Bitcoin, Equity and the Death of Conversion
In March 2026, the English High Court delivered one of the most important digital asset judgments yet seen in English private law. In Ping Fai Yuen v Li [2026] EWHC 532 (KB), Mr Justice Cotter confirmed something increasingly accepted after the Property (Digital Assets etc) Act 2025: Bitcoin is property. Yet the court simultaneously drew a sharp boundary around the traditional tort of conversion, holding that cryptocurrency, despite being property, cannot be 'converted' in the orthodox common law sense because it remains intangible.
The decision matters not merely because it concerns stolen Bitcoin, but because it reveals the direction in which English law is moving. The future of digital asset litigation may belong less to the old common law of possession and more to Equity: constructive trusts, proprietary restitution, tracing, unjust enrichment and fiduciary remedies. So in this case a constructive Trust was found where Equity treats them as holding the Bitcoin “on trust” for him.The constructive trust becomes a mechanism for proprietary recovery.
The claimant originally owned and controlled the Bitcoin through the cold wallet and seed phrase. He alleges that the defendants secretly obtained the seed phrase by covertly recording him and then transferred the Bitcoin away without consent. At common law, this creates problems because Bitcoin is intangible and not capable of possession in the traditional sense. That is why conversion failed. But Equity asks a different question. Instead of focusing on possession, it focuses on conscience. The equitable argument is: the defendants acquired control of the Bitcoin through wrongdoing, therefore it would be unconscionable for them to assert beneficial ownership. Consequently Equity imposes a constructive trust; that the defendant holds the property only on trust.
The facts read almost like a cyber-thriller adapted into domestic litigation. The claimant stored a substantial quantity of Bitcoin in a cold wallet, a physical offline device protected by a PIN and a 24-word recovery seed phrase. He alleged that his estranged wife secretly recorded him within the family home in order to obtain the seed phrase and subsequently transferred the Bitcoin without consent through a web of transactions into 71 separate wallet addresses.
The claimant pursued common law causes of action in conversion, trespass to goods and conspiracy. However, the defendants applied to strike out those claims, arguing that conversion and trespass apply only to tangible property. Bitcoin, although valuable, is intangible.Faced with this challenge, the claimant amended his pleadings to include proprietary restitution, unjust enrichment, constructive trust, breach of confidence, misuse of private information and economic torts relating to unlawful means. The court permitted those amendments but struck out the claims in conversion and trespass to goods.
The central legal tension in the case concerns the distinction between property and possessable property. The Property (Digital Assets etc) Act 2025 was intended to settle longstanding uncertainty surrounding digital assets. The Act effectively confirms that certain digital assets can attract personal property rights even though they do not fit neatly into the historic categories of choses in possession or choses in action. English courts no longer need waste time debating whether Bitcoin can be property at all. It can.
However, the Act did not rewrite centuries of tort doctrine. Cotter J relied heavily upon the House of Lords decision in OBG Ltd v Allan, which held that conversion is fundamentally concerned with interference with tangible property capable of possession. Lord Hoffmann in OBG warned against extending conversion into the realm of intangible rights, describing such an expansion as a “drastic” reshaping of the law. That warning remains decisive.
The court in Yuen v Li treated OBG as a “clear block” preventing extension of conversion into crypto-assets. Thus the paradox at the heart of the case emerges clearly. Bitcoin is property, yet Bitcoin cannot presently be converted.
Although the rejection of conversion attracted headlines, the more important development may be what survived. The claimant was permitted to proceed using proprietary and equitable remedies. This demonstrates a broader shift already visible within English digital asset jurisprudence. Crypto disputes are increasingly becoming disputes in Equity.
Constructive trusts, tracing, proprietary injunctions and unjust enrichment are now emerging as the primary legal architecture for digital asset recovery. This reflects the unique nature of cryptocurrency itself. Crypto-assets are decentralised, intangible and capable of instantaneous movement across jurisdictions. Traditional possessory torts fit awkwardly within such an environment, whereas equitable doctrines are far more flexible.
A constructive trust, for example, allows a claimant to argue that a defendant holding misappropriated Bitcoin should be treated as holding it on trust for the true owner. Proprietary tracing may then permit recovery into substitute wallets or assets purchased with the proceeds of the crypto. In this sense, Equity once again demonstrates its historic adaptive quality. Just as the Court of Chancery evolved to deal with uses, trusts and fiduciary obligations that the common law struggled to accommodate, modern equitable principles may now become the primary legal machinery for dealing with digital assets.
The judgment also has an institutional dimension. English law is competing to remain a leading jurisdiction for international digital asset disputes. Other common law jurisdictions, including New Zealand, British Columbia and several American states, have shown greater willingness to extend conversion to cryptocurrency. England has taken a more cautious route.
Rather than aggressively rewriting tort law, the courts appear determined to evolve incrementally through existing equitable and restitutionary principles. The judiciary’s message seems clear: digital assets will be recognised and protected, but doctrinal development must remain coherent with existing legal structures. This conservative flexibility may ultimately become a strength of English law. Instead of forcing crypto-assets artificially into twentieth-century tort categories, the courts are constructing a more nuanced framework grounded in proprietary remedies and equitable obligations.
At a deeper jurisprudential level, Yuen v Li reveals a growing tension inside private law itself. Much of classical property law depends upon the idea of possession: physical control over tangible things. Digital assets challenge that assumption. Bitcoin is valuable, transferable and proprietary, yet incapable of physical possession in any traditional sense.
The law is therefore entering unfamiliar territory. The distinction between tangible and intangible property, once foundational, may become increasingly unstable as wealth itself becomes progressively digital. For now, the High Court has drawn a line. Conversion remains tied to physical chattels. But the broader trajectory is unmistakable. As digital wealth expands, equity rather than common law possession may become the dominant conceptual framework governing proprietary rights in the twenty-first century.
In Yuen v Li, the High Court did more than decide a dispute about stolen Bitcoin. It quietly signalled the emergence of a new frontier for Equity and Trusts law.
Brian Patrick Bolger has taught Political Philosophy and Applied Linguistics in universities across Europe. He is an adviser to several Think Tanks and Corporates on Geopolitical Issues.
