Digital fraud: crypto, AI and asset recovery

Digital fraud now affects investors, exchanges, custodians, corporations and private clients. Fraudsters use artificial intelligence, blockchain infrastructure, synthetic media and automation to hide identity, obscure asset flows, induce authorised payments and move value across platforms and jurisdictions in minutes or hours.

England and Wales is a leading forum for digital asset disputes. The courts have recognised that cryptoassets can attract property rights and have adapted established interim remedies – including freezing and proprietary injunctions, disclosure orders, search and persons unknown relief – to digital asset fact patterns.

This note summarises the core civil tools available in England where digital assets have been misappropriated or where AI‑enabled deception has facilitated fraud.

Common forms of digital fraud

Fraud in this space pairs traditional deception with the speed and scale of automation and synthetic media. This can take the form of consumer scams, authorised push payment fraud, compromised wallets, exchange disputes, investment fraud and misconduct involving corporates, custodians or funds.

Prevalent methods

• Crypto schemes: phishing and seed‑phrase theft; ‘rug pulls’ and exit scams; Ponzi schemes; fake exchanges and unlicensed brokers.
• AI‑enabled attacks: deepfakes used for authorisation spoofing; voice cloning for urgent‑payment fraud; large‑scale automated scamming and romance fraud.
• Market manipulation and misconduct: wash trading (giving a false impression of trading volume in a token), misleading token promotion, false claims about AI capability, and structures designed to obscure value or ownership; and concealment of value through rapid transfers, mixers, cross-chain bridges, multiple exchanges and offshore structures.

Digital assets as property

The Property (Digital Assets etc) Act 2025 confirms that a thing is not prevented from being the object of personal property rights merely because it is neither a thing in possession nor a thing in action. In digital fraud cases, that supports proprietary claims and related interim relief in appropriate cases. However, the Act does not answer every question about which digital assets qualify as property or which remedies attach to them.

The limits still matter. In Yuen v Li [2026] EWHC 532 (KB), the High Court struck out a conversion claim concerning allegedly misappropriated Bitcoin. The case is a useful reminder that, although digital assets may be recognised as property, not every proprietary tort or remedy will apply automatically. See also our toolkit note on 'Conversion and recovering physical goods'.

Civil tools for asset recovery in England and Wales

Early action: service, preservation and disclosure relief

• Alternative service: in digital asset fraud, conventional service may not be possible or fast enough. The court may permit alternative service where there is evidence that the proposed method will bring the proceedings or application to the respondent’s attention:
  • service by NFT airdrop or another blockchain-based method may be considered where a wallet address is known and the evidence supports that approach;
  • service by email may be available where there is evidence that the address is active and controlled by the respondent; and
  • before considering alternative service, check whether the respondent has a reliable physical or electronic service address and whether any intermediary, exchange or platform may hold relevant contact information.

• Disclosure orders: key information is often held by exchanges, wallet providers, banks, payment processors and communications platforms:
  • Norwich Pharmacal and Bankers Trust orders: these may be used to identify wrongdoers and trace assets, including in appropriate cases against overseas non-parties, but service, enforcement and local-law issues need early consideration. See our toolkit note on obtaining information evidence from third parties and tracing assets for more detail.
  • Search and imaging orders: where there is a real risk that devices, seed phrases, cold wallets, communications or transaction records will be destroyed or concealed, the court may grant search and imaging relief to preserve evidence. The threshold is high and the safeguards are strict. See our toolkit note on search and imaging orders for more detail.
• Worldwide freezing injunctions: where there is a good arguable case and a real risk of dissipation, the court may restrain a respondent from dealing with assets up to a specified value, including assets outside England and Wales. Asset disclosure orders commonly sit alongside freezing injunction relief. See our toolkit notes on injunctions and Asset Disclosure Orders.
• Proprietary injunctions and delivery‑up: where the claimant can identify a specific asset or traceable proceeds, proprietary relief may preserve that asset pending trial. Different considerations apply from a freezing order: the focus is the claimant’s proprietary claim to the asset, not the respondent’s general assets. Fraud is not required, but the claimant must establish a serious proprietary claim. See our toolkit note on injunctions.
• Persons unknown orders: crypto fraud frequently involves anonymous actors. Defining respondents by description rather than by name can allow the court to grant freezing, proprietary and disclosure relief while identities are investigated. See our toolkit note on injunctions.
• Asset Disclosure Orders: where freezing relief is granted, asset disclosure can be critical to identifying what exists, where it is held and in whose name. In a digital asset case, that may include wallet addresses, exchange accounts and information about beneficial control. See our toolkit note on Asset Disclosure Orders.

Asset recovery: tracing and evidence

• Blockchain analytics: where the destination of digital assets is unknown, specialist analytics can link wallet addresses, clusters and on- and off-ramps to real-world actors. Analytics will not always be enough. Where assets are held in cold wallets, or where off-chain records are needed, disclosure, search/imaging or asset disclosure relief may also be required.
• Price and volatility data: not all tokens are freely tradeable and tend to be highly volatile. An early strategy is therefore needed for how loss will be evidenced and explained to the court.
• Overseas evidence and assets: where evidence or assets are outside England and Wales, consider letters of request, parallel relief in the local court and coordination with overseas counsel. Mutual legal assistance may be relevant in some cases, but civil recovery strategy should not be framed around it as the default route. See our toolkit note on enforcement.
• Judgment-stage examinations: after judgment, the court can require a debtor or company officer to attend court and give evidence about assets. This is a judgment-stage tool and is best considered as part of a coordinated enforcement strategy. See our toolkit note on recovery and enforcement. Failure to comply may amount to contempt, with serious consequences.

Asset recovery: tracing and evidence

• Blockchain analytics: where the destination of digital assets is unknown, specialist analytics can link wallet addresses, clusters and on/off-ramps to real-world actors. Analytics will not always be enough. Where assets are held in cold wallets, or where off-chain records are needed, disclosure, search/imaging or asset disclosure relief may also be required.
• Price and volatility data: not all tokens are freely tradeable and tend to be highly volatile. An early strategy is therefore needed for how loss will be evidenced and explained to the court.
• Overseas evidence and assets: where evidence or assets are outside England and Wales, consider letters of request, parallel relief in the local court and coordination with overseas counsel. Mutual legal assistance may be relevant in some cases, but civil recovery strategy should not be framed around it as the default route. See our toolkit note on jurisdiction.
• Judgment-stage examinations: after judgment, the court can require a debtor or company officer to attend court and give evidence about assets. This is a judgment-stage tool and is best considered as part of a coordinated enforcement strategy. See our toolkit note on recovery and enforcement. Failure to comply may amount to contempt, with serious consequences.

Regulatory developments

The FCA’s crypto roadmap and consultation papers set out staged policy development on regulated cryptoasset activities, admissions and disclosures, market abuse, custody, stablecoins, staking, lending and prudential requirements.

The UK government has legislated, and is continuing to consult, on a framework for bringing specified cryptoasset activities within the UK financial services regulatory perimeter under FSMA 2000. The regime is expected to cover activities such as dealing, arranging, operating trading platforms, custody and certain stablecoin and staking activities, but is not expected to be fully operative before 2027.

However, regulation does not replace civil court recovery. In most cases, urgent private-law remedies will still be needed to preserve evidence, identify wrongdoers and recover assets – often in days rather than weeks.

Practical advice

First-response steps

1. Preserve data: export wallet addresses, transaction hashes, logs, device artefacts and all relevant communications. Disable any auto‑deletion policies without alerting suspected wrongdoers unnecessarily. Consider preservation notices to third parties who may hold relevant material.
2. Engage specialists: consider at an early stage whether forensic tracing and incident‑response support is needed. In every case, begin an evidence chronology and chain of custody record.
3. Consider urgent relief: take advice immediately on whether urgent interim relief is needed. Delay can undermine an application for an injunction or disclosure relief.
4. Notify and report: Consider notifications to banks, exchanges, insurers and relevant authorities, and check any regulatory, reporting or internal escalation obligations.

To meet the rise and increasing sophistication of fraud, victims need powerful legal tools and lawyers who know how to use them. In this guide, we provide an overview of the key issues involved in fraud cases and outline some of the fraud litigation tools available in England.

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This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, June 2026