Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/1511709
16 www.lexpert.ca 'LAWYERS ALWAYS FIND A WAY TO GO AFTER THE MONEY' AS THE DECENTRALIZED FINANCE WORLD BECOMES INCREASINGLY SOPHISTICATED AND REGULATED, OPTIONS FOR COMBATTING CRYPTOCURRENCY FRAUD GROW ALONGSIDE IT Special Promotional Feature INCREASINGLY PROMINENT in the Canadian landscape, lawyers need to understand cryptocurrency and how to address it when it is part of a legal problem – because there are options available, says Cara Cameron, partner at Woods LLP. "There's a lot of cryptocurrency fraud going around, Canadians are losing millions, yet it's underreported partly because people feel disempowered about recovering their losses. But it is possible. We can deploy old legal tools to new tech- nolog y, and with extra help from exper- tise, big things can be accomplished." Cryptocurrency is ripe for fraud because it's an asset class that has experi- enced extraordinary consumer growth yet remains poorly understood. Fraudsters have found this to be a great opportunity. From mimicking typical securities fraud to old-fashioned Ponzi schemes, crypto- currency fraud "can be very sophisticated and global." Of course, not all crypto companies or exchanges are vehicles for fraud. However, "some are more myste- rious, and a lot less responsive to author- ities than others – and fraudsters know where they're going ," says Cameron. In many jurisdictions, particularly in the US, authorities are becoming more aggressive in dealing with it – for example, in recent years the US Securities and Exchange Commission made the news by charging a group of celebrities for promoting the purchase of certain crypto assets. The outstanding legal question of whether a particular crypto asset should be defined as a commodity or a security can be an obstacle to effective regulation because there is confusion as to what rules apply and who is the appropriate govern- ment body to enforce those rules. This being said, with time lawyers are finding ways to use new tools to solve the perennial problem of fraud in the new crypto world. For example, both US (in LCX AG v. John Doe Nos. 1-25 (Dkt. No.,154644/2022)) and UK (in D'Aloia v. Person Unknown & Others [2022] EWHC 1723 (Ch)) courts have allowed ser vice of proceedings via NFT (non- fungible token) on unknown parties who were alleged to have absconded with crypto. There have also been cases where courts in Canada and elsewhere have issued orders to preser ve or seize cryp- tocurrency, or to seize evidence to allow the tracing of crypto. Cameron notes that many of these cases are unreported or under seal but points to Ontario's Cicada 137 LLC v. Medjedovic as an example of the kind of relief available closer to home. ough not always easy, it is possible to trace cryptocurrency transferred through the blockchain, which is public. Although strategies can be used to obscure the trail, experts in tracing rely on their own rapidly evolving technolog y to hunt for fraud- ulently obtained funds. is expertise is becoming easier to find as crypto assets have become more mainstream and the of cryptocurrency more common. " We need to understand there's more that a lawyer can do hunt down crypto- currency than we often think there is, and that we don't have to do it alone," Cameron says, adding as an example that in her last Anton Piller Order, they had specific crypto experts named as part of the team who assisted the forensic IT person and the independent super vising solicitor in identif ying crypto accounts, taking control of them, and eventually taking control of the cryptocurrency. "As the decentralized finance world grows and becomes increasingly sophisticated and increasingly regulated, there may be greater opportunities for that – lawyers always find a way to go after the money." Cara Cameron is a highly skilled litigator and negotiator trusted by clients with their most challenging commercial disputes, specif- ically in matters concerning contractual and shareholders' rights, as well as white-collar investigations and defence, commercial fraud, asset tracing , and recovery proceedings. Cara has substantial experience in managing large and complex multijurisdictional cases, where success depends on the effective coordination of multi-professional teams. WOODS LLP is the foremost litigation, arbitra- tion, and insolvency firm in Canada, recognized nationally and internationally for its expertise and success. The firm acts in all manner of disputes where the stakes are high and the outcome is of vital importance to its clients and their businesses. Its team of formidable attorneys – multilingual, trained in the civil law and common law, dedicated to understanding its clients' interests, and devoted to successful advocacy – is known for its winning strategies and concrete results in high-stakes disputes. CARA CAMERON Partner, Woods LLP