How to report fraud when your digital assets are stolen

Digital asset fraud, particularly cryptocurrency theft, is a growing threat to individuals and corporate investors in the UK. This article begins our five-part legal guide to recovering stolen digital assets.

We provide a step-by-step overview of how to report crypto-related theft — from notifying exchanges and obtaining tracing reports to applying for injunctions, seeking disclosure orders, and initiating a legal claim.

Whether you’re an institutional provider or a private investor, understanding the legal framework in England and Wales is essential to pursuing recovery.

The rise of crypto fraud in the UK

As the UK continues to embrace digital assets, the scale of cryptocurrency fraud has escalated. The Financial Conduct Authority (FCA) has consistently warned about the growing number of unauthorised crypto platforms and scams, and the National Crime Agency reported that crypto-related fraud losses totalled over £300 million in 2023 alone.

Whether you are managing a corporate portfolio or holding digital assets privately, falling victim to theft can be both financially and legally devastating. This blog marks the first in a five-part series on digital asset recovery under English law. We begin with the most urgent concern: how to report fraud and start the recovery process.

Recognising digital asset fraud under UK law

Before reporting crypto theft, it is essential to understand how the law in England and Wales defines fraud in the context of digital assets. Common forms of crypto fraud include:

• Phishing scams – emails or websites impersonating legitimate services to harvest private keys.
   
• Rug pulls – fraudulent crypto projects where developers vanish with investor funds.
   
• Exchange hacks – cyberattacks targeting wallets or trading platforms.
   
• Social engineering – scams involving impersonation or fake customer support channels.

Legal framework

Under the Fraud Act 2006, fraud can occur through false representation, failure to disclose information, or abuse of position. Cryptocurrency is also increasingly recognised as "property" under English law, following the landmark decision in AA v Persons Unknown [2019] EWHC 3556 (Comm), which confirmed that crypto assets can be the subject of proprietary injunctions.

Immediate steps when your crypto is stolen

Quick action is critical to preserving evidence and increasing the chance of recovery. Here's what to do as soon as you suspect theft:

• Record the evidence – take screenshots of all relevant transactions, wallet addresses, communication logs, and timestamps.
   
• Contact the exchange – report the incident (usually via the platform's live chat service) and request a freeze on any suspicious or ongoing activity.
   
• Use blockchain tools – services like Etherscan or Chainalysis Reactor can help trace transactions.
   
• Report to Action Fraud – file a report with Action Fraud, the UK's national reporting centre for cybercrime and fraud.
   
• Notify your solicitor – engaging legal counsel early allows you to preserve your position, explore injunctions, and advise on civil remedies.

It is important to note that digital fraud is often transnational. Swift legal steps in the UK may support freezing orders or requests to foreign courts under international treaties.

Contacting the exchange: key points for a strong report

Most exchanges are headquartered overseas but cooperate with fraud investigations if the request is credible and well-documented. Your report should include:

• Account details and contact information
   
• Chronology of the suspected fraud
   
• Wallet addresses and transaction IDs
   
• Any supporting emails, chat logs, or screenshots
   
• Confirmation that a police report (Action Fraud) has been filed

If an exchange is uncooperative, legal intervention may be required. In some cases, English courts have granted Norwich Pharmacal Orders requiring platforms to disclose user information and assist in tracing funds.

Legal remedies under English law: from civil action to proprietary injunctions

If reporting and negotiation are unsuccessful, civil litigation may be necessary to recover your digital assets.

Legal tools include:

• Proprietary injunctions – to freeze crypto assets while their ownership is contested.
   
• Bankers Trust orders – to trace funds held in intermediary accounts.
   
• Norwich Pharmacal orders – to compel third parties like exchanges to disclose user data.
   
• Part 8 proceedings – in cases where there is no dispute on the facts, often used to obtain declaratory relief.

Recent case example

In Ion Science Ltd v Persons Unknown [2020], the High Court granted both proprietary and worldwide freezing injunctions to trace and recover stolen Bitcoin. The case confirmed that English courts are prepared to use conventional equitable remedies in crypto matters, particularly when victims act quickly and with legal precision.

Prevention and protection: legal strategies for corporate and private clients

Once the immediate crisis is under control, clients should adopt proactive legal strategies to protect digital assets moving forward.

Key measures can include:

• Using custodial wallets with multi-party controls or cold storage.
   
• Conducting regular legal reviews of crypto exposure within corporate governance.
   
• Verify the FCA status of any exchange or investment firm.
   
• Consult a solicitor before investing through new or unregulated platforms.
   
• Consider cyber insurance policies that include digital asset coverage.

Why legal expertise is critical after crypto theft

Whilst recovering digital assets under English law is technically complex (both technologically and legally), victims can access powerful tools, including injunctions, disclosure orders, and civil litigation strategies. The key element in being successful is to act swiftly and decisively.

This article is the first in our five-part series on recovering digital assets after crypto fraud. Future instalments will explore asset tracing, injunctions, exchange disclosure strategies, service by alternative means, and cross-border enforcement in greater detail.

If your digital assets have been stolen or your company needs guidance in establishing a legal strategy for crypto risk, contact our solicitors today. Our litigation team has deep experience in crypto lawsuits, company litigation, and financial fraud recovery.

Reach out now for a confidential consultation and reclaim control of your digital assets.