Gary Jones v Persons Unknown & Ors (No.2) [2025] EWHC 1823 (Comm)

[2025] EWHC 1823 (Comm)

Case No LM-2022-000125

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

LONDON CIRCUIT COMMERCIAL COURT (KBD)

Venue The Rolls Building, 7 Rolls Buildings, Fetter Lane, London

EC4A 1NL

Date of hearing: 10 June 2025

Before

HIS HONOUR JUDGE RICHARD PEARCE

(Sitting as a Judge of the High Court)

Between

GARY JONESRespondent

PERSONS UNKNOWNRespondent

(Being the individuals or companies who obtained access to the Claimant’s accountsRespondent

between about 22.01.2019 and 10.01.2020 and carried out the transactions [on or about theRespondent

same dates] as a result of which the crypto currencies held in those accounts wereRespondent

transferred to other accounts (“Transferred Assets”))Respondent

PERSONS UNKNOWNRespondent

(Being the individuals or companies who own or control the accounts into which theRespondent

Transferred Assets were transferred other than purchasers for full value)Respondent

PERSONS UNKNOWNRespondent

(Being the individuals or companies who are innocent receivers who have no reasonableRespondent

grounds for thinking that what has appeared in their account belongs to theRespondent

HUOBI GLOBAL LIMITED (A company registered in the Seychelles)Defendant

KYRREX LIMITED

(A company registered in St Vincent and the Grenadines)

Third Party/CPR 40.9 Applicant

MR DAVID MCILROY (instructed by HCR Legal LLP) for Claimant/Respondent

for THE FIRST TO FOURTH DEFENDANTS did not appear and were not represented

MR MARK LORRELL (instructed by Healys LLP) for Interested Party/CPR 40.9 Applicant

Approved Judgment

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Date 2025-06-10

[1]This is my judgment on the application before the court by a party who seeks to be joined to this action, Kyrrex Limited, a company registered in Saint Vincent and the Grenadines. The application is one to set aside or vary a judgment brought under Part 40 of the Civil Procedure Rules. The relevant provision of the Civil Procedure Rules, CPR 40.9, provides:

“A person who is not a party but who is directly affected by a judgment or order may apply to have the judgment or order set aside or varied.”

[2]It has been noted in submissions in this case and elsewhere that the rule is relatively lacking in prescription. I shall return to that point in due course.

[3]The application notice that is before the court is dated 27 November 2024. By that notice the applicant, Kyrrex Limited seeks an order in the following terms: that it be added as a party to the claim as the fifth defendant; that the judgment entered against the first to the fourth defendants on 6 September 2022 be set aside and the claim be reinstated; that the claimants do deliver back the sum of 89.616088 Bitcoin to the tHEL ( a reference to a Bitcoin wallet to which I shall return in due course); that the claimant file and serve a copy of the amended claim on the defendants; the defendants file and serve a defence; and, thereafter, there be provisions relating to the case management of the case.

[4]That application seeks to set aside a judgment of Mr Nigel Cooper KC as he now is. That judgment is in the bundle before the court. The relevant parts of the judgment which give significant background to this application can be seen at paragraphs 6 and following.

[5]Mr Gary Jones, the claimant in this action and the respondent to this application, is the victim of a large scale cyber fraud perpetrated by a group of online cyber criminals located overseas. There is a suggestion that they are based in Russia. That fraud targeted individuals through a website known as www.extickpro.com which is a fake cryptocurrency investment company promising high returns and persuading clients to set up cryptocurrency accounts on extickpro, the EP platform, and to transfer cryptocurrency to this fake online trading platform which I understand has now been shut down.

[6]At paragraph 7, Mr Cooper KC went on:

“7. Mr Jones initially responded to an online advertisement on the EP platform in January 2019 and having contacted the fraudsters opened an online account the following week. Mr Jones became a regular investor in cryptocurrencies, in particular Bitcoin, between 22 January 2019 and 10 January 2020 and during that period he invested a total of £480,206, purchasing Bitcoin from three cryptocurrency exchanges which was then transferred to the EP platform. Mr Jones said that he bought 89.61616088 Bitcoin which, as I understand it, at today’s value has a value of approximately £1.536 million. 8. Mr Jones did not operate the funds on the EP platform himself. Any trades he made were actioned by a so-called representative of the EP platform while on a phone call with Mr Jones using remote desktop software. It appears that none of the so-called trades in fact took place. The EP platform simply showed that the trade had occurred and appeared to show large profits accruing to Mr Jones’ account. That profit was entirely fictional and subsequently the persons who operated the EP platform took control of the Bitcoin and dissipated the funds across the Bitcoin blockchain. 9. Mr Jones did make several attempts to recover the money by telephone and email and eventually asked to withdraw his funds from the EP platform. Perhaps unsurprisingly, Mr Jones had been unable to obtain his money and was repeatedly given false explanations for why the repeated request to withdraw the funds was delayed. Eventually, in early 2020 Mr Jones sought to close his account on the EP platform. He did apparently receive a small return of $2,100 on 31 December 2019 but has otherwise not been able to recover his monies from the EP platform. 10. On 1 May 2020 Mr Jones instructed lawyers and investigators to attempt to recover his money. The CiRO expert report of 5 April 2022 provides evidence of a wallet connected to this fraud which is associated with Huobi Exchange and which, as at 1 April 2020, contained 488.71693660 Bitcoin. A report provided to me today highlights that the quantity of Bitcoin has in fact decreased notwithstanding the proprietary freezing order previously made. 11. The claimant has available to him the wallet deposit address for the wallet with Huobi Exchange. I do not propose to repeat the whole address in this judgment but will simply adopt the claimant’s definition and call it ‘the tHEL wallet’. As at 20 July 2022 I understand that the tHEL wallet held a balance of 14,986 Bitcoin which was apparently equivalent to US$345,148,288. I am informed by Mr Maguire [sc. counsel for Mr Jones] that the Bitcoin held in the wallet can only be Bitcoin which has been transferred to the wallet by individuals connected with the fraud on this claimant.”

[7]I close the quotation from the judgment there but note in passing two important points relied on by Mr Lorrell and, indeed, to some extent by Mr McIlroy. in each case for slightly different reasons. First, the judgment was wrong to attribute any cryptocurrency from Mr Jones having arrived in the tHEL wallet and, second, as Mr Lorrell points out, the final sentence of paragraph 11 of the judgment that I have just read out saying that the Bitcoin held in the tHEL wallet can only be Bitcoin transferred to the wallet by individuals connected with the fraud is not only incorrect but is not in fact consistent with the expert evidence from CiRO that Mr Jones had obtained by the time of that hearing. I shall return to that point.

[8]That sets the background to the fraud on Mr Jones. In May 2022 he issued a without notice application for a freezing injunction. On 28 June 2022 HHJ Pelling KC made an interim freezing injunction against the following three categories of Persons Unknown: firstly, the fraudsters who had effected the transfers out of Mr Jones’ Bitcoin accounts; secondly, the persons who owned or controlled the accounts into which those transferred assets were transferred and who were not innocent receivers which in the order are described as “Non-innocent Receivers”; and, thirdly, persons who received transferred assets for full value and without reasonable grounds for thinking that the transferred assets belonged to Mr Jones. That category of persons was named as “Innocent Receivers”. In addition to those three categories of Persons Unknown, an order was made against the cryptocurrency exchange, Huobi Global limited (“Huobi”) the exchange in which the tHEL wallet was held.

[9]The order identified (in the event wrongly as noted above) 89.61616088 Bitcoin said to have been transferred into the tHEL wallet. The freezing injunction froze assets up to the value of £1.75 million.

[10]By a separate order of the same date, Huobi was ordered to provide information on affidavit and to disclose certain documents. The information sought included full details of the identity of the account holders of the Bitcoin addresses such as tHEL. It would seem from the information before the court that to call somebody such as Kyrrex the account holder of a Bitcoin address may not be an accurate description of their true relationship with Huobi. In any event, whatever the niceties of the terminology, Huobi did not comply in any way, shape or form with the disclosure part of the order.

[11]The injunction having been made on 28 June, it was extended on 27 July and Mr Jones sought summary judgment. That was the judgment from which I have read a passage already. The summary judgment which Mr Jones obtained was for 89.61616088 Bitcoin, against the original fraudsters and non-innocent receivers for receipt and unjust enrichment and against Huobi for holding the Bitcoin as constructive trustee.

[12]The order recorded that the tHEL wallet under the control of Huobi had been used to store the fraudulently obtained Bitcoin and the order required the original fraudsters, non-innocent receivers and Huobi to deliver up and/or to restore to Mr Jones the 89 point odd Bitcoin that had been transferred out of the account. The order permitted the original fraudsters and non-innocent receivers and Huobi to apply to vary or discharge the order.

[13]Huobi took no part in those proceedings but complied with the order made by Mr Cooper KC by transferring the specified amount of Bitcoin inclusive of costs to Mr Jones’ nominated crypto wallet. It is common ground from the expert evidence that the parties have now obtained that the compliance by Huobi with the order of Mr Cooper involved it transferring Bitcoin not from the tHEL wallet but from another wallet which ends RwrmV.

[14]In any event, in mid-September 2022 because of the freezing injunction applying to the tHEL account, Kyrrex became aware of the injunction and ultimately of the summary judgment application. They took various steps in respect of this including writing a letter that explained their position, that they were not the receivers of Mr Jones’ Bitcoin and that, as they then understood the position to be, Bitcoin had been removed from the tHEL account to satisfy Mr Jones’ case, whereas, in fact, it should not have been. The applicant in this case, Kyrrex, were not able to obtain disclosure of documents from Mr Jones and accordingly issued an application for disclosure. That application was compromised in March 2023 by the provision of relevant documents and a payment of costs by Mr Jones.

[15]In October 2023 Huobi Global limited was struck off from the Seychelles Register of International Business Companies as a result of its failure to maintain a registered agent. This application to set aside the judgment and order of Mr Cooper KC was made on 27 November 2024. It is fair to say it has taken some time to come on for hearing. That seems to be entirely the consequence of matters outside of the control of Kyrrex, most particularly, that Kyrrex had to resist an application by Mr Jones for security for costs, that failed, and that Mr Jones latterly decided to disavow the evidence from CiRO and seek expert evidence from another company, Prometheus. That latter change of direction of expert evidence led to the adjournment of the hearing of this case until today’s date and, indeed, I note included an order that Mr Jones pay costs on the indemnity basis as a condition of being permitted to rely on new expert evidence.

[16]I start this judgment with two comments. The first is that, as far as I am concerned, both of the litigants before me are entirely innocent of any fraud and whoever ends up bearing any loss as a result of the fraud on Mr Jones will be somebody who is uncompensated in spite of being innocent of any misconduct. Mr Jones was, of course, the original victim of the fraud. He, fortunately for him, got his Bitcoin back and, indeed, as I understand the evidence, he now may have a significantly more valuable asset. That would not be the case presumably if the Bitcoin was transferred back in accordance with the order sought by Kyrrex.

[17]Kyrrex has had Bitcoin moved from its name effectively to ensure that Huobi has not suffered in satisfying Mr Jones’ loss, and I shall deal with that point in a little more detail in a moment, even though it is Kyrrex’s case that the fraudulently obtained Bitcoin was never credited to its name to its account. It is out of pocket as things stand and will remain out of pocket if this application does not succeed.

[18]The case brought by Kyrrex starts by asserting, as is now entirely accepted, that the application that Mr Jones brought had wrongly identified his Bitcoin as having been paid into the tHEL wallet. In fact, the tHEL wallet contained Bitcoin which belonged, was under the control of, was under the direction of or otherwise had been invested by Kyrrex, very little of which could be shown to be the result of arguably illicit conduct, and none of which related to Mr Jones. However, on the evidence before the court now, the tHEL wallet contained Bitcoin beyond assets to which Kyrrex may lay any claim or may be investments by its part on behalf of investors. That is of some significance as we shall see later on.

[19]The orders, as I have indicated, required transfer out of the tHEL wallet to satisfy the judgment that Mr Jones had obtained but, in fact, that is not what Huobi did. Rather, Huobi transferred Bitcoin from the RwrmV wallet but then looked to Kyrrex’s account in the tHEL wallet to reimburse it for the credit that it had made to Mr Jones out of the RwrmV wallet. Presumably, although it probably does not matter for this application, Huobi thought they were justified in doing that because the order that Mr Cooper KC had made targeted the tHEL wallet and the assets in that wallet erev thought to be those of Kyrrex, though quite how that lies with the fact that there seem to have been Bitcoin belonging to others as well as Kyrrex within the tHEL wallet is somewhat unclear.

[20]I noted in reading out the order from Mr Cooper KC that it permitted a fraudster or a non-innocent receiver of the Bitcoin of Mr Jones to apply to vary it but, of course, Kyrrex does not fall into either of those categories. Hence it brought this application under CPR 40.9.

[21]Kyrrex is a fintech and cryptocurrency exchange platform. It operates a crypto exchange business and had an account with Huobi which is a large global exchange. In fact, as I have indicated, Huobi Global Limited no longer operates. It seems from the material before the court, and Mr Lorrell relied on this in part for his submissions, that Huobi’s operation has been totally succeeded by a company called HTX and that names are interchangeably used with little or any care for corporate identity. That may very well be the case. In any event, having opened a facility with Huobi, the Bitcoin wallet ending in tHEL was at least on Kyrrex’s understanding assigned to it for its deposits even though it seems in fact that other Bitcoin went in there as well.

[22]It is important to understand Bitcoin just a little more. Bitcoin is, of course, a cryptocurrency, an electronic payment system which relies on proof of ownership through an open distributed digital ledger, the so-called blockchain. This is a list of the transactions publicly available for scrutiny. Kyrrex’s expert says this of a wallet: “A wallet stores the necessary information to transact the cryptocurrency. While wallets are often described as a place to hold or store cryptocurrency, due to the nature of the system, cryptocurrencies are inseparable from the blockchain transaction ledger. Therefore, a wallet is more correctly defined as something that ‘stores the digital credentials for your cryptocurrency holdings and allows you to access and spend them.’“ In submissions, Mr McIlroy made a comparison with safe deposit boxes and/or vaults containing safe deposit boxes.

[23]The tHEL address had then been provided to Kyrrex. On Kyrrex’s evidence, which I accept, when it wished to deposit Bitcoin with Huobi, it would send the Bitcoin to that address and Huobi would credit Kyrrex’s exchange account balance accordingly. Kyrrex could see the balance on the wallet but Huobi would control the private keys of the wallet. Huobi was able to and, indeed did, move Bitcoin between wallets and in a way that did not allow the public looking at the blockchain to identify what was in the wallet and who claimed ownership of it.

[24]That then is the background to the application. I have referred to CPR 40.9 already. There is a useful description of the power in CPR 40.9 in the White Book at 40.9.1. I need read only the first section of that:

“A person who is a party to proceedings may in circumstances far too numerous and varied to be easily, succinctly and accurately stated, apply to have any judgment or order given or made in the proceedings set aside or varied. Sometimes the application will take the form of an appeal, sometimes not. For obvious reasons, the bias of procedural law is against permitting parties to cause the court to go back on judgments and orders given and made so the circumstances in which a party may succeed in such an application are bound to be at least to an extent restricted.”

[25]The text of the White Book goes on to deal with various circumstances where CPR 40.9 has been applied and refers at least historically to the best known circumstance as being where default judgment for possession of land was obtained but a person with a claim to possession who was not party to the proceedings sought to be allowed into the proceedings and to set aside the judgment. Perhaps more often in the current legal framework we are seeing CPR 40.9 being used in so-called “Persons Unknown” injunctions, that is to say for present purposes injunctions in which protesters’ rights or actions are to a greater or lesser extent restrained by order of the court even though the person seeking to restrain the protest does not know the identity of the persons whose behaviour they are seeking to regulate. It will be noted that the present case also involves “Persons Unknown” but there is little doubt that this kind of Persons Unknown order and judgment which in my experience is a common style of order in cryptocurrency cases is a rather different proposition from the protester cases.

[26]The test to be applied on an application under CPR 40.9 is clearly set out within the terms of the rule itself: first, that a person who is “directly affected by a judgment or order” may apply and, second, that they may apply to have the judgment or order set aside or varied. Thus the person applying has to show that they are directly affected by the order and the court has to consider in the exercise of its discretion, perhaps better called its judgment, whether or not an order ought to be made.

[27]The test of whether somebody is directly affected was considered in the case of Abdelmamoud v The Egyptian Association In Great Britain Ltd

[2015] EWHC 1013 (Ch)

, a decision affirmed on appeal and cited with approval in other cases. Mr Edward Murray sitting as a Deputy

Judge of the High Court said:

“In order for a non-party to be directly affected by a judgment or order for the purpose of CPR 40.9, it is necessary that some interest capable of recognition by the law is materially and adversely affected by the judgment or order or would be materially and adversely affected by the enforcement of the judgment and order.”

[28]I have referred to the protester context of so-called “Persons Unknown” case. In those cases the directly affected test has been revisited probably most helpfully in the judgment of Hill J in Shell UK v Persons Unknown

[2023] EWHC 1229

. At paragraph 52 and following she cites various decisions including judgments of Johnson J, Ritchie J and Bennathan J in order to consider whether the principles referred to by Mr Edward Murray in Abdelmamoud apply with equal force in the context of the protester type cases. At paragraphs 63 to 65 she concludes that in the protester cases at least the court should be wary of applying too strict an approach to who qualifies as a directly affected person. In my judgment, it is clear from what Hill J is saying there that she is considering the application of the test in the context of people who are able to and are liable to assert rights which may be enforceable under the Human Rights Act. The conclusion she reaches is not necessarily of equal force and application in the cases such as the present which involve essentially property rights.

[29]I have indicated that beyond the question of demonstrating whether the applicant is a person directly affected the court must look to the exercise of a discretion or a judgment. It will always be important in an application of this kind to consider whether the person seeking to apply has a real prospect of successfully defending the claim against it were the judgment to be set aside - see the judgment of HHJ Cotter QC as he then was in Ageas Insurance Ltd v Stoodley [2019] Lloyd’s Rep IR.1 where at paragraph 53 he considered the test, considered previous authorities on the issue and was satisfied that the application must ordinarily “establish that there is... a real prospect of successfully defending the claim,” reflecting the test under CPR 13.3.

[30]Whilst referring to CPR 13.3, it is important to note that that contains with it an express obligation to make the application to set aside promptly. There is no corresponding express obligation under CPR 40.9. This distinction is probably the result of the myriad of circumstances in which CPR 40.9 may lead to a non-party making an application. Nevertheless, it is important to bear in mind that the overriding objective includes the need to ensure that cases are dealt with expeditiously and that, as Cotter J, as he now is, commented in Ageas at paragraph 47, a party might need to persuade the court that an application was brought promptly. Mr Lorrell on behalf of Kyrrex does not dispute that the promptness of the application is a relevant consideration on the application under CPR 40.9 but he makes the point that the failure expressly to mention it in CPR 40.9 may mean that it has a lesser significance than it does in some other applications or, at the very least, that the court may apply the issue more flexibly.

[31]In its skeleton argument, the appellant raises the question of whether their may be some good reason other than a pure merits based argument to set aside the judgment. That reference to good reason echoes the terms of CPR 13.3 which deals with an application by a party to set aside or vary a judgment where, of course, as an alternative to establishing a real prospect of successfully defending the claim, the party seeking to set aside the judgment may persuade the court that there is some other good reason why the judgment should be set aside or varied and/or CPR39.3(5) dealing with not attendance at trial.

[32]I note at the beginning of summarising the applicant’s submissions that it criticises two particular aspects of the conduct of the case on behalf of Mr Jones. The first is that, as I have indicated already, Mr Lorrell contends, and I accept this to be so, that the original order was made on misleading information both as to whether the stolen Bitcoin had been paid into the tHEL account and whether the tHEL account was exclusively the subject of fraudulent credits or transfers into it. Neither of these statements was correct They undoubtedly may in each case have influenced the order that Mr Cooper KC made. Indeed, given his express reference to the second point and given that his order contained reference to the tHEL wallet, it is probably the case that in both senses he was actually misled. Mr Lorrell has made clear during his submissions that he does not accuse anybody of dishonesty in respect of misleading the court but he draws attention to the fact that the obtaining of an order on misleading information is a serious matter. Kyrrex emphasise the need for anybody seeking an order, especially one that binds an unidentified third party such as them, to present the case fairly and accurately. Kyrrex say that there were failures here. I accept that this was so.

[33]The second point made by Kyrrex is again a point that I have summarised already, which is that on behalf of Kyrrex, Mr Lorrell complains that Mr Jones has been less than cooperative in terms of this application. He has put obstacles in the way of the efficient resolution of the issues by not disclosing documents at the outset. He is further criticised for making a security for costs application which failed in circumstances in which the judge was persuaded that he was clearly the claimant and could not in those circumstances expect to obtain an order for security for costs and for the late change in respect of expert evidence. Perhaps on the last of those points at the very least Mr Jones could be excused given the criticisms that have been made of CiRO’s report and the acknowledged weaknesses of the report.

[34]I turn then to the two aspects of the test. The first question is whether Kyrrex is a person directly affected by the judgment. If it is not, then it has no right to apply under CPR 40.9. It may be that it is an issue that the court could not determine now, in which case, if Kyrrex arguably were a person directly affected, the authorities would support the proposition that I should set aside judgment and allow that matter to be dealt with in any subsequent hearing.

[35]As I have indicated, the order that was satisfied by Huobi transferring Bitcoin was an order that targeted the tHEL account. Kyrrex undoubtedly had Bitcoin to its credit in the broad sense of the word within the tHEL account and Huobi’s actions having satisfied the order in favour of Mr Jones were to transfer assets from the Kyrrex account back to replenish its own accounts. Mr Jones does not necessarily accept this last matter to be made out on the evidence but I agree with Mr Lorrell that the evidence on that issue at the moment all points in one direction which is in favour of the case that his client advances.

[36]Mr Lorrell says that there could not be a case of somebody more directly affected by a judgment than somebody whose assets have been depleted because of that judgment and in order to satisfy that judgment. As I have indicated already, Mr Lorrell invites me to look at the broad definition of who is directly affected considered by Hill J in Shell Oil.

[37]Turning to the merits, Mr Lorrell says that he on behalf of his client can clearly show a meritorious defence, that is to say a defence with a real prospect of success. It is simply not in dispute that Kyrrex has suffered loss because Bitcoin which it had deposited with Huobi has been used by Huobi to replenish sums paid by Huobi to Mr Jones. No defence has yet been filed but it is clear, says Mr Lorrell, that Kyrrex clearly has a right of action for the recovery of what in effect is its Bitcoin. Thus Kyrrex contends Mr Jones was not entitled to a judgment against Huobi. A fortiori, he was not entitled to a judgment which targeted assets in the tHEL wallet and the satisfaction of that judgment by Bitcoin ultimately coming from the tHEL wallet amounts to a direct effect on Kyrrex. Moreover, it cannot be said that this is an afterthought by Kyrrex. It has been making the same point since it first became aware of the account being frozen in September 2022.

[38]As to delay and the effect of that on the exercise of the judgment, my attention has been referred to various material that is perhaps most conveniently summarised in the witness statement of Mr Plumpton dated 12 March 2025. That witness statement summarises what has happened since matters came to light. Essentially, the position from Kyrrex’s point of view was as follows. Until March 2023 when it obtained disclosure of documents it did not have the material necessary to launch this application. Any cryptocurrency case of this kind would involve the obtaining of expert evidence in order to explain the various transfers that had taken place so as to justify the argument being advanced. Once the documents were obtained, as Mr Plumpton puts it at paragraph 60 of his statement:

“We spent some months in 2023 ensuring that proceeding via the English Court was the right approach and that we had corporate approval to invest in a potentially costly expert exercise. By the end of 2023, once these pieces were in place, we moved forward with instructing AnotherDay [that is to say the expert instructed by Kyrrex]. The period from formal instruction to final report, early 2024 to August 2024, was around half a year which in the context of such investigations is reasonable. This included time for the experts to obtain and analyse blockchain data which can be an iterative process and to combine their findings into a clear report. We did not experience any undue delay on the experts’ part. The timeframe was largely as expected for a matter of this complexity. After receiving the report, the final two months... was spent preparing and filing this application.”

[39]That chronology takes Kyrrex through from discovering the freezing of the assets via the disclosure and the instructing of experts to the making of this application in November 2024.

[40]In weighing the merits, Mr Lorrell contends on behalf of Kyrrex that any criticism that could be made of delay is far outweighed by the strength of the case that his client advances. He draws my attention to the judgment of Freedman J in the case of Lombard North Central v Skyjets. That is a case to which I have been taken in some detail and the delay in that case was in total said to be about four years. It must be said that, as all cases that deal with issues of delay demonstrate, the factual circumstances can be infinitely variable. Mr McIlroy’s submissions persuaded me that whilst the delay in Lombard North Central v Skyjets was clearly significant, it was not one that it was easy to compare with what has happened in this case. It is an example of a case where a judge for reasons that one can discern from the judgment and which are clearly laid out at various points within it considered that a relatively lenient approach could be taken to what seems on the face of it to be a considerable delay. Balancing the merits with the delay and bearing in mind the other criticisms that are made of the obtaining of this judgment, including the assertion that misleading information was put before Mr Cooper KC, Mr Lorrell contends that the court should clearly exercise its discretion in favour of making the order sought.

[41]Turning to the respondent’s case, on behalf of Mr Jones, Mr McIlroy contends that Kyrrex’s analysis both as to whether it is a person directly affected and as to the merits of the defence is flawed. Looking first at the argument that the order required Bitcoin to be drawn from the tHEL wallet, that was indeed the case but, as Mr McIlroy shows at paragraphs 69 to 72 of his skeleton argument, at all times relevant to the obtaining of the freezing injunction and the subsequent satisfaction of the order, there was sufficient Bitcoin within the tHEL wallet to which Kyrrex and its customers laid no claim to satisfy the judgment. In those circumstances, it cannot either be said that the order of Mr Cooper KC directly targeted Kyrrex or that Kyrrex were directly affected by that order. Admittedly, if the tHEL wallet had only contained Bitcoin to which Kyrrex laid claim one way or another that argument could not be made but the evidence is not to that effect here. In any event, the Bitcoin that was actually transferred to Mr Jones’ account came from the RwrmV wallet, not the tHEL wallet.

[42]In those circumstances, whilst the evidence probably does point fairly convincingly to the fact that Huobi has chosen to draw from Kyrrex’s Bitcoin account in order to replenish its funds, it was not something either that it was obliged to do or that is a direct consequence of the order. Rather, it was Huobi’s choosing to credit Mr Jones in this way. In those circumstances, says Mr Jones, this simply cannot be said to be a case in which Kyrrex is directly affected by the order that was made. What directly affected Kyrrex was Huobi’s choices as to how it acted but those are matters between Huobi and Kyrrex for which, it is contended on behalf of Mr Jones, Kyrrex have remedies for pursuant to their contract with Huobi. Admittedly, now that Huobi is dissolved it may be difficult to exercise those rights but that was not the position at the time the transfer was made.

[43]In any event, Mr Jones disputes that Kyrrex has suffered a recoverable loss. In this respect, my attention is drawn to Investment Trust Companies v Revenue and Customs Commissioners

[2018] AC 275

which was cited in the important recent case of D’Aloia v Persons Unknown

[2025] 1 WLR 821

, again a crypto “Persons Unknown” case rather than a protester case. At best Kyrrex can say that Huobi has deducted Bitcoin from an account in which Kyrrex held Bitcoin to make up a shortfall but it does not show any proprietary interest in the Bitcoin of a manner that could give rise to a constructive trust, to a claim in unjust enrichment or, indeed, to a tracing claim. In any event, a claim in unjust enrichment would fail, says Mr Jones, because of his change of position, a point I will deal with separately below when looking at the question of delay. Accordingly, the arguments advanced by Kyrrex lack the merits necessary not only because it is not a directly affected party but because it does not show a legal basis for depriving Mr Jones of the benefit of a judgment that he has obtained against other parties.

[44]Further, Mr McIlroy on behalf of Mr Jones draws attention to the fact that the evidence before the court by way of the trading terms both of Huobi and of Kyrrex is that in both cases the wallets in which they held customers’ Bitcoin were custodial wallets with no specific identifiable Bitcoins held. In those circumstances, again Kyrrex simply does not have the proprietary interest sufficient to justify the right that it seeks to enforce.

[45]In dealing with the question of delay, Mr Jones contends that there has been considerable delay in the bringing of this application and that that alone or at least in combination with the weakness of the case on its merits should lead to the court rejecting the application. It is contended on behalf of Mr Jones that Kyrrex knew everything it needed to know by September 2022 when the order of Mr Cooper KC was satisfied. It is true that it would have needed to obtain expert evidence and it could not be argued by Mr Jones that expert evidence would be obtained overnight. Furthermore, it is accepted on Mr Jones’ side that in order to proceed with an application Kyrrex needed to obtain disclosure. But even taking together the need for disclosure and the need for expert evidence, that does not and cannot justify the two years - slightly over two years - between Kyrrex’s knowledge of matters in September 2022 and the issue of this application.

[46]Moreover, it is argued on behalf of Mr Jones that the delay here has caused specific prejudice. It must be noted that this is in contradiction to the Skyjets case where prejudice was not made out. In this case, it is contended that there is prejudice in three respects: first and most significantly, that the dissolution of Huobi Global Limited has made it impossible or at least very difficult for Mr Jones to proceed against that company, a clear circumstance of prejudice on his case; second, that to go after anybody else in respect of the missing Bitcoin would now be likely to be far more difficult than would have been the case in 2022 or 2023. Even then events were some years old. Now the Bitcoin was transferred originally from Mr Jones’ account between five and six years ago. Third, it is argued that Mr Jones’ financial position has changed.

[47]During the course of Mr Lorrell’s submissions, I identified that that last change of position point is a difficult one. There are circumstances in which a person’s financial change of position may be sufficient to justify an argument that they have been prejudiced whether such as to affect a remedy in unjust enrichment or, more generally, to affect an argument as to promptness. In my judgment, the evidence on that issue here is not sufficiently clear cut to justify an argument either that an unjust enrichment claim would fail or that there was specific prejudice in the change of financial circumstances due to lack of promptness. That does not however detract from the other two points made on behalf of Mr Jones, namely, the specific prejudice of not having proceeded against Huobi before it was struck off and the increased difficulty with the passage of time.

[48]How then do I balance all of these issues? Starting with the issue of delay, this is not a case of gross delay. It would not be possible to look at Skyjets and think that a delay of this length of time was gross but Kyrrex could and should properly have pursued matters more quickly. I find the evidence as to the length of time taken to instruct an expert and then to obtain an expert’s report to be unconvincing. I have other experience of cryptocurrency cases on the Bench. I have seen cases where reports have been obtained really quite quickly. I have seen cases where reports have taken several months and I would not have criticised Kyrrex if it had taken several months to get a report together but crypto cases like so many other cases involving the challenging of a judgment need a timely response and to have taken more than two years or perhaps as a better measure more than eighteen months from the date at which disclosure was given is in my judgment difficult to justify.

[49]Furthermore, this is a case where the delay is likely to be of significance because I accept the argument that the demise of Huobi Global Limited and the passage of time generally will significantly affect Mr Jones’ ability to get any relief from any other source.

[50]As to the other factors that I have identified relating to the obtaining of the order from Mr Cooper KC and the apparent barriers that it is said have been put in the place of the efficient dispatch of this litigation by Mr Jones or on his behalf, I am less convinced that either of those play any part in the judgment. As to the misleading of Mr Cooper KC, I accept any misleading that there may have occurred was entirely innocent. That does not give a right to set aside judgment. Mr McIlroy is correct that the authorities in terms of the automatic right to set aside a judgment would be limited to those cases where fraud can be shown. That is emphatically not the case here. It is one factor to weigh in the exercise of the discretion but it plays only a limited part in the weighing of the various factors.

[51]The apparent obstacles or the alleged obstacles put by Mr Jones to the efficient dispatch of this litigation are matters which can be criticised and indeed probably have already been criticised in other orders and judgments within this case. It does not consider that a general lack of cooperation in terms of the conduct of litigation is something that bears much if at all in the exercise of a judgment of the kind here.

[52]The real issues here, involve looking, apart from the delay issue, at the question of standing and at the question of the merits of the case. In my judgment, the words “directly affected” are a clear pointer to the court to avoid setting aside judgments which only indirectly affect another party. This case demonstrates quite vividly how judgments may affect other parties but in my judgment the effect here is a classic example of an indirect effect. I say that because it is quite clear on the evidence that Huobi did not need to access any Bitcoin that belonged to Kyrrex or its clients in order to satisfy this judgment. Moreover, on the merits issues that arise in the case, whilst I have every sympathy with Kyrrex who are entirely innocent losers, I see some considerable difficulties in the manner in which the case is advanced in a way that would justify the setting aside of the order. I have referred to what I see as the difficulties in treating Huobi as a custodian in order to bring a claim against them. I do not reject those difficulties out of hand but this would plainly be a problematic claim in which the merits are far from clear cut. In those circumstances, my finding on Kyrrex Limited not being directly affected is a bar to the application succeeding and it fails on that ground. It would in any event have failed on the application of the merits test bearing in mind not only the merits of the claim themselves but also the delay in bringing this application and the consequent prejudice to which I have referred. In those circumstances, with I can only repeat considerable sympathy for the position of Kyrrex, in my judgment this application must be dismissed. (Proceedings continued)

[53]The claimant, Mr Jones, seeks his costs on the standard basis until the expiry of an offer letter dated 19 May and after the expiry of the offer in that letter which was noon on 21 May 2025 costs on the indemnity basis. The basis upon which he so applies is that the offer made by him in that letter is in effect the result that has been achieved here, namely, that the application has not succeeded. He invited Kyrrex to withdraw the offer (sic). In the event, it did not so it has had a judgment against it.

[54]I have read that letter and noted the various arguments advanced within it. This is a letter not simply inviting Kyrrex to discontinue or to withdraw the application but setting out a whole series of grounds upon which it is asserted that it also ought to do so because it will not succeed in the application. In very large part, those grounds are made out within the judgment that I have handed down today. In addition, in particular, it is to be noted that the delay issue which played a significant part, although not only one part but played a significant part in my judgment, was one that had been identified previously both by HHJ Pelling KC and by Mr Holden KC sitting as a Deputy Judge of the High Court.

[55]Mr Lorrell on behalf of Kyrrex contends that it was reasonable to pursue the application. It is certainly the case that the application throws up some interesting questions and some interesting issues and some difference of analysis between the parties. Ultimately though, our costs regime is largely guided by the reasonableness of pursuing or not pursuing cases and applications in circumstances where costs can be saved.

[56]In my judgment, first of all, the claimant is clearly entitled to his costs on the standard basis until the expiry of that offer. That is not disputed by Mr Lorrell and, given the claimant’s success, it hardly could be. In the second case, this was a clear invitation to withdraw which in the light of my judgment clearly ought to have been accepted. In those circumstances, the court ought to give effect to the making of offers of this kind and that I ought to order indemnity costs with effect from noon on 21 May 2025. (Proceedings continued)

[57]I will refuse permission to appeal. An application can, of course, be made to the Court of Appeal within twenty-one days and I will provide the relevant form probably tomorrow now.

[58]Just in brief, on the directly affected test, in my judgment I correctly applied that test on the facts of this case. I emphasise this case had some particular facts including where the Bitcoin came from. On the balance between delay and merits, that is a classic exercise of a judgment on the material before the court. I shall look with interest at whether an application to the Court of Appeal is successful because the case undoubtedly has some points of interest in it. - - - - - - - - - - (This Judgment has been approved by HHJ Pearce.) Digital Transcription by Marten Walsh Cherer Ltd 2nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP Tel No: 020 7067 2900. DX: 410 LDE Email: info@martenwalshcherer.com Web: www.martenwalshcherer.com