When you hold Bitcoin or Ethereum, what exactly do you own? It’s not cash. It’s not a stock. And it’s not a physical thing you can put in a safe. Yet courts around the world are now forced to answer this question - and their answers are changing how crypto is handled in lawsuits, bankruptcies, and criminal cases.
Crypto as Property: Australia’s Landmark Ruling
In 2024, the Supreme Court of Victoria made a decision that sent shockwaves through the global crypto legal community. In In the matter of Blockchain Tech Pty Ltd VSC 690: Chen & Anor v Zhao & Ors, the court ruled definitively that Bitcoin qualifies as property under Australian law. This wasn’t just a technical ruling - it was a turning point. The judges laid out four clear criteria for something to be considered property:- It must have an identifiable subject matter (like a unique wallet address or private key)
- It must be identifiable by third parties (others can see and verify ownership)
- It must have a degree of permanence (it doesn’t vanish when the power goes out)
- It must be capable of being transferred (you can send it to someone else)
The U.S. Split: Securities vs. Property
While Australia focused on whether crypto is property, U.S. courts have been stuck on a different question: Is it a security? The answer determines whether the SEC has jurisdiction. If a token is a security, then it must be registered, and anyone selling it without a license can be sued. The Howey Test - a decades-old rule for identifying investments - is being stretched thin to fit crypto. But courts are starting to realize one-size-fits-all doesn’t work. In February 2025, the Second Circuit Court of Appeals ruled in Risley v. Universal Navigation that liability under federal securities law depends on whether an exchange is centralized or decentralized. If a company runs a platform where users trade tokens and the company acts as an intermediary - like Coinbase or Kraken - then it can be held responsible for selling unregistered securities. But if the platform just provides smart contracts that let users trade directly with each other, it’s not a seller. That’s a huge difference. That same month, the Southern District of New York reinforced this in Underwood v. Coinbase Global. The court said decentralized exchanges can’t be sued under Section 12(a)(1) of the Securities Act because they don’t control the transaction. The key? Who’s in charge? Centralized = liable. Decentralized = not liable - at least not under current securities law. Then came the bombshell in January 2025. The Third Circuit Court of Appeals ruled the SEC’s refusal to create crypto-specific rules was “arbitrary and capricious.” The court didn’t say crypto is or isn’t a security. It said the SEC can’t just ignore the problem. It has to explain why existing rules don’t work - especially when it comes to custody, broker-dealer requirements, and net capital rules that were designed for banks, not blockchain protocols.
Jurisdictional Nightmares: Where Is Crypto?
Here’s where things get really messy. If someone steals your Ethereum and sends it to a wallet in Delaware, can a Delaware court seize it? In October 2025, the Delaware Court of Chancery said no - in Timoria LLC v. Anis. The case involved stolen Ether that ended up in a Delaware-based subsidiary’s wallet. The plaintiff argued that because the title was held in Delaware, the court had jurisdiction. The court disagreed. It ruled that cryptocurrency doesn’t have a physical location. You can’t say it’s “in” Delaware just because the wallet address is registered there. The situs - the legal location - of crypto isn’t determined by where the company is incorporated. It’s not like a bank account in New York. This creates a huge problem for cross-border enforcement. If your crypto is stolen and moved through multiple jurisdictions - say, from Australia to Singapore to a wallet hosted in a server farm in Iceland - which court gets to decide? There’s no global standard. Even the GENIUS Act, passed in October 2025 to bring stablecoins into the U.S. financial system, doesn’t solve this. It regulates stablecoins, but not Bitcoin or Ethereum. And it doesn’t override state or federal jurisdictional rules.Enforcement Is Getting Real
The DOJ isn’t waiting for Congress to act. In June 2025, they filed a civil forfeiture complaint to seize $7.74 million in cryptocurrency linked to North Korean hackers. That same month, Iurii Gugnin was indicted for using his company Evita to launder over $500 million - including transactions tied to sanctioned Russian entities. The charges? Money laundering, sanctions evasion, and conspiracy. Meanwhile, the District of Massachusetts has become a hotspot for market manipulation cases. In October 2024, 17 people were charged with using bots to create fake trading volume - a practice called wash trading. They inflated prices, tricked investors, then dumped their tokens. The DOJ didn’t just fine them. They went after the crypto directly. These aren’t theoretical cases. They’re real, and they’re happening now. Companies handling crypto need to track where their funds are going, who they’re transacting with, and whether those parties are on sanctions lists. One mistake could mean your assets are frozen - or worse, you’re facing criminal charges.
What This Means for Crypto Businesses
If you run a crypto exchange, wallet service, or even a DeFi protocol, the legal landscape is now a minefield. Here’s what you need to know:- If you’re centralized - meaning you hold users’ keys or control trades - you’re at high risk of being sued under securities law. You need legal counsel who understands the Risley and Underwood rulings.
- If you’re decentralized - your code does the work, not your team - you still need to document how your system works. Courts are now asking for detailed technical disclosures during discovery.
- Asset recovery is possible, but only if you can prove ownership. Keep records of wallet addresses, transaction hashes, and timestamps. Without them, courts won’t help you.
- In Australia, you can now get a court-appointed receiver to freeze or recover crypto. In the U.S., you might need to rely on criminal forfeiture or asset tracing through blockchain analytics firms like Chainalysis or Elliptic.
The Road Ahead
2025 has been a year of breakthroughs - and backtracking. Courts are no longer ignoring crypto. They’re wrestling with it. But they’re not unified. Australia says it’s property. The U.S. says it might be a security. And no one agrees on where it lives. What’s clear is this: crypto isn’t going away. And courts aren’t going to wait for Congress to fix it. They’re making the rules as they go. That means the next big case - whether it’s about NFT royalties, DAO governance tokens, or private key recovery - could reshape everything again. For now, if you hold crypto, treat it like property. Document everything. Know your jurisdiction. And understand that if something goes wrong, the court might be your only recourse - but only if you’ve done your homework.Is cryptocurrency considered property in all countries?
No. Australia has clearly ruled Bitcoin and other major cryptocurrencies as property under common law. The U.S. has not made a uniform ruling - federal courts focus on whether crypto qualifies as a security under the Howey Test. Some countries, like El Salvador, treat Bitcoin as legal tender. Others, like China, ban crypto transactions entirely. There’s no global standard.
Can I sue someone for stealing my crypto?
Yes - but only if you can prove ownership and the theft occurred in a jurisdiction that recognizes crypto as property. In Australia, you can file a civil claim and request a court order to freeze the wallet. In the U.S., you may need to work with law enforcement if the theft involves hacking or fraud. Blockchain analytics firms can help trace transactions, but courts still require solid proof of ownership - private keys, transaction records, and wallet history.
What’s the difference between centralized and decentralized exchanges in court?
Courts now treat them very differently. Centralized exchanges (like Coinbase or Binance) act as intermediaries - they hold users’ funds and match trades. That makes them potentially liable as sellers of unregistered securities. Decentralized exchanges (like Uniswap) run on smart contracts and don’t hold user funds. Courts have ruled these platforms aren’t statutory sellers under securities law, so they’re not automatically liable for token sales made through them.
Why does the SEC keep refusing to create crypto rules?
The SEC claims existing securities laws are enough. But in January 2025, the Third Circuit Court of Appeals said that reasoning was “arbitrary and capricious.” The court pointed out the SEC never explained why rules designed for banks and stockbrokers can’t apply to crypto - especially regarding custody, net capital requirements, and broker-dealer obligations. The SEC is now legally required to justify its inaction - but it hasn’t yet provided a clear plan.
Can crypto be seized in bankruptcy?
Yes - if the court recognizes it as property. In Australia, courts have already appointed receivers to take control of crypto assets during corporate insolvency. In the U.S., bankruptcy trustees can claim crypto as part of the estate if it’s owned by the debtor. The challenge is tracing it. If the debtor used a non-custodial wallet and didn’t leave keys, recovery becomes nearly impossible. Documentation is key.
What’s the GENIUS Act, and does it affect Bitcoin?
The GENIUS Act, passed in October 2025, brings stablecoins - digital currencies pegged to the U.S. dollar - into the formal U.S. financial system. It requires issuers to register, hold reserves, and comply with anti-money laundering rules. But it does not apply to Bitcoin, Ethereum, or other non-stablecoin cryptocurrencies. So while it helps dollar-backed tokens, it leaves the rest in regulatory gray zones.
Sammy Tam
December 17, 2025 AT 17:24Still, the bailment thing is weird. You can't 'lend' crypto like a car? That feels off.
Jonny Cena
December 19, 2025 AT 02:38George Cheetham
December 19, 2025 AT 23:38Sue Bumgarner
December 21, 2025 AT 02:41Kayla Murphy
December 22, 2025 AT 17:20Dionne Wilkinson
December 23, 2025 AT 15:20Emma Sherwood
December 24, 2025 AT 07:49Florence Maail
December 25, 2025 AT 23:24Chevy Guy
December 26, 2025 AT 03:49and the courts are just now noticing
shocking
next theyll say water is wet
Kelsey Stephens
December 28, 2025 AT 00:07Tom Joyner
December 29, 2025 AT 16:01Terrance Alan
December 30, 2025 AT 07:35Sally Valdez
December 30, 2025 AT 07:48Elvis Lam
December 31, 2025 AT 19:00Amy Copeland
January 1, 2026 AT 15:07