Bozdeniz v Aux Cayes Fintech Co. Ltd (MA 192 of 2023) [2023] SCSC 814 (17 May 2023)

SUPREME COURT OF SEYCHELLES In the exparte matter between: IIHAN BOZDENIZ (Of Maslak, Sanatkarlar Sok. Eclipse B217 Sariyer, Istanbul, Turkey) (Represented by Mr. Audrick Govinden) And Not Reportable [2023] sese ...3g6 MAI92/2023 (Arising in eS30/2023) Applicant AUX CAYES FINTECH CO. LTD (A Seychelles International business Company) Respondent (Represented by its Director At its registered office at Appleby Global Services (Seychelles) Limited of Suite 202 2nd Floor, Eden Plaza, Eden Island, Seychelles) Neutral Citation: Before: Summary: Heard: Delivered: Bozdeniz v Aux Cayes Fintech Co. Ltd (MA 192/2023) (arising in eS30/2023) [2023] sese 3g5 A. Madeleine, J Application for Provisional Seizure 3rd and 15thMay 2023 17thMay 2023 (17 May 2023) ORDER (a) I hereby direct a warrant to be issued to one of the process servers to seize provisionally the below described cryptocurrency assets of the respective user id's found in the shared wallet address on the OKEX online exchange website platform operated by the Respondent - Aux Cayes Fintecli Co. Ltd: Crypto Assets 257, 644.00 TETHER 42,543.00 THETHER 31,433.00 TETHER 54,818.00 TETHER TETHER 3,472.00 ok:x.comuser id 159,354.00 TETHER 819,935.00 TETHER 23.237,00 TETHER 195,800.00 TETHER 831,445.00 TETHER TETHER 1,019.00 (b) That the above-described cryptocurrency assets shall remain in the possession of the Respondent Aux Cayes Fintech Co. Ltd until further order of this court. (c) A copy of this order is to be served on the Respondent. ORDER MADELEINE, J APPLICATION [1] This is an ex-parte application for the provisional seizure of cryptocurrency assets of the following respective user id's found in the shared wallet address exchange website platform operated by the Respondent - Aux Cayes deposited on the OKEX online olex.com user id Fintech Co. Ltd: Crypto Assets 257, 644.00 TETHER 42,543.00 THETHER 31,433.00 TETHER 54,818.00 TETHER TETHER 3,472.00 159,354.00 TETHER 819,935.00 TETHER 23.237,00 TETHER 195,800.00 TETHER 831,445.00 TETHER TETHER 1,019.00 [2] The Applicant also seeks the following orders in the alternative: (i) An order that the Respondent transfers the above referred cryptocurrency assets to the Applicant's TETHER Wallet ; or (ii) An order that the Respondent keeps possession of the provisionally seized Assets pending further order of the court. [3] The application arises from the main suit: CS 30/2023IIhan Bozdeniz vAux Cayes Co. Ltd ("main suit") wherein the Applicant alleges that his cryptocurrency assets have been fraudulently misappropriated and transferred to OKEX online exchange platform www.okx.com operated by the Respondent - an international business company incorporated in Seychelles with IBC No. . The main suit imputes that the Respondent facilitated the fraudulent misappropriation and/or transfer of Applicant's cryptocurrency assets. [4] The application was initially made by way of notice of motion. Leave of Court was then granted to amend the application by substituting a petition for the notice of motion. [5] The basis for the application is made out in the affidavit of the Applicant dated 30th March 2023. The supporting affidavit states that following Norwich Pharmacal order(s) and online investigation(s), it has been discovered that the Applicant's investments in cryptocurrency had been fraudulently misappropriated from his account on www.okbitb.com and transferred to www.okbitdd.com and ultimately to the shared wallet address deposited on the OKEX online exchange website platform www.okx.com. The Respondent operates the website platform www.okx.com. [6] The supporting affidavit also states that the Appl icant has suffered loss and damages as a result of this fraudulent misappropriation and has filed a plaint in the main suit, a copy of which has been produced. Further, having regard to the nature of cryptocurrency assets, there are no alternative and/or sufficient means to restrict dealings with the said assets pending the determination of the main suit. Unless an order of provisional seizure is granted, the Applicant's cryptocurrency assets can be easily and immediately transferred and dealt with within a matter of seconds online. Should this happen, the main suit will be rendered nugatory and the Applicant will lose the fruits of the judgment in the main suit if is delivered in his favour. The harm that the Applicant is likely to suffer cannot be atoned by damages. There being no alternative means to restrict dealings with the aforesaid assets pending the determination of the main suit, the balance of convenience Iies in favour of granting the order of provisional seizure. SUBMISSION [7] Applicant's Counsel relied on sections 280 and 281 of the Seychelles Code of Civil Procedure ("SCCP"), and also submitted that our laws do not preclude the application of the said provisions to intangible assets. He further submitted that cryptocurrencies are transferrable just like shares in a company and monies held in bank accounts. [8] On the question of availability of alternative remedies, the Applicant's Counsel impressed upon the court that the orders sought are the only means to safeguard the cryptocurrency assets pending the determination of the main suit. An order of injunction would not be feasible since the misappropriation and transfer of the cryptocurrency assets has been committed by the user id's but whose actual identities cannot be verified. Mutual legal assistance will also not be timely and as such the cryptocurrency assets are very likely to be further transferred prior to obtaining legal assistance. LAW AND ANALYSIS [9] Sections 280 and 281 of the Seychelles Code of Civil Procedure provides as follows - "280. At any time after a suit has been commenced, the plaintiff may apply to the Court to seize provisionally any movable property in the possession of the defendant in the suit or to attach provisionally any money or moveable property due to or belonging to the defendant in the suit, which is in the hands of any third person. The application shall be by petition supported by an affidavit of thefact and shall be signed by the plaintiff or his attorney, if any, and shall state the title and number of the suit. 281. If the court is satisfied that the plaintiff has a bone fide claim, the court shall direct a warrant to be issued to one of the ushers to seize provisionally such property, or shall make an order prohibiting the third person in whose hands such money or other movable property is from paying such money or delivering such property to any person pending the further order of the court. The order shall be served on the third party by the usher. " [10] In Union Estate Management (Pty) Ltd v Herbert Mittermayer 1979 SLR 140 the court considered sections 279 and 280 of the Seychelles Code of Civil Procedure and held inter alia that- "(i) the application for provisional seizure of movable property must be by petition supported bv an affidavit of the facts; (iii) the basic facts to be stated are that a suit has been commenced, the title, the number and the gist of the suit; (iv) the seizure is to be effected on the movable property in the possession of the defendant and as such it is not necessary to described that theproperty or to alleged that it belongs to the defendant; (v) it may be useful to attach a copy ofthe plaint to the application but that is not as the court may refer to the plaint; (vi) the plaint should disclose a prima facie case against the defendant it is not necessary to show that the claim is likely to succeed or that it rests on documentary proof; (vii) if the court finds that it should test the bonafides of the applicant or that the seizure is likely to cause damages it may require the applicant to furnish security; (viii) an affidavit based on information and belief must disclose the source of the information and the grounds of belief and distinguish what part is based on knowledge and what part is based on information and belief; (ix) where an affidavit contains the basic/acts required/or an application/or seizure the court can always look at the plaint to make up its minds as to the bona fides o(the claim,' [11] I have considered the evidence deponed in the supporting affidavit application, the plaint in the main suit, Applicant's submissions and the above cited authorities. I am satisfied that the Applicant has a bona fide claim and that the plaint in the main suit discloses a prima facie case against the Respondent herein and Defendant in the main suit. I am further satisfied that cryptocurrencies can be easily alienated online. Having regards to the volatile nature of cryptocurrency transactions, there are real risks of loss of the Applicant's cryptocurrency investments unless the described assets are provisionally seized and kept in the possession of the Respondent pending the determination of the main suit. ORDER [12] I therefore make the following orders: (a) I hereby direct a warrant to be issued to one of the process servers to seize provisionally the below described cryptocurrency assets of the respective user id's found in the shared wallet address website platform www.okx.cOIl1operated by the Respondent - Aux Cayes Fintech on the OKEX online exchange okx.com user id Co. Ltd: Crypto Assets 257,644.00 TETHER 42,543.00 THETHER 31,433.00 TETHER 54,818.00 TETHER 3,472.00 TETHER 159,354.00 TETHER 819,935.00 TETHER 23.237,00 TETHER 195,800.00 TETHER 831,445.00 TETHER 1,019.00 TETHER (b) That the above-described cryptocurrency assets shall remain in the possession of the Respondent Aux Cayes Fintech Co. Ltd until further order of this court. (c) A copy of this order is to be served on the Respondent. Signed, dated and delivered at IIe du Port this 17thMay, 2023. I' A.~ Judge 7