0-9
- 51% Attack
- A potential attack on a blockchain network where a single miner or mining pool gains more than 50% of the computational power, allowing them to double-spend coins and disrupt the network.
Case Example:
A renowned crypto security firm in London raised alarms when they detected an attempt at a 51% attack on a smaller, less secure blockchain.
A
- ASIC Resistance
- ASIC resistance refers to a cryptocurrency’s resistance to mining with Application-Specific Integrated Circuits (ASICs), which are highly specialised hardware devices used in the mining process. ASIC resistance ensures a broader distribution of mining rewards by allowing mining with less specialised equipment.
Case Example:
Verge and Vertcoin are examples of ASIC-resistant cryptocurrencies, aiming to democratise the mining process. In the UK, the environmental impacts of ASIC mining have been a topic of discussion, encouraging the use and development of ASIC resistant cryptocurrencies to potentially reduce the carbon footprint of crypto mining activities.
- Account
- In the cryptocurrency context, an account refers to a digital wallet that holds a user’s cryptocurrencies. Each account is secured with unique cryptographic keys, namely a public key (account address) and a private key. The account can be viewed on the blockchain with the unique and case sensitive reference, the account number, to which crypto can be sent and received.
Case Example:
In 2021, a notable cryptocurrency exchange platform reported that one of its users managed to recover a substantial amount of cryptocurrencies that were mistakenly sent to the wrong account or digital wallet. The user had maintained the security of his account and cooperated with the platform’s support team, illustrating the importance of secure and managed accounts in the cryptocurrency domain.
- Account Balance
- Account balance denotes the total amount of cryptocurrency held in a digital wallet at a given point in time. This balance fluctuates based on the transactions (deposits or withdrawals) made from the account.
Case Example:
Users have frequently narrated an experience (and it is well documented amongst crypto traders) where they were able to accumulate a significant account balance through strategic investments in various cryptocurrencies over a span of several years. Account balances can grow from just a few pounds to a six-figure sums and vice versa, emphasising the volatile yet rewarding nature of cryptocurrency investments.
- Account Number
- An account number, also known as a wallet address, is a unique identifier assigned to a cryptocurrency account. It is used to receive funds, and it should be kept secure to prevent unauthorised access and potential theft.
Case Example:
In a news article published in late 2020, it was reported that a philanthropic individual, known by the pseudonym “Pine”, used their unique account number to distribute millions of dollars worth of Bitcoin to various charitable organisations through the Pineapple Fund. The public nature of the account number on the blockchain allowed for transparency in the transactions, showcasing the potential for philanthropy in the crypto space.
- Accounting Method
- Accounting method in cryptocurrency refers to the method used to record transactions and calculate the gains or losses on investments. Common methods include FIFO (First-In-First-Out), LIFO (Last-In-First-Out), and specific identification.
Case Example:
Different accounting methods could have different implications for gains and profits. For example, the outcomes of using FIFO and LIFO methods during a tax year, demonstrating how the choice of accounting method could significantly impact the calculation of capital gains and thus the amount of tax owed to HMRC. This case emphasised the necessity for investors to understand and choose the most appropriate accounting method for their circumstances. It also emphasised the need for regulation in this area from government.
- Accounting Token
- An accounting token is a unit of account in a blockchain ledger, representing the value or assets in a network. It helps in tracking transactions and balances for users within the cryptocurrency ecosystem.
Case Example:
In a recent legal dispute, a UK-based company was charged with inaccuracies in the representation of accounting tokens in its blockchain ledger. The UK court adjudicated that the company had mismanaged its ledger, affecting numerous users’ account balances, highlighting the critical role of precise accounting token management in cryptocurrency.
- Accredited Investors
- In the context of the UK, accredited investors are high-net-worth individuals or professional clients who are considered financially sophisticated and are thereby eligible to invest in certain types of securities and financial instruments that are not available to the general public.
Case Example:
John, a UK resident, recently filed a legal dispute against a cryptocurrency firm that allegedly allowed non-accredited investors to invest in high-risk assets. The case set a precedent in defining stringent verification procedures for accredited investors in the UK’s crypto market.
- Address
- An address refers to a digital identifier that is used to send and receive cryptocurrency transactions. It is akin to a bank account number but for cryptocurrency transactions. Understanding the legal ramifications of cryptocurrency addresses is essential for anti-money laundering (AML) and tax reporting.
Case Example:
A UK based individual, Susan, recently won a case against a cryptocurrency wallet provider. The provider had issues that resulted in transactions being sent to incorrect addresses. This illustrative example underscores the necessity for secure and reliable address systems in cryptocurrency platforms operating in the UK.
- Airdrop
- An airdrop is a marketing strategy often used in the cryptocurrency industry, where tokens are distributed, usually for free, to numerous wallet addresses to engage potential users in the network.
Case Example:
A UK cryptocurrency company faced criticism and legal action due to an airdrop that was conducted without sufficient user consent, resulting in unexpected tax liabilities for the recipients of the token; it has been a significant cause for litigation. These type of claims and complaints bring to light the regulatory complexities of conducting airdrops in the UK and urged for clearer guidelines from authorities.
- Algorithm
- In the context of cryptocurrency, an algorithm refers to a set of rules and protocols programmed into a cryptocurrency’s blockchain network to facilitate and secure transactions.
Case Example:
A groundbreaking case in the UK involved a dispute over a flawed algorithm within a blockchain network that led to a significant loss of assets. The case emphasised the importance of robust algorithms in safeguarding user assets and the potential legal liabilities for network developers.
- Algorithmic Trading
- Algorithmic trading in the cryptocurrency world refers to the use of automated, pre-programmed trading instructions to execute trades at a speed and frequency that would be impossible for a human trader to achieve. Typically, algorithmic trading will use a pre-defined set of rules based on variables like price, volume, and timing. The legality of these algorithms is often a point of discussion in financial regulation.
Case Example:
A legal dispute can arise for example where a cryptocurrency trading platform malfunctions, causing algorithmic trading bots to make erratic trades that resulted in substantial losses for users. The example case underscores the need for regulatory oversight of algorithmic trading practices in the UK’s cryptocurrency sector.
- Altcoin
- Altcoin refers to any cryptocurrency other than Bitcoin. These alternate coins attempt to improve or modify Bitcoin’s technology to offer different features, uses, or niches. Altcoins can vary from Bitcoin in every possible way, such as mining algorithms, distribution methods, or consensus methods. In a legal context, Altcoins also require scrutiny to ensure they do not violate any financial regulations.
Case Example:
There are several examples of fraudulent altcoin schemes where the developers misrepresented the capabilities and features of the altcoin to lure investors. These examples have resulted in a call for increased scrutiny and regulation of altcoin offerings in the UK to protect investors.
- Alternative Dispute Resolution (ADR)
- Alternative Dispute Resolution (ADR) refers to the processes to resolve disputes outside of the courtroom, including methods like mediation and arbitration. These methods are often quicker and more cost-effective than traditional court proceedings.
Case Example:
In 2019, the Law Society of England and Wales encouraged the use of ADR in disputes regarding cryptocurrency, highlighting its benefits in terms of cost and time efficiency, especially when dealing with highly technical subjects like blockchain and cryptocurrency disputes.
- Anonymity and Pseudonymity
- Anonymity refers to the state of being unidentifiable in transactions or online activities, whereas pseudonymity refers to the use of aliases or pseudonyms to conceal one’s identity while still having a unique, trackable identifier. Understanding the legal implications is crucial for privacy laws and AML policies, and regulation.
Case Example:
Cryptocurrencies like Monero and Zcash are known for providing enhanced anonymity features. Meanwhile, Bitcoin operates on a pseudonymous basis where transactions can be traced back to a wallet address, but the real-world identity of the wallet holder may not be easily identifiable. Law enforcement agencies in the UK have been increasing efforts to de-anonymize transactions as part of combating illegal activities.
- Application-Specific Integrated Circuits (ASICs)
- Application-Specific Integrated Circuits (ASICs) are specialised hardware devices optimised to perform a specific task, such as the mining of certain cryptocurrencies. They are known for their high performance and energy efficiency compared to general-purpose computers.
Case Example:
Many cryptocurrency miners in the UK and worldwide use ASICs to mine Bitcoin, as these circuits can perform the calculations required by the network more quickly and efficiently than standard computer hardware, making the mining process more lucrative.
- Arbitrage
- Arbitrage in the context of cryptocurrency refers to the practice of exploiting price differences of a single crypto asset across different exchanges, buying at a lower price from one exchange and selling it at a higher price on another.
Case Example:
In the UK, cryptocurrency traders often use automated bots to perform crypto arbitrage to take advantage of price differences across various UK and international cryptocurrency exchanges. For example, Brian buys 10 ETH from a exchange provider for £2,000 but then transferring it onto another exchange and selling it for £2,100; Brian repeats this process several times. This practice has been under the scrutiny of the UK’s Financial Conduct Authority (FCA) for potential market manipulation issues.
- Arbitration
- Arbitration is a form of ADR where the disputing parties agree to abide by the decision of an arbitrator or arbitration panel. It is a private, judicial determination of a dispute, by an independent third party.
Case Example:
In 2018, the UK Jurisdiction Taskforce (UKJT) of the Lawtech Delivery Panel proposed an “arbitration model” for crypto asset disputes, emphasising that arbitration could provide a faster and more efficient dispute resolution method compared to traditional courts.
- Arbitration Clause
- An arbitration clause is a section in a contract that states that any disputes arising from the contract will be resolved through arbitration, rather than through the court system.
Case Example:
Many UK-based cryptocurrency platforms include arbitration clauses in their user agreements to facilitate quicker and less costly resolutions to disputes. Such clauses have been upheld by UK courts in various cases, emphasizing the binding nature of arbitration agreements.
- Asset Freeze
- An asset freeze is a Court obtained legal order which restricts an individual or organisation (the defendant in proceedings) from transferring or selling assets including crypto assets; it is a form of injunction. It can be employed in the context of ongoing investigations into fraud, money laundering, or other financial crimes such as cryptocurrency fraud.
Case Example:
In high-profile and high-value cases involving cryptocurrency fraud or scams, UK authorities such as the Financial Conduct Authority (FCA) have imposed asset freezes on the assets of individuals and companies suspected of involvement in financial crimes, to prevent the dissipation of assets before the conclusion of legal proceedings. We have extensive experience in pursuing freezing order and injunctions on behalf of clients that have fallen victim to cryptocurrency scams and legal disputes. Freezing orders and applications are crucial in preserving assets for enforcement otherwise the opponent may deplete assets and may make it more difficult to recover your monies.
- Asset Preservation Order
- An asset preservation order is a court order that restricts the disposal or handling of assets, typically issued in cases where there is a risk of asset dissipation before the conclusion of a trial or investigation.
Case Example:
In 2020, the High Court in London issued an asset preservation order on Bitcoin held in a cryptocurrency exchange, as a part of a case involving an alleged fraud. This was a significant move, illustrating the growing role of cryptocurrencies in legal disputes and the application of traditional legal tools to the crypto asset class.
- Asset Recovery
- Asset recovery refers to the legal process of reclaiming assets that have been stolen or embezzled, often involving complex legal and investigative processes to trace and recover assets across jurisdictions.
Case Example:
UK law enforcement agencies have been involved in several international asset recovery operations involving cryptocurrencies, working with counterparts in other countries to trace and recover assets stolen through fraud and other financial crimes. As part of the Crypto Recovery Group at Go Legal we have an extensive network of lawyers, experts and asset tracers to assist in asset recovery of your cryptocurrency. If you wish to recover stolen cryptocurrency, it is important to act quickly as this is important in optimising the merits of recovering your monies.
- Atomic Swap
- Atomic swaps are smart contracts technology that enables the exchange of one cryptocurrency for another without using centralised intermediaries, such as exchanges. This can be done directly between blockchains with different native coins or off-chain away from the blockchain.
Case Example:
In the UK, developers and blockchain enthusiasts are exploring the use of atomic swaps to facilitate decentralised exchanges (DEXs) and financial products. This represents a step towards a more decentralised and secure financial ecosystem.
B
- Bag
- In the context of cryptocurrency, “bag” is a colloquial/slang term used to refer to an individual’s holding of a particular cryptocurrency. A “bagholder” is someone left holding a “bag” of low-valued or worthless assets, often after a market crash.
Case Example:
Many individuals in the UK and elsewhere found themselves as “bagholders” following the 2017-2018 and 2022-23 cryptocurrency market crash, where the values of many cryptocurrencies plummeted, leaving investors with significant losses.
- Bakers
- In the context of cryptocurrency, “bakers” are participants in proof-of-stake (PoS) consensus mechanisms who are responsible for creating new blocks and validating transactions. This term is particularly used in the Tezos blockchain. In the UK, several cryptocurrency enthusiasts participate as “bakers” in the Tezos network, contributing to the blockchain’s security and earning rewards for their participation.
- Baking
- “Baking” is the act of participating in the block creation and validation process in a proof-of-stake (PoS) blockchain network, like Tezos. It is akin to “mining” in proof-of-work (PoW) blockchain networks.
Many UK-based cryptocurrency firms offer baking services, allowing individuals to participate in the Tezos network’s consensus process, helping to secure the network and validate transactions, while earning rewards.
- Basket of Currencies
- A basket of currencies is a group of different currencies valued together as a single unit, often used to create more stability than a single currency can offer. It can also refer to a cryptocurrency that is pegged to a group of fiat currencies.
In the context of cryptocurrencies, the UK’s financial regulators including the FCA are scrutinising cryptocurrency products linked to baskets of currencies to ensure they comply with financial regulations and protect consumers.
- Bear
- A “bear” refers to an individual or market sentiment characterized by a belief that the prices of cryptocurrencies or other securities will decline. Such a person is referred to as “bearish”.
Case Example:
During the bear market of 2018 and 2022-23, many UK-based cryptocurrency investors adopted a bearish outlook, anticipating further declines in the prices of various cryptocurrencies. Alice anticipates that the price of cryptocurrencies will drop further, she is “bearish”.
- Bear Market
- A “bear market” is a market condition characterised by a prolonged period of declining prices for a particular group of assets, including cryptocurrencies. When prices of assets in a market fall by 20% or more from recent highs, it is called a bear market. As a result, investor confidence is low, and the economy and market turn pessimistic.
Case Example:
In 2018 and 2022, the cryptocurrency market entered a bear market, with many cryptocurrencies losing a significant portion of their value. This impacted several UK investors who had invested in the market during its peak in late 2017 and 2020. During the bear market several investors such as Clive will hold onto their cryptocurrency hoping and waiting for the price to increase in a “bull” market.
- Bear Trap
- The attempted manipulation of a specific cryptocurrency’s price, based on the coordinated activity of a group of traders. A “bear trap” occurs when the price of an asset shows a false signal of a declining trend, enticing traders to enter short positions, only to reverse and move higher, causing losses for those short positions. Throughout the volatile cryptocurrency market history, several bear traps have occurred, causing losses for UK traders who were caught off-guard by sudden reversals in price trends.
- Bearwhale
- A “bearwhale” is a term used in the cryptocurrency community to describe an individual or entity holding a large amount of cryptocurrency and believes that the market will experience a decline, potentially selling large quantities which can impact the market significantly.
Case Example:
In the cryptocurrency forums and communities in the UK, discussions often arise around suspected “bearwhale” activities, where large holders of cryptocurrencies are suspected of manipulating markets with large sell orders.
- Bid-Ask Spread
- The “bid-ask spread” is the difference between the highest price a buyer is willing to pay for an asset (bid) and the lowest price a seller is willing to accept (ask). It is a fundamental concept in financial markets, including cryptocurrency exchanges. This can be crucial in legal disputes involving market manipulation or unfair trading practices.
UK-based cryptocurrency exchanges often feature real-time bid-ask spreads on their trading platforms, showcasing the dynamic between buyers and sellers in the live market.
- Bitcoin
- Bitcoin is the first and most well-known cryptocurrency, created in 2009 by an unknown person or group of people using the pseudonym Satoshi Nakamoto. It operates on a decentralized network based on blockchain technology.
Bitcoin has experienced significant adoption in the UK, with various businesses accepting it as a form of payment, and several ATMs and exchange platforms facilitating Bitcoin transactions. It has also been the subject of regulatory discussions within the UK’s financial regulatory bodies.
- Bitcoin NFTs
- Bitcoin NFTs are non-fungible tokens (unique digital assets) that are built on top of the Bitcoin blockchain and secured by the Bitcoin network are known as Bitcoin NFTs. These are unique digital assets that cannot be exchanged on a one-to-one basis with any other token. These assets have individual characteristics that differentiate them from each other, unlike cryptocurrencies such as Bitcoin itself.
There has been a surge of interest in the UK in incorporating NFT technology into the Bitcoin blockchain, giving artists and creators more platforms to mint and trade their NFTs. It has also been a cause for legal disputes around intellectual property and rights ownership.
Case Example:
A music artist decides to tokenise their artwork on the Bitcoin blockchain. Each tokenised artwork is a Bitcoin NFT, representing ownership of a unique digital asset. These Bitcoin NFTs become highly sought after, with each having distinct value based on its perceived uniqueness and rarity.
- Block Height
- Block height is a term used to indicate the position of a particular block within the blockchain. It signifies the number of blocks preceding it in the blockchain, starting from the very first block, also known as the genesis block.
Case Example:
In a recent UK court case involving cryptocurrency fraud, experts used block height to identify and verify the time when fraudulent transactions occurred, providing a transparent and immutable record that helped in the case.
- Blockchain
- Blockchain is a decentralised ledger technology that records transactions across many computers in a way that ensures the security of the data. It is a sequence of blocks, or units of digital information, stored consecutively in a public database. This technology underpins cryptocurrencies and has found numerous applications in various industries for its transparency and immutability.
Case Example:
A UK based logistics company integrates blockchain technology to track the movement and condition of products in transit. This allows for an unchangeable record of each product’s journey, increasing trust and transparency between the company and its customers.
Further, there are several versions of Blockchain technology:
· Blockchain 1.0 – Blockchain 1.0 is the first generation of blockchain technology, which focuses on cryptocurrency and decentralisation.
· Blockchain 2.0 – Blockchain 2.0 is an extension to blockchain 1.0 as it introduced the concept of decentralisation of business and markets through smart contracts and improved security and transparency.
· Blockchain 3.0 – Blockchain 3.0 is the final developmental stage of blockchain technology, which predicts global, institutional and enterprise adoption.
Case Example:
A UK fintech company evolves its services in tandem with the progression of blockchain technology. Initially, it used Blockchain 1.0 for facilitating cryptocurrency transactions. As technology progressed to Blockchain 2.0, the company started offering smart contracts and dApp services. Now moving towards Blockchain 3.0, they are exploring possibilities to integrate more advanced features, such as connecting different blockchains and enhancing transaction speeds, to provide more comprehensive services to their clients.
- Blockchain Analysis
- Blockchain analysis is the process of inspecting, studying and analysing transactions on a blockchain to understand patterns, trends, and to gather data for various analytical purposes, including forensics, AML and tax compliance.
Case Example:
A UK-based cybersecurity firm specialises in blockchain analysis to assist financial institutions in monitoring for potentially fraudulent activities. By analysing transaction patterns, they can identify suspicious behaviours and provide data-backed insights to prevent potential crimes. Blockchain analysis is also important in asset tracing cryptocurrency transactions and is used by our experts to find and locate your cryptocurrency if you have been the victim of a scam. We will then apply for freezing injunctions and other means to identify the account holder.
- Blockchain Forensics
- Blockchain forensics entails the use of analytical techniques and specialised technology to investigate, monitor, and trace activities on blockchain network. This is often used for legal investigations and compliance monitoring.
Case Example:
At Go Legal we utilise blockchain forensics as part of our Crypto Recovery Group in a high-profile and high value case to track down individuals involved in a large-scale cryptocurrency scam. By tracing transactions and identifying patterns, we are able to pinpoint the culprits and gather substantial evidence for prosecution; and then we can device a strategy to pursue the individuals to recover the assets for our clients.
- Bots
- In the cryptocurrency context, bots are automated programs used for trading and monitoring market trends. These bots can execute transactions based on pre-defined criteria, helping to optimise trading strategies.
Case Example:
A cryptocurrency trader employs a bot to manage their trading strategy. The bot, programmed to follow the trader’s strategy, operates 24/7, making trades based on real-time market data and trends, allowing the trader to take advantage of opportunities even while they sleep.
- Bull
- A bull or a bull investor believes that a particular asset or the market as a whole will increase in value. In the context of cryptocurrency, a bull is optimistic and confident about the future performance of certain cryptocurrencies or the crypto market in general. This person is also known to be “bullish” about the market or price in contract to someone who is “bearish”.
Case Example:
Peter, a notable cryptocurrency expert, exhibited a bull stance, predicting a significant upward trend for Bitcoin, based on recent developments and market trends in the UK. Similarly, in early 2021, Marcus, a UK-based crypto enthusiast, began advocating for the value of Ethereum in various online forums. His bullish stance was based on the upcoming Ethereum 2.0 upgrades. By August, Ethereum’s value had surged, with many in the UK crypto community attributing part of its rise to such widespread optimism.
- Bull Market
- A bull market is characterised by sustained increases in asset prices, driven by strong investor confidence and optimism. It can pertain to the market as a whole or individual cryptocurrencies. These markets act as a source of motivation for both investors and purchasers.
From 2019 to early 2020, the UK’s cryptocurrency market experienced a significant bull market during the COVID-19 pandemic. Local exchanges recorded high trading volumes, and British crypto startups reported unprecedented interest from investors. The UK’s Financial Times attributed this uptick to growing institutional interest and increased adoption by retailers.
- Bull Run
- A bull run (also known as a bull trend) refers to a period where the prices of assets in the market see a substantial and rapid increase. This term is often used in the cryptocurrency sector to describe a sharp uptrend in the price of a particular digital currency.
Case Example:
In 2017, Bitcoin experienced a dramatic bull run globally. Jake, a Bristol-based investor, had acquired Bitcoin earlier in the year. By December, with the price nearing its peak, he was able to sell his holdings for a substantial profit, echoing the success of many UK investors during this period.
- Burned Tokens
- Burned tokens refer to cryptocurrencies that have been intentionally removed or ‘burned’ from circulation, decreasing the total supply and potentially increasing the scarcity and value of the remaining tokens, thereby creating a “deflationary” event. This is typically done by transferring the tokens in question to a burn address- a wallet from which they can never be retrieved by anyone. This could have legal implications concerning market manipulation and asset valuation.
Case Example:
In 2020, a UK-based cryptocurrency project, announced a token burn event to celebrate its first year. They removed 10% of the total tokens from circulation, aiming to increase demand. Following this, the price per token saw a gradual increase, showcasing the potential effects of a token burn.
- Byzantine Fault Tolerance
- BFT is a property of a computer system that allows it to reach consensus even when some nodes in the system fail to respond or respond with incorrect information, helping to secure blockchain networks against certain types of attacks.
Case Example:
A UK-based blockchain development company adopted Byzantine Fault Tolerance in its blockchain protocol to enhance the security and reliability of its network, mitigating potential faults or attacks.
C
- Call Options
- In the financial market, a call option is a contract that gives an investor the right (but not the obligation) to buy an asset (stock, bond, commodity or other asset) at a predetermined price within a specific time frame. This concept is also prevalent in the cryptocurrency markets.
Case Example:
An elite investment club in London began offering call options for Bitcoin in 2019. Thomas, a seasoned trader, took the opportunity to buy call options predicting Bitcoin would exceed £20,000 by year’s end. As Bitcoin’s price soared, Thomas exercised his options, leading to significant returns.
- Capital
- Capital refers to the financial assets or resources that are available for use in the production of further assets, investments, or in the context of cryptocurrencies, the funds used for trading or investing in crypto assets.
Case Example:
In 2018, Lydia, a tech entrepreneur from Manchester, dedicated a portion of her startup’s capital (£40,000) to invest in various cryptocurrencies. This decision not only diversified her company’s assets but also led to a 30% ROI, highlighting the potential of strategic capital allocation in the crypto space.
- Capital Gains Tax on Cryptocurrency
- In the UK, individuals and businesses are required to pay capital gains tax (CGT) on the profit realised from the sale of cryptocurrencies. The exact rate can vary depending on various factors, including the entity’s tax bracket and the duration the asset was held. Legal guidance can be critical in understanding how to report these gains accurately.
Case Example:
In 2019, Harry, a Liverpool resident, decided to sell a portion of his crypto assets after a three-year holding period. The substantial profit fell under the UK’s capital gains taxation. With guidance from a local financial consultant and expert lawyers, he navigated the tax implications, ensuring full compliance with UK tax laws.
- Capitulation
- Capitulation refers to a point in a declining market where investors give up on trying to recapture lost gains and sell off their assets to cut losses, often leading to a sharp and sudden decrease in asset prices.
Case Example:
During a 2018 crypto market downturn, the UK’s “Crypto Weekly” magazine reported a trend of capitulation among local investors. One investor, Fiona from Birmingham, recounted her experience, revealing that she sold most of her holdings to prevent further losses, reflecting a sentiment felt by many during that period.
- Cash
- Cash, in the context of cryptocurrencies, can refer to fiat money used to purchase cryptocurrencies or “cash-out” from cryptocurrency investments, converting digital assets back into fiat currency.
Case Example:
After the 2017 crypto surge, Oliver, a Cardiff-based trader, decided it was time to cash out some of his Bitcoin assets. Using a popular UK crypto exchange, he converted a portion of his Bitcoin holdings back into GBP, securing his profits and using them to invest in a local business venture.
- Cease and Desist Order
- A legal order issued by a government agency (such as the FCA) or court directing a person or entity to stop an activity deemed illegal or questionable.
Case Example:
In 2018, BitCoinTradeX, a UK-based cryptocurrency platform, received a cease and desist order from the UK’s Financial Conduct Authority (FCA) due to its unauthorised and misleading advertising campaigns. The platform had to halt its promotional activities immediately and rectify its approach to align with UK regulations.
- Censorship
- The suppression or prohibition of any parts of content, often relating to speech or communication, deemed objectionable, harmful, or sensitive to the general public.
Case Example:
In 2019, a cryptocurrency project focused on creating a censorship-resistant social media platform gained traction among UK users. This came in response to increasing concerns about free speech restrictions on major platforms.
- Central Bank
- The chief financial authority in a country responsible for issuing currency, setting monetary policy, regulation, and overseeing the nation’s banking system.
The Bank of England, as the England’s central bank, began exploring the implications and potential benefits of integrating digital currencies into the nation’s financial ecosystem in the late 2010s.
- Central Bank Digital Currency (CBDC)
- A digital form of a country’s native currency, backed and issued by its central bank, operating alongside traditional money. In 2020, the Bank of England announced its research findings on developing a CBDC for the UK. Their proposed digital pound aimed to enhance payment efficiencies while ensuring stability in the financial system. The legal status of CBDCs is a developing area of international law.
- Central Ledger
- A singular, main record where all transaction data is stored and managed by a central authority. In contrast to distributed ledger technology like blockchain, many traditional UK banking systems rely on a central ledger to record and process customer transactions.
- Centralised
- A system where control is exercised by a single entity or a group of related entities. While blockchain is often touted for its decentralisation, many UK crypto exchanges operate on centralised systems, managing user funds and overseeing trade orders.
- Chain Reorganisation
- A situation in which a blockchain undergoes a restructuring due to the discovery of a longer chain, leading to the replacement of older blocks. Chain reorganisations can have significant legal implications if they result in the double-spending of coins or reversal of transactions.
Case Example:
In 2019, a popular UK cryptocurrency news site reported a chain reorganization event in Ethereum, sparking discussions about blockchain security among UK crypto enthusiasts.
- Chain Split
- When a single blockchain diverges into two separate chains, often due to changes in protocol or disagreements in the community.
Case Example:
In 2017, Bitcoin experienced a notable chain split, resulting in two separate cryptocurrencies: Bitcoin (BTC) and Bitcoin Cash (BCH). This event led to heated debates among UK crypto investors regarding the future of both coins.
- Chain of Custody
- The chronological documentation that records the sequence of custody, control, transfer, analysis, and disposition of evidence, like digital wallets or blockchain transactions.
It is important when dealing with cryptocurrency disputes to establish a clear chain of custody for digital assets to ensure rightful ownership and avoid fraudulent activities; forensic experts may be required in order to clarify this issue.
- Chargeback
- A demand by a credit card provider for a retailer to cover the loss of a fraudulent or disputed transaction.
Case Example:
In 2018, a UK merchant accepting Bitcoin faced challenges with traditional payment methods, as chargebacks from credit card transactions were rising. Switching to cryptocurrency reduced these issues due to its irreversible transaction nature.
- Claim Form
- A formal legal document (Form N1) used to initiate legal proceedings under the Civil Procedure Rules (CPR) under Part 7, detailing the nature of the claim and the relief sought. This is typically used to assert a legal claim involving financial disputes in the crypto space.
Case Example:
In 2020, a UK investor initiated a legal against a crypto wallet provider over lost funds. He commenced the suit by submitting a claim form (part 7) to the High Court of Justice, detailing the alleged negligence of the provider and seeking significant damages.
- Class Action
- A legal action where one or several individuals represent a larger group in a legal claim at Court.
Case Example:
In 2019, a group of UK-based crypto investors initiated a class action against a well-known crypto exchange following a significant security breach. They argued that the platform failed to implement adequate security measures, leading to collective losses.
- Code
- A set of instructions for a computer, typically forming the basis for software, apps, and platforms, including those for cryptocurrency operations.
Case Example:
Cryptocurrency developers working on Ethereum often refer to “smart contract code” to automate transactions without intermediaries.
- Coin
- A type of cryptocurrency that operates independently with its blockchain.
Case Example: Bitcoin, widely recognised even among UK non-investors, is a prime example of a coin with its unique blockchain.
- Coin Mixing
- A method to improve the privacy and anonymity of cryptocurrency transactions by pooling several transactions together to obfuscate their origins. Several UK-based privacy advocates recommend using coin mixing services to enhance the confidentiality of Bitcoin transactions. This is frequently scrutinised for its potential role in money laundering and other illicit activities, and make regulation more difficult for governments.
- Cold Storage
- Offline storage of cryptocurrencies, typically involving hardware non-custodial wallets, USBs, offline computers, or paper wallets. It is a security measure for storing cryptocurrencies offline, away from internet access, reducing the risk of hacking.
Case Example:
Many UK crypto exchanges keep a significant portion of their assets in cold storage to safeguard them from potential online breaches.
- Collateral
- An asset or property offered as security to back a loan or other financial obligation.
Case Example:
A UK crypto lending platform began offering services where users could use their Bitcoin holdings as collateral to secure fiat loans.
- Computer program
- A collection of instructions written in code that can be executed by a computer.
Case Example:
A UK fintech startup designed a computer program that automatically executes cryptocurrency trades based on real-time market data.
- Confidential Assets
- A type of cryptographic tool that allows for the encryption of the asset amounts in transactions, enhancing privacy.
Case Example:
Several UK crypto projects are researching the integration of confidential assets to ensure transaction amounts remain undisclosed to the public.
- Consensus Algorithm
- A process used in computer science and cryptocurrency to achieve agreement on a single data value or a single state of the network among distributed processes or multi-agent systems.
Case Example:
The shift of Ethereum from a Proof-of-Work to a Proof-of-Stake consensus algorithm has been a topic of considerable interest and discussion.
- Consensus mechanism
- A technique used in blockchain and cryptocurrency to achieve agreement on a single data value among distributed processes or systems.
Case Example:
Proof-of-Work and Proof-of-Stake are popular consensus mechanisms, with many UK crypto enthusiasts debating their merits and efficiency.
- Contempt of Court
- The offence of being disobedient or discourteous to the court, relevant when someone violates court orders related to cryptocurrency, such as a freezing injunction.
Case Example:
A UK-based crypto exchange failed to produce necessary documents for an ongoing investigation, leading the court to issue a contempt of court charge against its CEO.
- Contract
- In traditional finance, a contract is a binding agreement between two or more parties. In cryptocurrencies, smart contracts can execute functions on the blockchain.
Case Example:
A UK investor enters into a contract with a crypto mining company, where the latter promises a specific return on investment over a defined period.
- Contract for Difference (CFD)
- A financial contract that pays the differences in the settlement price between the open and closing trades, allowing individuals to speculate on financial markets without owning the underlying asset. Many UK traders utilise CFDs to profit from the volatile movements in the price of Bitcoin without holding the cryptocurrency.
- Correction
- A correction is a pullback of an asset’s price of at least 10% to adjust for over-valuation.
Case Example:
Following a steady rise in Ethereum’s value, financial experts anticipate a correction, advising traders to act cautiously.
- Cost Order
- An order made by a court requiring one party to pay another party’s legal fees, often an issue in legal cases involving cryptocurrencies given the high costs associated with litigation.
Case Example:
After a protracted legal battle in the High Court between a crypto platform and an investor, the court issues a cost order, requiring the losing party to bear the legal costs of the prevailing party in the sum of £75,000 summarily assessed after the court hearing.
- Counterclaim
- A claim made to offset another claim in litigation, frequently seen in cryptocurrency disputes where both parties allege wrongdoing.
Case Example:
In a dispute between a UK crypto developer and an investor, the investor has brought the claim (the claimant) and the developer (the defendant) counterclaims, asserting the investor failed to meet contractual obligations, contributing to the project’s failure.
- Credit Rating
- Credit rating is a measure that allows banks and lending institutions to predict how capable you are of repaying your debt.
Case Example:
A UK-based crypto startup struggles to secure funding due to a low credit rating, stemming from its high-risk profile and market volatility.
- Credit Risk
- The risk of loss due to a borrower’s failure to make payments on any type of debt.
Case Example:
A UK bank decides against offering services to a prominent crypto exchange, citing significant credit risks associated with the platform’s operations.
- Crowdfunding
- The practice of funding a project by raising small amounts of money from many people, typically via the internet.
Case Example:
A UK-based blockchain project successfully achieves its development goals through crowdfunding the sums of £100m from 50,000 investors, allowing supporters to contribute in cryptocurrency.
- Crypto Custody Solutions
- Third-party providers of storage and security services for cryptocurrencies, sometimes brought into legal discussions around the responsibility and liability for stored assets.
Case Example:
A leading UK bank integrates a crypto custody solution, enabling institutional clients to safely store their Bitcoin holdings while ensuring regulatory compliance.
- Crypto Lending
- A practice where users can earn interest on their cryptocurrency holdings by lending them out to borrowers, usually via platforms.
Case Example:
In the UK, a startup introduces a platform that allows users to earn interest on their staked Ethereum, giving traditional banking a run for its money.
- Crypto Recovery Group
- This is a specialist and dedicated division of Go Legal focussing on asset recovery of cryptocurrency for clients. We have several international experts, lawyers, and accountants part of the Crypto Recovery Group that assist our clients and provide discounted rates for their investigatory work. Please do not hesitate to get in touch with us for a Free Consultation to discuss how we may be able to assist with your cryptocurrency needs.
- Crypto-Collectibles
- Unique digital assets verified using blockchain technology representing ownership of a specific item or piece of content. These could be anything from unique tokens to digital artwork, each with its own set of legal challenges around ownership and rights.
Case Example:
A digital artist in the UK gains fame by selling crypto-collectibles, each being a unique piece of digital art stored and verified on the Ethereum blockchain.
- Cryptoasset
- A cryptoasset is any digital asset that uses cryptographic technologies to maintain its operation as a currency or decentralised application.
Case Example:
The FCA, HMRC the UK Government has classifies certain tokens used in initial coin offerings (ICOs) as cryptoassets, impacting how they’re taxed and regulated.
- Cryptocurrency
- A digital or virtual currency that uses cryptography for security and operates independently of a central authority or bank.
Case Example:
Bitcoin, the first and most well-known cryptocurrency, has seen widespread adoption among retailers and investors in the UK. Since Bitcoin there have been hundreds and thousands of Altcoins in the market each providing a unique set of use cases and technology.
- Cryptocurrency Fraud
- Fraudulent activities involving cryptocurrency, such as stealing funds, fraudulent schemes, and hacking exchanges. Deceptive activities associated with cryptocurrency, which can include Ponzi schemes, fake ICOs, or phishing attempts.
Case Example:
In 2022, a UK resident, John, was approached online about a new and promising cryptocurrency ICO. After investing a significant sum, he discovered that the ICO was a scam, leading to the loss of his investment.
- Cryptocurrency Wallet
- A digital storage facility for holding cryptographic keys that signify ownership of cryptocurrency. The legal implications of wallet custody and ownership can be complex, often requiring expert advice.
- Cryptographic Hash Function
- A mathematical function used in the encryption and hashing process. Understanding these functions is essential for legal cases involving blockchain technology.
Case Example:
The Bitcoin blockchain utilizes the SHA-256 cryptographic hash function, an industry standard in the UK and globally.
- Cryptography
- The art of writing and solving codes, often used in securing communication, verifying data integrity, and cryptocurrency transactions.
Case Example:
With the rise of cryptocurrency use in the UK, universities introduce advanced courses in cryptography, acknowledging its growing importance in the digital age.
- Cryptojacking
- The unauthorised use of someone’s computer or device to mine cryptocurrency, often relevant in cybercrime cases related to digital assets.
Case Example:
Several UK companies report breaches wherein hackers implanted cryptojacking scripts, redirecting computational resources to mine Monero without consent.
- Custodial Services
- Services, typically offered by financial institutions, that involve holding, safeguarding, and administering assets on behalf of their owners.
Case Example:
Emma, a prominent cryptocurrency trader in London, opted to store her vast Bitcoin holdings with a reputable bank that offered cryptocurrency custodial services, ensuring her assets remained secure and compliant with UK regulations.
- Custody Dispute
- A disagreement or legal battle concerning the rights and responsibilities for the care and control of assets.
Case Example:
After a major crypto-exchange went bankrupt, there was a significant custody dispute in the High Court. Clients of the exchange claimed the platform still held large portions of their assets, leading to a prolonged legal battle.
- Cybercrime
- Crimes committed online or facilitated through computer networks, which can range from identity theft to hacking and financial fraud.
Case Example:
Tech-savvy Jane found herself at the centre of a cybercrime investigation when her online shopping site was hacked. Personal details of thousands of her UK customers were compromised, leading to a major data breach.
D
- Damages
- Monetary compensation awarded to a person who has suffered a loss or harm due to the unlawful act or negligence of another. The aim is to put the injured party in the position they would have been without the wrongful act, fraud or theft.
Case Example:
A UK cryptocurrency startup was ordered by the High Court to pay £2 million in damages to a client after a software glitch led to significant financial losses for the client.
- Dapp (Decentralized Application)
- Software that runs on a blockchain rather than a single computer or server ensuring they are not controlled by any single entity, typically using blockchain technology. Dapps have various legal implications, from intellectual property rights to user data protection.
Case Example:
In Birmingham, a group of developers launched a Dapp aimed at connecting local farmers directly with consumers. By using blockchain, they ensured transparent, tamper-proof records of each transaction.
- Data Subject Access Request
- A request made by an individual to an organisation to obtain a copy of the data they hold about them, as per the General Data Protection Regulation (GDPR) and UK data protection laws. This is particularly relevant given the privacy concerns around cryptocurrency transactions.
Case Example:
Concerned about her data’s privacy, Maria submitted a Data Subject Access Request to a major cryptocurrency exchange in the UK. They were legally obliged to provide her with all personal data they held about her within a month under the GDPR.
- DeFi
- Short for Decentralized Finance; it refers to the ecosystem of financial applications built on blockchain technologies.
Case Example:
Sarah found traditional banks’ interest rates unsatisfactory. She turned to DeFi platforms, earning higher interest on her deposits using smart contract-based lending pools.
- Decentralized
- A system where decision-making and control is spread out across various points or nodes, rather than residing with a central authority.
Case Example:
Rather than relying on a central bank or governmental body to oversee transactions, Bitcoin operates on a decentralized network, meaning it is controlled and verified by various individuals and entities across the world.
- Decentralized Autonomous Organization (DAO)
- A digital organization represented by rules encoded as a computer program that is transparent, controlled by its members and not influenced by a central government. Legal status and governance issues surrounding DAOs are complicated.
Case Example:
‘GreenEarth DAO’ was created by UK environmentalists to channel funds into renewable energy projects. Members vote on funding allocations, with all decisions made transparently via blockchain.
- Decentralized Currency
- A type of currency that is not regulated or controlled by any central authority or government. Decentralized currency refers to bank-free methods of transferring wealth or ownership of any other commodity without needing a third party.
Case Example:
Stella, a UK-based freelancer, often accepts payments in Bitcoin, a decentralized currency, allowing her to work with clients from all over the world without worrying about currency conversion or banking restrictions.
- Decentralized Finance (DeFi)
- A movement that uses decentralized networks and blockchains to transform traditional financial products into trustless and transparent protocols. Financial services, such as borrowing, lending, or asset trading, built on blockchain technologies. DeFi platforms are subject to different legal standards compared to traditional financial platforms.
Case Example:
Peter used a DeFi platform to obtain a loan using his Ethereum as collateral, bypassing traditional UK banking systems and enjoying faster, more transparent services.
- Decentralized Justice
- A concept where justice decisions, often related to online platforms or decentralized organizations, are made by a community or network rather than a centralized legal authority.
Case Example:
When a dispute arose between two users of a crypto platform, rather than taking it to UK courts, they opted for the platform’s decentralized justice system, where fellow users weighed in on the matter.
- Decentralized Stablecoin
- A type of cryptocurrency that’s price is pegged to an external reference, such as a fiat currency, but is operated and governed by decentralized protocols or DAOs. Decentralized stablecoins are fully transparent, non-custodial with no or partial third-party control.
Case Example:
To hedge against the volatility of the crypto market, Oliver converted some of his assets into DAI, a decentralized stablecoin pegged to the US dollar, but not controlled by any single entity.
- Decryption
- The process of converting encrypted data back into its original form, making it understandable.
Case Example:
The UK’s cybercrime unit successfully used decryption tools to access data from a captured hacker’s computer, revealing a treasure trove of stolen information.
- Defamation
- The action of damaging the good reputation of someone through false statements, either written (libel) or spoken (slander). Can occur on crypto forums.
Case Example:
A prominent crypto trader in London sued a major newspaper for defamation after they incorrectly reported his involvement in illicit activities.
- Default Judgment
- A judgment awarded in the favour of a claimant because the defendant failed to take the required action, such as not responding to a summons. This term is especially relevant for international cryptocurrency cases where one party may be difficult to locate or contact.
Case Example:
When a UK crypto business failed to respond to a breach of contract High Court claim for £2m within the stipulated time of 14 days, the claimant was awarded a default judgment against the defendant for £2m plus fixed costs as the defendant failed to comply with the CPR to file a defence to the claim.
- Deflation
- The decrease in the general price level of goods and services, typically associated with a contraction in the supply of money and credit in the economy.
Case Example:
As Bitcoin gained popularity in the UK and became widely accepted for transactions, there was less demand for the British pound, leading to deflation as the pound’s purchasing power increased.
- Delisting
- The removal of a cryptocurrency from a trading platform or exchange, typically due to non-compliance with the exchange’s rules or for other regulatory reasons.
Case Example: After several regulatory breaches, ‘BitCryptoX’ was delisted from a major UK-based cryptocurrency exchange, causing a sharp decline in its trading volume.
- Derivative
- A financial contract whose value is based on the performance of underlying assets, like stocks, bonds, or cryptocurrencies.
Case Example:
John, a UK investor, entered into a Bitcoin derivative contract, allowing him to potentially profit from price changes without actually owning any Bitcoin.
- Derivatives
- Financial products that derive their value from an underlying asset, such as futures, options, or swaps. Cryptocurrency derivatives are often subject to the same regulations as traditional financial derivatives.
Case Example:
The London-based ‘CryptoTrade Exchange’ recently launched a suite of cryptocurrency derivatives, enabling traders to hedge against price volatility.
- Desktop Wallet
- A software application for storing cryptocurrency, which is downloaded and installed on a personal computer.
Case Example:
Sarah prefers using a desktop wallet for her Ethereum, believing it offers a balance between security and convenience.
- Diamond Hands
- A slang term in the cryptocurrency community on social media platforms, referring to individuals who hold onto their investments, even during market downturns by more than 20%, expecting future profits.
Case Example:
Despite the sharp decline in crypto prices, Tom from Manchester maintained his ‘diamond hands’, holding onto his Bitcoin investment with the hope of a future price surge.
- Digital Art
- Artworks created and stored in a digital format, often sold or represented as NFTs (Non-Fungible Tokens) in the cryptocurrency world.
Case Example:
A UK-based artist made headlines by selling a piece of digital art for 500 Ethereum on a popular NFT platform.
- Digital Asset
- Digital assets includes a cryptoasset, digital token, smart contract or other digital or coded representation of an asset or transaction; and a digital asset system means the digital environment or platform in which a digital asset exists.
UK’s legal reforms are increasingly recognising cryptocurrencies like Bitcoin and Ethereum as digital assets, giving them a place in inheritance, tax and contract law.
- Digital Currency
- A currency that exists only in digital form, as opposed to traditional physical currencies (like banknotes and coins). The Bank of England has been researching the potential for a digital pound as a type of central bank digital currency (CBDC).
- Digital Signature
- A cryptographic scheme to verify the identity of the digital document signer. Digital signatures have legal standing like handwritten signatures.
Case Example:
To ensure the safety of transactions, the UK-based ‘CryptoSecure Exchange’ employs digital signatures, giving an additional layer of verification.
- Dip
- A dip is when markets experience a short or protracted downturn.
Case Example:
Tom saw a dip in the price of Bitcoin below £15,000, Tom and many UK traders saw it as a buying opportunity, anticipating future price increases and purchased more Bitcoin during the dip in price.
- Disclosure
- The process by which parties to a legal dispute are required to reveal relevant documents to each other by the Court. This could include revealing blockchain transactions, addresses, or wallet information. This could be done by way of an application to the Court for specific or pre-action disclosure, or typically during the proceedings.
Case Example:
In the High Court, a company facing allegations of fraud in its cryptocurrency operations was ordered to provide full disclosure of its financial dealings.
- Disclosure Order
- A legal order compelling one party to reveal certain information to another party.
Case Example:
A London-based crypto firm, suspected of money laundering, was served with a disclosure order, requiring them to unveil their transaction records to the authorities.
- Discord
- A popular online communication platform, often used by cryptocurrency communities for discussions, announcements, and support.
Case Example:
The ‘UKCryptoTalk’ community on Discord regularly hosts webinars and Q&A sessions, offering insights into the rapidly evolving crypto market in the UK.
- Distributed ledger
- A digital system for recording transactions, where details are stored across multiple places simultaneously. A distributed ledger is shared (that is, “distributed”) amongst a network of computers (known as “nodes”) and may be available to other participants. Participants approve and eventually synchronise additions to the ledger through an agreed consensus mechanism.
Case Example:
Think of ‘UKTradeSecure’, a recent startup that managed to drastically reduce instances of fraud among its users. By deploying a distributed ledger system, every time a user in London made a transaction, it was verified in nodes from Manchester to Edinburgh, ensuring no unauthorized changes went undetected.
- Distributed ledger technology (“DLT”)
- The technology behind distributed ledgers, allowing multiple copies of a database to be maintained simultaneously in different locations.
The FCA’s pilot project, which used DLT to trace illicit financial transactions, unveiled concealed money laundering networks running through Bristol and Cardiff.
- Diversification
- The strategy of spreading investments across different assets or sectors to reduce risk.
Case Example:
Alex, a financial trader from Leeds, saw his colleague lose a significant amount by putting all his investments in one crypto. Learning from this, Alex diversified, investing in Bitcoin, Ethereum, and emerging tokens like Polkadot. When one of them faced a dip, the others kept his portfolio steady.
- Double Spending
- A potential flaw in digital currency systems where the same single digital token can be spent more than once. Legal issues arise when double spending is used to defraud or steal.
Case Example:
‘CryptoGuardian’, a UK-based digital wallet provider, once faced a scandal when hackers exploited a vulnerability allowing them to double-spend. This incident led to stricter security measures in crypto exchanges and wallets across the UK.
- Dump
- A sudden sell-off of digital assets.
Case Example:
Recently, a famous crypto influencer’s negative tweet about a particular Altcoin led to its massive dump on UK crypto exchanges, wiping out millions in market capitalisation within hours.
- Dumping
- A collective market sell-off that occurs when large quantities of a particular cryptocurrency are sold in a short period of time.
- Dust Attack
- A method where attackers send tiny amounts of cryptocurrency to a wallet to uncover the identity of its holder. This has implications for both privacy law and AML regulations.
Case Example:
Lucy, an enthusiastic crypto trader in Liverpool, once received minute transactions. It wasn’t a technical glitch. Later, a report from ‘UKCryptoSecurity’ indicated that hundreds in the UK were targeted in similar ‘dust attacks’ to breach their anonymity.
- Dusting Attack
- A type of blockchain analytics attack that sends small amounts of cryptocurrency to personal wallets in order to de-anonymize individuals. This could have implications for user privacy.
E
- E-Disclosure
- The electronic aspect of identifying, collecting and producing electronically stored information in response to a request for production in a legal Court claim or investigation, increasingly relevant due to the digital nature of cryptocurrencies.
Case Example:
In the High Court a crypto firm was accused of fraudulent schemes, e-disclosure was crucial. The bulk of evidence was in the form of emails, transaction logs, and chat histories, all produced electronically and served on the claimant in the legal proceedings.
- E-Signature
- An electronic signature, or e-signature, is any electronic mark (sign, sound, symbol, etc.) used in the palace of a physical signature in signing a document or contract.
Case Example:
Sarah, running an online cryptocurrency consultancy in Birmingham, streamlined her client onboarding by integrating e-signatures. Clients could verify their identities and sign agreements without any paperwork or postal delays.
- ERC-20
- A technical standard for smart contracts on the Ethereum blockchain. ERC-20 tokens have set rules that most tokens follow, facilitating interoperability between tokens.
Case Example:
‘CryptoGreen’, a UK company, launched a token for carbon credit trading using the ERC-20 standard, ensuring compatibility with popular Ethereum-based wallets and exchanges.
- Email Spoofing
- Email spoofing is a technique that is used in order to trick users into thinking that a message actually came from a different person. The creation of email messages with a forged sender address, often used in phishing attacks.
Case Example:
“UK’s Largest Crypto Phishing Scandal Unveiled” – this was the headline when a cybercriminal group mimicked emails from ‘BritCoinExchange’. They misled thousands of Brits, convincing them to click on malicious links and drain their wallets.
- Encryption
- Encryption is a method through which information can be made into code to prevent unauthorised access.
Case Example:
Following a high-profile data breach of ‘DigitalAssetsUK’, one of the UK’s prominent crypto custody providers, they overhauled their security measures. Their new protocols featured advanced encryption, ensuring user data was tightly sealed, meeting all GDPR standards.
- Equity
- Equity is the funds that would be returned to a company’s shareholders if all of the company’s assets were dissolved and all debts were paid off in the event of liquidation. It is the ownership interest in a company represented by shares of stock.
Case Example:
Consider the case of ‘UKTechStart’, a London-based blockchain startup. After an initial investment round, early supporters received equity, giving them a stake in the company’s future successes and profits.
- Escrow Agent
- A neutral third party that holds assets on behalf of transacting parties to ensure exchange terms are met. Used for crypto transactions.
Case Example:
During a high-profile acquisition of ‘ChainRealm’, a UK blockchain company, an escrow agent held the payment to be released only after all contractual conditions were met, ensuring trust on both sides.
- Ether
- The native cryptocurrency of the Ethereum platform. A recent report highlighted a surge in Ether’s price after the UK endorsed a new blockchain-based public record system running on the Ethereum network.
- Ethereum
- Also known by its code ETH, Ethereum is a decentralized, open-source blockchain system that features its cryptocurrency, Ether.
Case Example:
‘EthDappsUK’, a Birmingham-based firm, became renowned for developing decentralized applications exclusively on the Ethereum platform, showcasing its versatility beyond just cryptocurrency.
- Exchange
- Platforms where you can buy, sell, and trade cryptocurrencies. Exchanges are subject to various regulatory frameworks that differ from country to country and may require a legal advisory to navigate effectively. There are several crypto exchanges such as Binance and Crypto.com.
- Exchange-Traded Fund (ETF)
- A fund that tracks a cryptocurrency, or basket of cryptocurrencies, and can be traded like stocks on an exchange. The legal status of crypto ETFs varies between jurisdictions. Last year, the UK saw its first-ever cryptocurrency ETF listed, allowing mainstream investors to indirectly invest in a basket of crypto assets without holding the actual coins.
- Exit Scam
- A fraudulent practice by unethical cryptocurrency promoters who disappear with investors’ money during or after an ICO.
Case Example:
The infamous ‘OneCoin’ ICO raised significant funds only for its founders to vanish, leading to a nationwide crackdown on unsupervised ICOs.
- Expert Witness
- A person qualified in cryptocurrency or blockchain technology who is permitted by the court to provide specialised opinion evidence. This is increasingly prevalent in cryptocurrency disputes that involve technical complexity. In several High Court claims in the UK, the Court has ordered expert evidence to be admitted in order to assist the Court to further understand the technology and determine a binding decision in this developing area of law.
F
- FIFO (First-In-First-Out)
- FIFO, or First-In-First-Out, is a widely recognised accounting method in the UK, especially relevant in the realm of cryptocurrency transactions. Under this approach, it is the first-acquired assets that are sold first. The method is used to determine the capital gains or losses during asset disposal, which subsequently affects an individual’s or entity’s Capital Gains Tax (CGT) liabilities to HMRC.
Case Example:
Eleanor, a UK-based cryptocurrency investor who began investing in Ethereum (ETH) in the year 2019. Over the year, she accumulated ETH at different price points:
1. In January: 10 ETH @ £100
2. In June: 20 ETH @ £200
3. In December: 15 ETH @ £300
In 2020, observing a surge in the market, Eleanor decided to sell a portion of her holdings in February when the price was at £350 per ETH. Opting to use the FIFO method for accounting, the first assets she acquired would be the first to be sold. Therefore, she decided to sell 20 ETH. The calculation of her capital gains would be as follows:
· Original purchase price for the first 10 ETH: 10 ETH × £100 = £1,000
· Original purchase price for the next 10 ETH: 10 ETH × £200 = £2,000
· Selling price: 20 ETH × £350 = £7,000
To find her total capital gains, we subtract the original purchase price of £3,000 (£1,000 + £2,000) from her selling price of £7,000, resulting in a capital gain of £4,000.
This illustrative case example illustrates how Eleanor, by using the FIFO method, can calculate her capital gains when selling her assets. It will be necessary to report these gains when filing her Capital Gains Tax to HMRC, taking into account any applicable exemptions and reliefs.
- Fan Token
- A fan token is a cryptocurrency issued by a specific sports team and allows its holders to participate in the governing activities and attain exclusive rewards & discounts.
Case Example:
A lot of premier league football clubs for example such as Arsenal FC and Manchester United have launched its fan token, enabling supporters to vote on minor team decisions and access exclusive merchandise, and other perks.
- Fiat On-Ramp
- A method of converting fiat currency into cryptocurrency; this is a feature offered by several crypto exchange platforms and service providers. The legal frameworks around these conversion methods are a point of focus for regulatory bodies.
Case Example:
Binance for example introduced a seamless fiat on-ramp system allowing locals to quickly buy Bitcoin using GBP, making crypto adoption more accessible.
- Fiat currency
- The Fiat currency is money a government has deemed or certified as legal tender that they support such as USD, GBP, INR, EUR, or other world currency is lawful and accepted to pay both public and private debts. In a recent UK panel on digital finance, economists debated the longevity of fiat currencies like the pound sterling in the face of rising cryptocurrency adoption.
- Fiduciary Duty
- The legal obligation of one party to act in the best interest of another. This is often cited in legal cases involving cryptocurrency, particularly those that involve the mismanagement of crypto assets.
Case Example:
There are several claims in the High Court of cryptocurrency hedge fund managers who have been taken to court for breaching his fiduciary duty by not acting in the best interests of his investors, leading to significant losses.
- Fish
- Someone who has a small crypto investment.
Case Example:
After attending a crypto seminar in Manchester, Peter, a local teacher, invested £5,000 into crypto, positioning him as a ‘fish’ in the vast sea of crypto investors.
- Flippening
- A theoretical future point in time when Ethereum (or another cryptocurrency) might surpass Bitcoin in market capitalisation.
Case Example:
A significant debate erupted on ‘UKCryptoForum’ when Ethereum’s market cap approached Bitcoin’s, with many speculating if the long-awaited ‘Flippening’ was close. However, it has not yet happened and it not likely to happen for some time now given the recent market decline and industry confidence.
- Fork
- A change to the protocol of a blockchain network. A situation where a blockchain splits into two separate chains, often due to changes in protocol or disagreements in the community. Forks can create new versions of a blockchain and can have numerous legal implications, particularly around asset ownership and tax implications.
Case Example:
A case in point is when Bitcoin experienced a fork, leading to the creation of Bitcoin Cash. This split was covered extensively by UK financial news outlets, explaining its implications to local investors.
- Forum Disputes
- Disagreements about which jurisdiction or forum should hear a case, particularly relevant in the globalised crypto space.
Case Example:
‘CryptoGlobal’, a firm with ties to both the UK and Singapore, found itself embroiled in a forum dispute as the defendant considered that Signapore should determine the claim whereas the claimant had issued the claim in the High Court in London. Therefore, there was a dispute as to jurisdiction and the forum to determine the claim.
- Freezing Injunction
- A court order that prevents a party from disposing of or dealing with their assets, often sought in cases where cryptocurrency assets are at risk of being moved or hidden. This is a key and important component of cryptocurrency legal disputes in order to secure and protect the assets in question to make enforcement easier and ensures that the opponent does not seek to transfer, hide or deplete the assets.
Case Example:
In a recent High Court claim, a freezing injunction was imposed on a rogue crypto trader’s assets in the sum of £20m, ensuring he could not dissipate investor funds while the trial was ongoing.
- Front-Running
- The unethical practice of a broker executing orders on a security for its own account while taking advantage of advance knowledge of pending orders from its customers. In the context of blockchain, this can happen in decentralized finance (DeFi) platforms.
Case Example:
A whistleblower in Liverpool exposed a case where a prominent crypto exchange’s employee Steven was front-running, taking advantage of advance knowledge about large client orders.
- Fungibility
- The ability of a token to be replaced by another of the same kind, making it interchangeable. Fungibility can be important in legal considerations around taxation and asset transfers.
Case Example:
Gold, a traditional asset, and Ethereum, a cryptocurrency, both display fungibility. A seminar in Birmingham compared the fungibility of these assets, highlighting how one ounce of gold or one Ethereum token is equivalent in value and properties to any other of its kind.
- Fungible
- In cryptocurrency, fungibility is when a coin or token can be replaced by any other identical coin or token.
Case Example:
One Bitcoin held by a trader in London is fungible because it holds the same value and properties as a Bitcoin held by someone in Edinburgh.
- Fungible Token
- Tokens with identical properties meaning each token is the same as every other token. This makes these tokens useful for digital cash, smart contracts, and online voting systems. Non-fungible tokens (NFTs) are the opposite, being distinctly unique from each other.
Case Example:
In a UK court case, an individual tried to differentiate between two Ethereum tokens he owned. However, as Ethereum tokens are fungible, both held identical value, making his argument invalid.
G
- Gains
- The profit earned from the sale or appreciation of assets, including cryptocurrencies.
Case Example:
Jane, a Brighton resident, bought Bitcoin in 2019 and sold it in 2022, realising substantial gains. She now needs to consider the capital gains tax implications in the UK.
- Gas Fees
- The fees required to perform transactions and execute contracts on the Ethereum blockchain. These can be significant in cases involving financial disputes in blockchain contracts.
Case Example:
A London-based dApp developer had to reconsider certain functionalities due to the fluctuating high gas fees, impacting user adoption rates.
- Gas Price
- A term used on the Ethereum platform that refers to the price you are willing to pay for a transaction.
Case Example:
During a major crypto event in London, congestion on the Ethereum network spiked, causing many users to increase their gas prices to get their transactions prioritised and processed faster.
- Governance Token
- Tokens that allow the holder to help govern a decentralised organisation. These tokens have legal implications related to voting rights and ownership.
Case Example:
‘UKDeFiPlatform’, a homegrown DeFi project, issued governance tokens allowing its users to vote on protocol upgrades and changes, giving them a stake in the platform’s future direction.
H
- HODL
- A term derived from a misspelling of “hold,” referring to the strategy of keeping and retaining cryptocurrencies rather than selling them. There may be potential disputes concerned missed opportunities and negligent advice.
Case Example:
In a popular crypto forum on Reddit, a user shared his story from 2010, mentioning how he decided to HODL his Bitcoin even during significant market drops, which later proved advantageous when its value soared. The mis-spelling of the word ‘hold’ later grow traction and a lot of people in the crypto community started using the word HODL. Brian would HODL is cryptocurrency in the hope that the value will increase over time – he is taking a long term position.
- Hacking
- Unauthorised intrusion into a computer or a network, often with malicious intent.
Case Example:
A notable incident involved several crypto exchange platforms being hacked, leading to the loss of millions of pounds worth of digital assets. The incident spurred discussions about crypto security measures internationally.
- Hacking Losses
- When an exchange, wallet or user account is hacked and cryptocurrency is stolen. It has become a major source of legal disputes.
Case Example:
After a major hacking incident targeting a cryptocurrency wallet provider in Birmingham, several users reported hacking losses, which became a significant legal dispute involving claims for damages.
- Halving
- The event where the block reward for mining new blocks is halved, reducing the rate at which new tokens are created. This can have implications for market manipulation and valuation.
Case Example:
The Bitcoin halving event in 2020 generated immense media coverage in the UK, with many analysts debating its potential impact on Bitcoin’s price; the result of the halving increased the price of Bitcoin.
- Hard Cap
- The maximum amount of money that can be raised in an Initial Coin Offering (ICO) or other fundraising mechanisms. Legal compliance is necessary to set and abide by hard caps.
Case Example:
‘CryptoStartUK’, a new blockchain project in London, announced an ICO with a hard cap of £20 million, attracting attention from investors.
- Hard Fork
- A type of fork that creates a permanent divergence from the previous version of a blockchain.
Case Example:
The Bitcoin Cash hard fork in 2017, which split from Bitcoin, was a topic of substantial discussion in UK crypto communities, leading to debates about the long-term viability of both chains.
- Hashrate
- The computing power used in the process of mining to validate transactions on a blockchain. A higher hashrate indicates more computing power is required, which can be relevant in legal disputes involving mining operations.
Case Example:
A recent article in a UK tech magazine highlighted the exponential growth in the global Bitcoin hashrate, pointing out the involvement of several UK-based mining operations contributing to this growth.
- Hedge Contract
- An agreement or investment designed to reduce the risk of adverse price movements in an asset, typically involving a promise to purchase or sell the asset at a set price on a future date.
Case Example:
A UK-based crypto trading firm once entered a hedge contract to mitigate the risks associated with the volatile prices of Ethereum, ensuring they could sell their holdings at a predetermined price, irrespective of market fluctuations.
- Hot Wallet
- A digital wallet that is connected to the internet and can make immediate transactions. Hot wallets are considered less secure than cold wallets and have different legal requirements for asset protection.
Case Example:
A prominent UK cryptocurrency exchange was criticised after hackers breached its security systems, gaining access to its hot wallet and draining thousands of Bitcoins.
- Hybrid Contract
- A smart legal contract, some terms of which are defined in natural language and other terms of which are defined in the code of a computer program. Some or all the contractual obligations are performed automatically by the code. In addition, the same contractual term(s) can be written in both natural language and in code.
Case Example:
A UK-based property firm made headlines when they introduced hybrid contracts to lease properties, integrating blockchain technology to auto-execute certain clauses while retaining traditional contract aspects.
I
- IP Address
- A unique string of numbers separated by periods that identifies each computer using the Internet Protocol to communicate over a network.
Case Example:
A UK-based crypto firm faced a security breach. With the help of cybersecurity experts, they traced the malicious activity to an IP address originating from outside the UK.
- Identity Theft
- The unauthorised use of someone’s personal information to commit fraud or other crimes such as accessing accounts, filing taxes and depleting assets.
Case Example:
In 2021, a Cardiff resident became a victim of identity theft when cybercriminals accessed his personal data and misused it to open several cryptocurrency accounts in his name. This resulted in a capital gains tax event when those individuals sold the cryptocurrency for profits. However, this resident was not involved in crypto trading and in fact had never traded previously.
- Implied Contract
- A contract formed through non-verbal conduct, rather than explicit words, such as those based on actions, conduct or circumstances occasionally seen in cryptocurrency transactions.
Case Example:
A UK crypto miner claimed breach of an implied contract when a colleague failed to share mining rewards, based on their history of splitting profits, even though there was no written agreement.
- Inflation
- The rate at which the general level of prices for goods and services rises, causing the purchasing power of currency to fall.
Case Example:
Amidst high inflation rates in the UK, many turned to Bitcoin and other cryptocurrencies as a hedge against the diminishing purchasing power of the pound.
- Inheritance Dispute
- Legal controversies that arise over assets, including cryptocurrency, in a deceased individual’s estate. These legal disputes are being more common.
Case Example:
A Court claim saw siblings locked in an inheritance dispute over their late father’s substantial cryptocurrency holdings, as the digital assets had not been explicitly mentioned in the will.
- Initial Coin Offering (ICO)
- A method of funding for startups where a new cryptocurrency or tokens are sold to investors in order to finance product development. ICOs are often scrutinised to ensure they comply with international law, particularly financial regulations and consumer protections.
Case Example:
‘TechTokenUK’, a startup from Leeds, launched an ICO in 2018, raising over £10 million from UK investors eager to secure tokens in anticipation of the project’s success.
- Initial DEX Offering (IDO)
- A fundraising event where new cryptocurrency projects raise capital by listing their tokens on a decentralized exchange (DEX), allowing instant trading and liquidity.
Case Example:
In 2022, ‘UKTechCoin’, a promising blockchain project, bypassed traditional fundraising methods and launched an IDO on a popular DEX. The project managed to raise £5 million within hours due to the immediate liquidity provided by the DEX.
- Initial NFT Offering (INO)
- A fundraising approach where projects raise capital by selling a collection of non-fungible tokens (NFTs) before releasing them to the wider market.
Case Example:
British artist Jane Smith held an exclusive INO for her digital art collection, attracting worldwide attention. The INO managed to garner over £2 million, showcasing the growing interest in digital art assets within the market.
- Initial Public Offering (IPO)
- The process by which a private company goes public by selling its shares to institutional and retail investors, leading to the listing of these shares on a stock exchange.
Case Example:
A well-known UK-based cryptocurrency exchange underwent an IPO in 2021, marking a significant milestone for crypto businesses entering mainstream financial markets. The shares were oversubscribed, highlighting strong investor interest.
- Initial Token Offering (ITO)
- ITOs are similar to initial coin offerings — but have more of a focus on offering tokens with intrinsic utility in the form of software or usage in an ecosystem. Again they are are sold to early investors.
Case Example:
‘GreenChainUK’, an environmental blockchain initiative, conducted an ITO in 2019 to fund its sustainable projects, raising awareness and £3 million in the process.
- Injunction
- A court and legal order compelling a party to do or refrain from doing certain acts. Injunctions may be used to prevent the transfer of cryptocurrency to third parties or exchanges. If the terms of the injunction and the breaching party will be in contempt of court and liable for a fine and potentially imprisonment.
Case Example:
In a high-profile UK case, a cryptocurrency firm sought a High Court injunction against a competitor, claiming they were using proprietary technology in violation of existing agreements.
- Insider Trading
- The illegal practice of trading securities or other financial instruments based on non-public, material information about the asset.
Case Example:
A senior executive at a major UK cryptocurrency platform was investigated for insider trading after allegedly using confidential information to profit from impending announcements.
- Intellectual Property (IP)
- Creations of the mind, such as inventions, literary and artistic works, symbols, names, and images used in commerce, which can be legally protected.
Illustrative Example:
‘BlockGenius’, a UK blockchain startup, filed multiple IP protections for their unique consensus algorithms, positioning them favourably in the competitive tech market.
- Interested party
- An individual or entity who has a stake or concern in the outcome of a particular matter or legal proceeding.
Case Example:
In a legal dispute between a UK crypto exchange and its customers, a prominent banking institution became an interested party, as the outcome affected their collaboration with the exchange.
- Interoperability
- The ability for different blockchain protocols, systems, networks and platforms to interact and integrate with each other and share information seamlessly. This has important legal implications for cross-chain transactions and contract enforcement.
Case Example:
A UK-based fintech conference showcased a project that demonstrated interoperability between Ethereum and other blockchains, highlighting the potential for seamless cross-chain transactions and collaborations.
- Interpleader
- A legal process where a third party, holding funds or property that are the subject of competing claims, asks the court to determine the rightful claimant.
Case Example:
A UK cryptocurrency exchange, unsure of the rightful owner of certain disputed crypto assets, initiated an interpleader action. The court was tasked with determining which of two customers had the valid claim to the assets.
- Invest
- The act of allocating resources, often in the form of capital or money, with the expectation of generating an income or profit.
Case Example:
After attending a blockchain seminar in London, John decided to invest £10,000 in various promising cryptocurrency projects, hoping for a high return on investment.
J
- Jurisdiction
- The authority of a legal body in one country to preside over cases in a defined jurisdiction. Typical in cross-border crypto cases given the international nature of cryptocurrency.
Illustrative Example:
A cryptocurrency dispute arose between a user in the UK and an exchange based in Singapore. The user’s lawyer had to advise on which jurisdiction’s courts had the authority to hear the case and consider where to issue proceedings.
- Jurisdictional Issues
- Legal concerns that arise when the power of a court to decide on a matter is questionable, usually due to geographic considerations or the nature of the matter. This is typical in cryptocurrency litigation.
Case Example:
A UK crypto investor sued a foreign-based ICO project for misrepresentation. The defendant contested that UK courts did not have the authority to rule on the matter, raising jurisdictional issues.
K
- Know Your Customer (KYC)
- KYC regulations require businesses to verify the identity of their clients. In the crypto world, this usually means picture verification, proof of address, and potentially other identification methods to prevent illegal activities.
Case Example:
‘CryptoUKBank’, a UK-based digital bank, was fined for not adhering to strict KYC procedures, which led to fraudulent accounts being created on their platform.
L
- LIFO (Last-In-First-Out)
- LIFO, or Last-In-First-Out, is an accounting method utilised to manage assets such as cryptocurrencies. In this approach, the most recently acquired assets are the first to be sold or disposed of. It plays a critical role in determining the capital gains or losses during the disposal of assets, thus impacting the Capital Gains Tax (CGT) liabilities one might incur to HMRC.
Case Example:
In the early phase of the cryptocurrency surge in 2017, a UK investor (Adrian) decided to venture into the world of digital assets by investing in Bitcoin. Throughout the year, he acquired Bitcoin at several different price points:
1. In February: 1 BTC @ £800
2. In July: 2 BTC @ £4,000
3. In November: 2 BTC @ £12,000
By early 2018, the market experienced a correction, prompting Adrian to sell 2 BTC in March when the price was £8,000 per BTC. Using the LIFO accounting method, the bitcoins acquired last (November purchase: 2 BTC @ £12,000) were deemed to be the first to be sold. Therefore, Adrian’s capital loss on this transaction would be calculated as:
· Purchase Price: 2 BTC × £12,000 = £24,000
· Selling Price: 2 BTC × £8,000 = £16,000
· Capital Loss: £24,000 – £16,000 = £8,000
In this hypothetical scenario, Adrian is able to report a capital loss, which could potentially offset other capital gains he may have, reducing his overall Capital Gains Tax liability for the year. This example vividly illustrates how the LIFO method can be a strategic tool in managing tax liabilities in the UK, especially amidst fluctuating cryptocurrency markets.
- Layer-2 Solution
- Secondary frameworks or protocols that are built on top of an existing blockchain. These solutions may have different legal statuses than the primary blockchain.
Case Example:
With Ethereum facing scalability issues, several UK-based startups developed Layer-2 solutions to expedite transaction speeds, garnering significant attention in the crypto community.
- Ledger
- A book or system of accounts where financial transactions are recorded.
Case Example:
David, a crypto enthusiast in the UK, used a digital ledger to keep track of all his cryptocurrency transactions, ensuring transparency and accuracy.
- Letter Before Claim
- A formal legal letter setting out the claim and the basis for it, which must usually be sent before commencing proceedings in a civil court in England & Wales in accordance with the Civil Procedure Rules. It is the first step in most crypto dispute resolution processes.
Case Example:
After losing her funds on a cryptocurrency platform, Sarah from the UK sent a ‘Letter Before Claim’ to the platform’s operators, urging them to address the issue or face legal action.
- Leverage
- Borrowed capital to increase the potential return on an investment. In cryptocurrency trading, it refers to the amount a trader can multiply their trades by using borrowed funds from a broker.
Case Example:
Michael, a cryptocurrency trader in Birmingham, decided to use 10x leverage on his trade. This meant that for every £1 of his own money, he was trading with £10. However, while this magnified his potential profits, it also increased his potential losses.
- Lightning Network
- A second-layer solution on the Bitcoin network designed to enable fast, low-cost transactions by creating off-chain payment channels.
Case Example:
Alice, a coffee shop owner in London, adopted the Lightning Network to allow her customers to make small Bitcoin payments for their coffees without incurring high transaction fees.
- Liquidity Pool
- A cryptocurrency reserve that allows users to lend or pool their assets to facilitate trading by providing liquidity. This is a critical component of many DeFi applications and has its own set of legal challenges.
Case Example:
Tom, a crypto enthusiast in Manchester, decided to contribute to a liquidity pool on a decentralised exchange. In return, he earned fees from the trades that happened in that pool.
- Litigation Hold
- The requirement to preserve all documents, data, and records that may be relevant to a legal dispute. This can be crucial in cryptocurrency cases where blockchain data is vital.
Case Example:
Following a massive data breach, a UK cryptocurrency exchange was issued a litigation hold, mandating the preservation of all communications and transactions that could be relevant in a subsequent legal dispute.
- Loan-to-value (LTV)
- The ratio of a loan to the value of the purchased asset, commonly used in mortgage lending. In crypto, it pertains to the amount of cryptocurrency collateral required to receive a loan.
Case Example:
Jane from Cardiff used her Bitcoin holdings as collateral to get a fiat loan. The lender provided 50% LTV, meaning for every £200 of Bitcoin she offered as collateral, she received £100 as a loan.
- Long and Short Positions
- ‘Long’ is a bullish position expecting the asset price to rise, while ‘short’ is a bearish position expecting the asset price to fall. This can have legal implications in the context of financial regulation and market manipulation.
Case Example:
Believing in a positive future for Ethereum, Oliver in Edinburgh went long, buying more Ethereum. Meanwhile, suspecting an upcoming dip in Bitcoin, his friend Emily went short, betting against its rise.
M
- Mareva Injunction
- Another term for a Freezing Injunction. It is a court order that freezes a defendant’s assets to prevent them from being taken out of jurisdiction or disposed of before a judgment.
Case Example:
A London-based cryptocurrency firm suspected that an ex-employee was about to transfer stolen crypto assets abroad. They swiftly obtained a Mareva Injunction, freezing the assets before they could be moved.
- Margin Trading
- A method of trading assets using funds provided by a third party, allowing traders to access greater sums of capital and potentially amplify profits or losses. Margin trading is risky and can be subject to financial regulations.
Case Example:
Liam, a trader from Belfast, was bullish on Litecoin’s potential rise. He used margin trading, borrowing funds to amplify his position. When Litecoin’s price surged, his profits magnified, but he was also aware of the risk of magnified losses had the market moved against him.
- Market Cap
- The total value of a cryptocurrency, calculated by multiplying the current supply of tokens or coins by the current price. The legal significance comes when evaluating the size and impact of a specific cryptocurrency.
Case Example:
When Bitcoin reached a price of £30,000 with 18 million Bitcoins in circulation, its market cap was £540 billion.
- Market Manipulation
- Any practice that results in the artificial inflation or deflation of the price of a security, increasingly a concern with cryptocurrencies.
Case Example:
In 2018, UK regulators were alerted to potential market manipulation when sudden and unexplained price spikes in certain altcoins coincided with coordinated social media campaigns promoting these coins.
- Mediation
- A form of alternative dispute resolution where a neutral third party, the mediator, assists the disputing parties to reach a mutually acceptable resolution. At Go Legal several of our lawyers are also trained and qualified mediators.
Case Example:
Two UK-based crypto firms in disagreement over a partnership agreement chose mediation over litigation. After a day’s discussion facilitated by the mediator, they found common ground and revised their agreement.
- Memecoin
- A cryptocurrency that started as a joke or meme but has gained popularity and value, often driven by social media.
Case Example:
Dogecoin, which started as a meme featuring the Shiba Inu dog, became a sensation in the UK and worldwide, with many buying it after social media endorsements.
- Metaverse
- A metaverse is a digital universe that contains all the aspects of the real world, such as real-time interactions and economies. It offers a unique experience to end-users.
Case Example:
Sarah from Glasgow purchased a virtual plot of land in a popular metaverse platform where she set up a digital art gallery. Her exhibits gained traction, leading to real-world profit.
- Miner Extractable Value (MEV)
- A measure of the profit a miner can make through their ability to arbitrarily include, exclude, or re-order transactions within the blocks they produce. This could have anti-competitive implications.
Case Example:
A miner in Leeds noticed an arbitrage opportunity in a DeFi platform and, leveraging MEV, rearranged transactions in the block to capitalize on it.
- Mining
- The process by which participants on a DLT system solve a computationally intensive mathematical problem so that data can be added to the distributed ledger. Mining is typically a feature of permissionless DLT systems, which require participants to solve mathematical problems as part of the consensus mechanism. Mining is the means through new coins are released.
Case Example:
John from Liverpool set up a mining rig in his garage, using it to validate and add Bitcoin transactions to the blockchain, earning new Bitcoins in return.
- Money Laundering
- Money laundering is a technique used for illegal businesses to hide their money from the authorities. It is the process of making illegally-gained proceeds appear legal by disguising the origins of the money.
Case Example:
A high-profile case in London saw a businesswoman converting her ill-gotten wealth into Bitcoin to mask its origins, but UK investigators utilised blockchain forensics to trace the transactions and charge her.
- Money Laundering Regulations
- A set of UK regulations designed to prevent businesses from being used for money laundering or terrorist financing.
Case Example:
A crypto exchange in Manchester was subjected to a regulatory audit to ensure compliance with UK Money Laundering Regulations, which involved verifying customer identities and tracking suspicious transactions.
- Multi-Signature (Multi-Sig)
- A digital signature scheme which allows a group to sign any document, revealing an address. This is often used for corporate accounts and has numerous legal applications.
Case Example:
A Bristol-based crypto start-up stored its funds in a multi-sig wallet, requiring three of its five board members to authorise any major transaction, adding a layer of security against potential internal or external thefts.
N
- Natural Language
- Refers to the human language, such as English, as opposed to machine or programming language.
Case Example:
In a UK case involving smart contracts, the court had to interpret the intentions of the parties not just from the code but from accompanying natural language descriptions.
- Natural language contract/traditional contract
- A legally binding agreement written in everyday language, as opposed to a code-based or smart contract.
Case Example:
While a London art gallery utilised smart contracts for online sales, their in-person sales still relied on traditional natural language contracts.
- Node
- A computer that maintains a copy of the blockchain and is part of the network participating in its maintenance by validating and relaying transactions. Running a node can have legal implications, such as what you are required to do if illegal transactions are processed.
Case Example:
Liam in Cardiff set up a full node for Bitcoin, helping to strengthen the network’s security and earn rewards.
- Non-Custodial Wallet
- A type of wallet where only the user has control of their private keys. This can be significant in legal disputes over asset ownership.
Case Example:
Hannah from Birmingham chose a non-custodial wallet for her Ethereum, ensuring that she, not a third party, held control over her assets.
- Non-Fungible Token (NFT)
- A unique digital asset verified using blockchain technology, representing ownership of a specific item or piece of content.
Case Example:
A UK artist auctioned a digital painting as an NFT, with the winning bidder receiving a blockchain-verified token proving its authenticity and ownership.
- Non-fungible Assets
- Assets that are unique and cannot be exchanged on a one-for-one basis.
Case Example:
An antique shop in Belfast sells non-fungible assets, like vintage watches, where each item has unique value and characteristics.
- Norwich Pharmacal Order
- An order that compels a third party such as a bank or crypto exchange to disclose documents or information, commonly used in cryptocurrency cases to trace assets or identify anonymous individuals involved in transactions.
Case Example:
In a case involving cryptocurrency theft, the High Court in London issued a Norwich Pharmacal Order against a crypto exchange, forcing it to reveal details of a user suspected of fraudulent activities.
O
- OTC Trading (Over The Counter)
- Trading that occurs directly between parties without a centralised exchange. OTC trading is common among large financial actors but can also be subject to regulation.
Case Example:
In London, two hedge funds engaged in OTC trading for a bulk of Ethereum tokens to facilitate a discrete, swift transaction.
- Off-chain / onchain
- “Off-chain” refers to actions or transactions that are external to the distributed ledger or blockchain. “On-chain” refers to actions or transactions that are recorded on the distributed ledger or blockchain.
Case Example:
When two parties in Liverpool made a verbal agreement about a Bitcoin sale, the negotiation was off-chain. Once the transfer took place, and it was recorded on the Bitcoin blockchain, it became an on-chain transaction.
- Offline Storage
- A method to store cryptocurrency keys in a way that is completely disconnected from the internet, enhancing security.
Case Example:
The CTO of a Manchester-based crypto company recommended offline storage for most of their assets to prevent potential cyber-attacks.
- Offshore Account
- A bank account located outside the account holder’s country of residence, often used for tax benefits or other financial advantages.
Case Example:
A prominent businessman from the UK faced scrutiny when it was revealed he held Bitcoin in an offshore account, potentially avoiding domestic taxes.
- On-Chain Governance
- Decision-making processes that take place on the blockchain, typically involving protocol changes decided by token holders’ consensus.
Case Example:
A popular DeFi platform based in London proposed changes to its transaction fees. Token holders voted directly on the blockchain, making it an on-chain governance decision.
- Online Storage
- Refers to the storage of cryptocurrency private keys or other data on internet-connected devices or platforms.
Case Example:
After her laptop was compromised by malware, Sarah from Leeds realised the risks of storing her crypto keys using online storage and opted for a hardware wallet instead.
- Open Source
- Open source is a philosophy, with participants believing in the free and open sharing of information in pursuit of the greater common good.
Case Example:
The Bitcoin protocol is open source, meaning developers from Bristol to Birmingham can review its code and suggest improvements.
- Oracle
- An agent that finds and verifies information, bridging the real world and the blockchain by providing data to smart contracts for execution of said contracts under specified conditions.
Case Example:
A farmer in Devon entered a smart contract that pays out based on weather conditions. The contract used an oracle to pull data from a weather site, triggering a payment when it rained.
- Over-the-Counter (OTC)
- Over-the-counter is defined as a transaction made outside of an exchange, often peer-to-peer through private trades.
Case Example:
A UK-based company wanted to purchase a significant amount of Bitcoin without impacting market prices, so they opted for an OTC trader with a private seller.
P
- P2P (Peer-to-Peer)
- Refers to the decentralised interactions between parties in a distributed network, without the need for intermediaries. P2P systems can be complex to regulate and subject to various laws.
Case Example:
Alex from Cardiff bought Bitcoin directly from a seller in London using a P2P platform, bypassing traditional exchanges.
- Paper Wallet
- A physical document, often in the form of QR code, containing a public address for receiving cryptocurrencies along with a private key for spending or transferring cryptocurrency stored in that address. Legal issues can arise over the ownership and control of the paper wallet.
Case Example:
James from Belfast gifted his grandson some Bitcoin for his birthday, presenting it in the form of a paper wallet.
- Particulars of Claim
- A detailed legal document filed at Court outline of the claim being brought, which must be provided after the claim form. In cryptocurrency cases, this will often include a specific list of transactions or wallet addresses.
Case Example:
After a crypto business dispute in Cardiff, the aggrieved party submitted their particulars of claim, highlighting how the other side had breached their contract.
- Passive Income
- Passive income is money produced from investments that do not require the earner to be actively involved.
Case Example:
Chloe from Newcastle invested in a DeFi staking platform, earning her a steady passive income through rewards.
- Permissioned
- A type of blockchain where participants need to be vetted and granted access.
Case Example:
A consortium of UK banks created a permissioned blockchain for interbank transfers, ensuring only verified banks could participate.
- Permissioned DLT system
- A distributed ledger technology system that restricts access and participation to authorised entities.
Case Example:
A UK real estate consortium used a permissioned DLT system to track property sales, ensuring only member agencies could add and verify transactions.
- Permissioned Ledger
- A ledger system where access and actions are restricted to a select group of participants. This is in contrast to public ledgers, which anyone can join. Legal frameworks may differ between the two.
Case Example:
A Manchester-based healthcare provider used a permissioned ledger to store patient data, ensuring only authorised personnel could access it.
- Permissionless
- A type of blockchain where anyone can join and participate without seeking approval.
Case Example:
Bitcoin is a permissionless system, allowing any individual from London to Glasgow to join its network and validate transactions.
- Permissionless DLT system
- A distributed ledger technology system that’s open and doesn’t restrict participation.
Case Example:
A new decentralised social media platform originating from London was built on a permissionless DLT system, ensuring it remained censorship-resistant.
- Phishing
- A cybercrime where targets are contacted by email, telephone, or text by someone posing as a legitimate institution to lure individuals into providing sensitive data.
Case Example:
Jane from Birmingham received an email that appeared to be from her crypto exchange asking for her login details. Recognising it as a phishing attempt, she reported it to the platform and avoided a potential loss.
- Ponzi Scheme
- A fraudulent investing scheme promising high rates of return with little risk to investors. The scheme leads investors to believe profits are coming from legitimate business activities when in fact they are coming from payments made by newer investors.
Case Example:
A London-based crypto investment firm promised 10% returns monthly to its investors. New investments were used to pay earlier investors. When new investors dwindled, the scheme collapsed, revealing it as a Ponzi.
- Preliminary Hearing
- A court hearing in an ongoing Court claim that determines the basic or preliminary issues in a case, often used to decide the course of future hearings or to reach a settlement before a case goes to trial. For example, there could be a hearing to determine jurisdiction in a court claim.
Case Example:
A blockchain startup in Manchester was accused of copyright infringement. At a preliminary hearing, both parties identified core issues, leading to a mediation.
- Privacy Coins
- Cryptocurrencies designed to offer secure and anonymous transactions. These coins often attract regulatory attention due to their potential use for illicit activities.
Case Example:
Monero and Zcash are examples of privacy coins. A Bristol journalist used Monero for transactions to protect her sources’ identities.
- Private DLT system
- A DLT system which is accessible for use by a limited group of participants.
Case Example:
A consortium of UK pharmacies created a private DLT system to trace drug sources, with only member pharmacies having access.
- Private Key/Secret Key
- A piece of code generated in asymmetric-key encryption process, paired with a public key, to be used in decrypting information hashed with the public key. It allows a user to spend, withdraw, or otherwise control their digital assets.
Case Example:
Tom from Liverpool lost his Bitcoin when he inadvertently revealed his private key in an online forum.
- Proof-of-Stake (PoS)
- A type of consensus mechanism in which a cryptocurrency blockchain network aims to achieve distributed consensus through coin ownership.
Case Example:
After Ethereum’s move to PoS, Sarah in Leeds staked her Ether to participate in validating transactions and earned rewards.
- Proof-of-Work (PoW)
- A consensus mechanism where participants solve complex mathematical problems to validate transactions and create new blocks.
Illustrative Example:
Bitcoin operates on PoW, with miners worldwide, including in Glasgow, expending computational power to solve problems and earn Bitcoin.
- Pseudonymity
- The practice of using a false or fictitious identifier which conceals a person’s real identity.
Case Example:
On the Bitcoin network, users’ identities remain hidden, but all transactions tied to a specific pseudonymous address are publicly visible.
- Public Chain
- A publicly accessible blockchain network. These are subject to different legal standards than private or consortium blockchains.
Case Example:
The Bitcoin network is a public chain where anyone from Birmingham to Belfast can verify transactions.
- Public Key
- An alphanumeric string derived from a private key. It’s used to receive funds and verify signatures but cannot initiate a transaction.
Case Example:
Jane from Norwich shared her public key to receive a Bitcoin payment for her artwork.
- Pump and Dump (P&D) Scheme
- A type of market manipulation where the price of an asset is artificially inflated (“pumped”), often through misleading or false statements, to attract unsuspecting investors, then sold off (“dumped”) for profit.
Case Example:
In 2018, several Telegram groups were exposed for coordinating P&D schemes on lesser-known crypto coins in UK exchanges.
Q
- Quadratic Voting
- A system of democratic governance that allows people to vote on multiple issues and express how strongly they feel about them. This novel voting system has unexplored legal ramifications.
Case Example:
A DeFi project in Edinburgh utilised quadratic voting, allowing users to express varying levels of preference on development proposals.
- Quantum Meruit
- A Latin term meaning “as much as he deserved”. In law, it refers to a reasonable sum of money to be paid for services rendered when the amount is not stipulated in a legally enforceable contract. Often raised in disputes involving cryptocurrency where one party feels they have not been adequately compensated.
Case Example:
A blockchain developer in Bristol took a crypto firm to court, seeking payment under quantum meruit after the firm benefited from his services but without a clear contract.
- Quia Timet Injunction
- A type of UK injunction obtained where harm is anticipated in the future, preventing the action before it occurs.
Illustrative Example:
An Oxford-based crypto project obtained a quia timet injunction to prevent a former employee from leaking proprietary code.
R
- Ransomware
- Malicious software that encrypts files on a victim’s computer and demands a ransom, often in cryptocurrency, to decrypt them. This has legal implications for both criminal law and cybersecurity regulations.
Case Example:
A trust was hit by the WannaCry ransomware attack in 2017, which encrypted patient data and demanded Bitcoin in exchange for decryption.
- Refund Demand
- When a customer demands their money back for services or products bought with cryptocurrency.
Case Example:
After participating in an ICO that failed to launch its promised platform, investors from Newcastle made refund demands.
- Regulated
- Regulation is when something is controlled by a specific set of rules, standards, or laws.
Case Example:
In 2020, the UK’s Financial Conduct Authority (FCA) announced that all UK crypto exchange platforms must be regulated and adhere to anti-money laundering regulations.
- Regulatory Sandbox
- A framework set up by regulators that allows businesses including FinTech startups and other innovators to conduct live experiments in a controlled environment, often including crypto ventures. These experiments often include products, services, models and delivery mechanisms in the real market, with real consumers.
Case Example:
The Financial Conduct Authority (FCA) in the UK established a regulatory sandbox, allowing several blockchain startups in London to test their financial products without launching a full public release.
- Replay Attack
- A malicious network attack where valid data transmission is maliciously repeated or delayed. This can be a concern with some blockchain forks.
Case Example:
After a blockchain split, Alice sent Bob 5 coins on Chain A. Due to lack of replay protection, Bob also received 5 coins on Chain B without Alice’s consent.
- Restitution
- The act of restoring something to its original state including lost or stolen assets. In the context of cryptocurrency, this can involve the return of stolen or fraudulently obtained assets.
Case Example:
A crypto-exchange was hacked, but authorities later managed to trace the stolen funds and return them to the affected users.
- Ring Signatures
- A type of digital signature that can be performed by any member of a group of users that each have keys. It can be signed without revealing which member signed it. This concept is important for privacy laws and may also have AML implications.
Case Example:
The cryptocurrency Monero uses ring signatures to enhance the privacy of its transactions.
- Rolling Reserve
- A risk management strategy where a percentage of a merchant’s revenues are kept aside to cover potential chargebacks or disputes. Understanding how these impacts cryptocurrency transactions can be vital.
Case Example:
A Cardiff-based crypto merchandise store had 5% of its earnings held in a rolling reserve by its payment processor to mitigate potential refunds.
S
- SIM Swapping
- A type of scam where the attacker tricks a telecom provider into switching a victim’s phone number to a new SIM card, granting them access to the victim’s calls, texts, and two-factor authentication.
Case Example:
Jack from Liverpool became a victim of SIM swapping, leading to unauthorised access to his cryptocurrency wallets.
- Satoshi Nakamoto
- The pseudonymous creator or creators of Bitcoin and the author of the Bitcoin whitepaper. Satoshi’s identity remains one of the crypto world’s greatest mysteries, with numerous theories about who or what Satoshi might be.
- Scam
- A fraudulent scheme or action intended to make a profit. There have been a significant increase in crypto litigation due to scams.
Case Example:
Several UK investors such as Simon were lured into a ‘too good to be true’ crypto investment scheme, only to find out it was a scam when the organisers disappeared with their money.
- Scamcoin
- It is term for a cryptocurrency believed to have no genuine utility or purpose, often associated with schemes to defraud investors.
Case Example:
Amid the crypto boom, several coins were promising exponential returns in short periods but was later exposed as a scamcoins.
- Search Order (Anton Piller Order)
- A court order that provides the right to search premises and seize evidence without prior warning, sometimes utilised in cryptocurrency cases to prevent destruction or transfer of digital assets.
Illustrative Example:
A London-based crypto startup obtained a search order to prevent a disgruntled ex-employee from destroying or hiding incriminating electronic evidence.
- Security for Costs
- A court order requiring a claimant to provide security for the defendant’s legal costs, to ensure the defendant can recover costs if they win. Often a feature in high-value crypto disputes.
Case Example:
A blockchain firm in Edinburgh, concerned about a claimant’s ability to pay court costs, sought security for costs before proceeding.
- SegWit (Segregated Witness)
- A protocol upgrade that changes the way data is stored. It is mostly known for its role in solving Bitcoin’s scalability problem. SegWit can have legal implications for transaction verification and fraud prevention. After SegWit was implemented on Bitcoin, several UK-based crypto exchanges had to update their systems to support the new transaction format.
- Sharding
- A scalability solution for blockchains that divides the network into smaller pieces, or “shards”, each capable of processing its own transactions and smart contracts. The legality of transactions involving shards can be complex.
Case Example:
Ethereum 2.0 aims to use sharding to increase its transaction capacity, influencing developers in Leeds to design Dapps accordingly.
- Sidechain
- A secondary blockchain running parallel to a primary blockchain, allowing assets to be transferred between the two. Sidechains can have their own sets of rules and governance models, complicating their legal status.
Case Example:
A fintech company in Belfast developed a sidechain to Bitcoin to experiment with faster transaction speeds without affecting the main Bitcoin blockchain.
- Smart Contract Audits
- The process of checking the code of smart contracts in order to ensure they work as expected. Audits can often prevent legal issues from arising due to contract failure.
Case Example:
Before launching a new DeFi platform, a London based startup hired experts to conduct a smart contract audit, which identified potential security risks.
- Smart Contract Bugs
- Errors or flaws in a smart contract’s code that can lead to unintended actions, often leading to vulnerabilities or malfunctions.
Case Example:
The infamous hack in 2016 was due to a smart contract bug that allowed an attacker to siphon funds from the decentralised organisation.
- Smart contract
- A self-executing contract with the contract terms directly written into code. They run on a blockchain and can operate without intermediaries. Understanding the legal implications of using smart contracts is essential, especially for business agreements.
Case Example:
A London art gallery sold a piece of digital art using a smart contract, ensuring the artist received royalties for every subsequent sale.
- Smart contract platform
- A blockchain system that supports the creation and execution of smart contracts.
Case Example:
Ethereum, launched in 2015, became the first widely recognised platform dedicated to smart contracts, paving the way for countless decentralised applications.
- Smart legal contract
- A legally binding contract in which some or all of the contractual terms are defined in and/or performed automatically by a computer program. There are essentially three forms a smart legal contract can take, depending on the role played by the code. These are:
• natural language contract with automated performance;
• hybrid contract; or
• solely code contract.
Case Example:
A Bristol-based car leasing company implemented smart legal contracts so when a lessee pays the last instalment, the ownership details of the car automatically update, reflecting the new owner.
- Soft Fork
- A backward-compatible method of upgrading a blockchain system wherein only previously valid transactions are made invalid. This has implications for governance and might affect existing contracts or transactions in unforeseen ways.
Case Example:
Bitcoin’s activation of Segregated Witness (SegWit) in 2017 was through a soft fork, refining the block structure without creating a new cryptocurrency.
- Solely code contract
- A contract that is written and executed in code only, without reference to a natural language version.
Case Example:
A decentralised betting platform might employ solely code contracts. Users betting on a football match outcome will receive winnings automatically depending on the match result, without needing any human intervention.
- Stablecoin
- A cryptocurrency with extremely low volatility, sometimes used as a means of portfolio diversification. Examples include gold-backed cryptocurrency or fiat-pegged cryptocurrency.
Case Example:
Tether (USDT) is a prominent stablecoin claiming to be pegged 1:1 with the US dollar, offering cryptocurrency traders an option to “park” their assets during market volatility.
- Staking
- The process of actively participating in transaction validation in a proof-of-stake blockchain. Staking has tax implications and potential legal risks, such as if the blockchain project turns out to be fraudulent.
Case Example:
On the Ethereum 2.0 network, users can stake their ETH to become validators, helping to secure the network and earning rewards in return.
- State Channels
- Secondary payment channels that occur off-chain and offer a means of increasing the scalability of transactions. These may have unique legal requirements related to contractual agreements between parties.
Case Example:
Two online gamers in Edinburgh might use a state channel for micro-transactions in a game. They would only update the main Ethereum blockchain when they finish playing, reducing fees, and enhancing speed.
- Strike Out
- A legal ruling that stops a claim from proceeding further, usually because it has no chance of success. This type of Court application for a strike out of the claim is made at the same time as a summary judgment application.
Case Example:
In a crypto-related dispute in London, a judge struck out a claim after determining that the evidence provided was insubstantial for the case to proceed.
- Summary Judgment
- A judgment made by the court without a full trial, usually when one party’s claim or defence has no real prospect of success.
Case Example:
A crypto business in Manchester sued for breach of contract. The defendant’s defence was so weak that the claimant applied for and was granted a summary judgment.
- Sybil Attack
- A security threat in peer-to-peer networks where one node imitates multiple nodes to gain a disproportionate influence.
Case Example:
In a decentralised voting system for a blockchain upgrade, an attacker could create many nodes, casting multiple votes to manipulate the outcome.
T
- Taint Analysis
- A method used in blockchain analysis to track the movement of funds by examining and ‘tainting’ coins involved in suspicious or known transactions.
Case Example:
After a high-profile theft from a cryptocurrency exchange, investigators in London used taint analysis to track the movement of stolen bitcoins through various wallets, aiding in the identification of the perpetrators.
- Tax Litigation
- Legal proceedings related to disputes arising from tax assessments, payments, or claims between taxpayers and tax authorities.
Case Example:
A prominent cryptocurrency trader in Birmingham was audited and investigated by HMRC, which claimed he owed significant back taxes from undeclared crypto gains. The dispute led to tax litigation in the First-tier Tax Tribunal where the trader challenged HMRC’s assessment.
- Theft
- Stealing of cryptocurrency through hacking, fraud, physical theft of devices etc. Very common issue.
Case Example:
A well-known crypto wallet provider in Bristol reported a significant theft where hackers gained unauthorised access to users’ wallets and transferred vast amounts of cryptocurrencies.
- Third-Party Debt Order
- Formerly known as garnishee orders, these are court orders requiring a third party (usually the bank) who owes money to a judgment debtor to pay that money instead to a judgment creditor. In crypto terms, it could apply to an exchange or wallet service holding funds belonging to a debtor.
Case Example:
In a crypto dispute, a Liverpool-based crypto exchange was served with a third-party debt order, mandating it to freeze assets of a user who owed significant debt from a failed trade.
- Ticker Symbol
- A shorthand symbol of up to five characters that represent a cryptocurrency. Ticker symbols are essential for trading and have legal implications in cases of fraud, intellectual property or misrepresentation.
Case Example:
Bitcoin, the pioneering cryptocurrency, is represented by the ticker symbol “BTC” on most exchanges.
- Time-Locked Contracts
- Smart contracts that hold and release funds or other assets after a predetermined time or upon certain conditions being met. This can be significant in legal cases involving fraud or contract disputes.
Case Example:
A London-based startup raised funds via a time-locked contract, ensuring investors that the raised Ether would only be accessed gradually over two years, instilling confidence in their long-term commitment.
- Time-Locking
- The practice of setting a specific future time or block number before which funds cannot be accessed or spent. This has various legal implications, especially in the realms of contracts and wills.
Case Example:
A charity in Glasgow time-locked donations ensuring that funds would only be accessible after a year, promoting transparency to donors about fund utilisation.
- Token
- A digital representation of an asset or utility on a blockchain.
Case Example:
A renowned artist from Cardiff released a limited series of digital artworks as tokens on the Ethereum blockchain, ensuring provenance and authenticity.
- Tokenomics
- The study of the economic models behind tokens including the issuance, distribution, and management of tokens within a blockchain ecosystem.. Understanding tokenomics is vital for legal assessments related to taxation and utility versus security status.
Case Example:
A decentralised finance platform in Belfast designed its tokenomics to incentivize liquidity providers with additional tokens, ensuring stable platform operations.
- Transaction Fee
- A fee incurred when sending or receiving cryptocurrencies, paid to network validators or miners.
Case Example:
Sarah, a merchant in Edinburgh, noticed her Bitcoin transaction fees fluctuate based on network congestion, influencing her decision on when to consolidate her received payments.
- Transaction Malleability
- A potential issue in some blockchain implementations where transaction IDs can be changed before they get confirmed.
Case Example:
Early in Bitcoin’s history, an attacker exploited transaction malleability to request withdrawal confirmations multiple times from a crypto exchange, leading to substantial losses.
- Trusts and Equitable Remedies
- These are methods the court may employ to impose constructive trusts on cryptocurrency assets or apply equitable principles to remedy unfair situations. Typically these remedies are arguments and solutions to assist with unjust enrichment or violations of trust, often involving assets held for the benefit of another.
Case Example:
A crypto heir in Leeds sought equitable remedies when trustees mismanaged inherited cryptocurrency assets, arguing they breached their fiduciary duties.
- Tumbling
- Also known as “mixing,” it is the act of using a third-party service to break the connection between a wallet address sending coins and the addresses receiving coins. Tumbling can be a subject in money laundering cases.
Case Example:
Criminals involved in a ransomware attack in Manchester used tumbling services to launder their illicit gains, attempting to confound investigators.
U
- UK Jurisdiction Taskforce (UKJT)
- The UK Jurisdiction Taskforce (UKJT) is a unit within the LawTech Delivery Panel of the UK, focused on addressing the legal uncertainties of crypto assets, smart contracts, and distributed ledger technology in the UK. It aims to promote investment, dispute resolution, and innovation in the sector.
In November 2019, the UKJT published a legal statement clarifying the status of crypto-assets and smart contracts under English and Welsh law. This was a landmark move to bring clarity in the regulatory space surrounding cryptocurrencies and related technologies.
- UKJT Legal Statement
- UK Jurisdiction Taskforce, Legal statement on cryptoassets and smart contracts (2019) – A significant statement issued by the UK Jurisdiction Taskforce (UKJT) clarifying the status of cryptoassets and smart contracts under English and Welsh law.
Case Example:
In a London seminar, legal experts referenced the UKJT Legal Statement to argue that, under certain conditions, cryptoassets could be treated as property.
- Unbanked
- Individuals who do not have access to traditional banking services.
Case Example:
A fintech startup in London targeted the unbanked population of the UK, offering them a cryptocurrency-based financial platform for payments, savings, and loans.
- Unilateral contract
- A contract where one party (the offeror) makes a promise in return for performance by the other party (the offeree), but the offeree does not promise to perform so that only the offeror is bound under the contract. The contract forms when the offeree fulfils the specified condition.
Case Example:
A Devon-based gaming platform offered a unilateral contract – a reward in cryptocurrency to the first player who achieved a specific high score.
- Unregulated
- Activities or entities not overseen by a regulatory authority, or not subjected to governmental control or supervision. In England & Wales, cryptocurrency is overseen and regulated by the FCA.
Case Example:
Jane, an investor in Cambridge, was interested in a new cryptocurrency project but found out it was unregulated. She decided to tread cautiously as the lack of oversight meant potentially higher risks.
- Use Case
- A specific situation or scenario where a product or service could be employed to solve a problem or achieve a goal.
Case Example:
The Bank of England, in a recent report, highlighted the use case of blockchain technology for transparent and tamper-proof land registries.
- Utility Token
- These are non-security tokens that are designed for a particular application, product or service other than as an investment. Utility tokens are subject to a completely different set of legal implications and require specialised understanding.
Case Example:
An Edinburgh-based software company issued utility tokens during their ICO, which could be later used to avail services on their platform.
V
- Vanity Address
- A cryptocurrency address which contains a specific sequence or set of characters chosen by its owner. Ownership and control of vanity addresses can be a subject of legal disputes.
Case Example:
Paul, a crypto enthusiast in Liverpool, generated a vanity Bitcoin address that started with his initials, making it distinct and recognisable.
- Virtual Machine
- A software emulation of a computer system. In blockchain, Ethereum’s Virtual Machine (EVM) is often discussed in legal contexts involving smart contract execution. It allows developers to run smart contracts irrespective of the underlying hardware.
- Virus
- Malicious software designed to infiltrate or damage a computer system, often without the user’s knowledge.
Case Example:
A Bristol tech firm reported that a computer virus attempted to divert their cryptocurrency transactions to a different address, emphasising the need for robust cybersecurity measures.
- Volatility
- The degree to which an asset’s price fluctuates over a period.
Case Example:
In a recent financial news segment, the volatility of Bitcoin was a topic of discussion as its price experienced significant highs and lows within a week.
W
- Wallet
- A digital tool that allows users to store, send, and receive cryptocurrencies.
Case Example:
Sarah, from London, used a digital wallet to securely store her Ethereum tokens and transact with vendors accepting crypto payments.
- Wallet Provider
- A company or entity offering software or hardware solutions to create and manage cryptocurrency wallets. The legal obligations of wallet providers are still an evolving area in many jurisdictions.
Case Example:
Tom, a crypto newcomer from Newcastle, signed up with a renowned wallet provider to ensure his crypto holdings were safely managed.
- Watchtower
- A service that monitors the blockchain for transactions related to user-specific addresses to prevent potential fraud. Watchtowers can act as third-party arbitrators or automated contract enforcers, which brings in new legal scenarios.
Case Example:
Fearing possible dishonesty from a trading counterpart, an online merchant in Birmingham employed a watchtower service to oversee their Lightning Network transactions.
- Whitelist
- An exclusive list of crypto addresses that are given the permission to participate in a token sale or ICO. Legal issues can arise if the whitelist violates any rules or regulations concerning financial transactions or customer identity.
Case Example:
To ensure a fair initial token distribution, a Manchester-based blockchain startup allowed only whitelisted addresses to participate in its token sale.
- Whitepaper
- A document released by a crypto project that gives investors technical and financial information about its concept, and a roadmap for how it plans to grow and succeed.
Case Example:
Before investing in any crypto, a group of crypto investors in Bristol always reviewed a project’s whitepaper to understand its objectives and underlying technology.
- Winding-up Petition
- A legal action taken by a creditor to wind up a company that owes them money, increasingly relevant in cases where a crypto business is involved.
Case Example:
A major crypto platform in Birmingham faced a winding-up petition when it could not repay its debtors after a prolonged bear market.
- Without Prejudice
- Legal protection that allows parties to speak freely in negotiations or settlement discussions (either in writing or orally) without fearing their words will be used against them later in court. This is often used in resolving cryptocurrency disputes out of court.
Case Example:
After a bitter crypto exchange dispute, both parties in London exchanged “without prejudice” letters trying to reach an out-of-court settlement.
- Wrapped Tokens
- Cryptocurrency tokens that represent another cryptocurrency on a different blockchain. They are used to enable interactions across different blockchain platforms.
Case Example:
A DeFi platform in Leeds used wrapped Bitcoin (WBTC) to facilitate lending and borrowing using Bitcoin on the Ethereum blockchain.
X
- xDai
- A stablecoin of Ethereum that operates on its own blockchain, designed to have a stable value pegged to the US dollar. It aims to offer fast and low-cost transactions. The legality of sidechains and pegged assets can be a grey area in law.
Case Example:
To avoid Ethereum’s high gas fees, a fintech firm in Liverpool integrated xDai as a payment solution for their cross-border transactions.
Y
- Yield Farming
- The practice of staking or lending cryptocurrency assets in order to generate high returns or rewards. This is often a focal point in the regulation and legality of DeFi applications.
Case Example:
In Norwich, a group of crypto enthusiasts started yield farming using various DeFi platforms, aiming to maximise their passive income.
Z
- Zero-Knowledge Proof
- A cryptographic method by which one party can prove to another that they know a value, without conveying any information apart from the fact that they know the value. Zero-knowledge proofs are considered a legal grey area in many jurisdictions due to their potential for use in nefarious activities.
Case Example:
To enhance user privacy, a crypto project in Leeds implemented zero-knowledge proofs to verify transactions without revealing sender or receiver details.
- Zk-Rollups
- A scaling solution for blockchains that use zero-knowledge proofs to bundle multiple transfers into a single transaction, increasing throughput.
Case Example:
An Ethereum-based game in Cardiff adopted zk-rollups to handle a large volume of transactions efficiently, offering a smoother user experience.
