the seed phrase to recreate the private key and transfer the Bitcoin. A hardware wallet does not store Bitcoin. It stores access credentials. If the wrong consists only in learning or using a seed phrase, it is not obvious that trespass to goods is the right analytical route.
Damages present another unresolved problem. If liability is established, how should loss be assessed? The usual market rule assumes a reliable market price. Digital asset markets often do not offer that comfort. They can be fragmented, thinly traded, highly volatile, and vulnerable to wash trading and manipulation. The Singapore High Court in Kalen v World Exchange Services confronted this difficulty and used an averaging method across several dates. That approach may be practically attractive because it smooths volatility. But it also raises a question: why those dates, rather than others? The problem becomes sharper where the defendant is not a deliberate wrongdoer but an innocent recipient or donee. Should such a person be liable by reference to a market price that may itself be distorted?
The central lesson of Yuen is that calling digital assets ‘third things’ does not tell us what legal consequences should follow. It does not determine whether conversion should apply. It does not tell us whether any new tort should be strict or fault-based. It does not explain how the rights of digital asset holders should interact with the rights of those who own the devices, servers, and ledgers through which those assets are accessed or maintained. Nor does it solve the problem of valuation in unstable crypto-markets. The real question is therefore not whether digital assets can be labelled property. It is what rights that label creates, against whom, and on what terms.
The authors’ full paper is available here. Both authors contributed equally.
Hui Jing is an Associate Professor at the Faculty of Law, The University of Hong Kong.
Kelvin F.K. Low is a Professor at the Faculty of Law, The University of Hong Kong.
Share:
With the support of
