The court heard how Shulev opened the account, which contained more than 800 bitcoins currently worth around £30m, using his company email address. While Nexo argued that the account was a corporate business account and that all the assets it contained belonged to the company, Shulev said that he opened it in his personal capacity and that some of the crypto assets it contained were his.
Shulev and Nexo signed a settlement agreement before the High Court hearing, but a further dispute arose over the effect it had on the process. Under the terms of the agreement, Shulev was to release access, control, and ownership of the HDR account to Nexo, and receive currency and crypto-asset fees totaling approximately $1 million in return. But Shulev argued in court that the definition of “assets” in the settlement agreement was too broad and uncertain to be binding, and he allowed Nexo to continually add to what he was required to provide to justify refusing to pay him.
The court found that Shulev had not yet fulfilled his part of the settlement agreement and had relinquished any rights to Nexo’s corporate trading account. The judge ruled that Shulev must transfer approximately $10 million in crypto assets before Nexo is forced to pay the $1 million in fees. The judge also ruled that both Shulev and Nexo were jointly obligated to inform HDR that the account will be turned over to Nexo.
Hinesh Shah of Pinsent Masons said: “This case highlights the importance of segregating personal and corporate crypto assets so that a clear distinction can be made. Similar to traditional financial assets, where one can create multiple accounts or wallets, the individual could and probably should have opened separate wallets for whatever personal crypto he claimed he was entitled to.”
Shah added: “Despite the principle of agency and the need to justify how such crypto assets were obtained, separate accounts would have at least allowed the individual to quantify the value of their personal crypto assets, in order to expedite a potential claim in the United States Courts. United Kingdom”.
The court also decided that the definition of the term ‘assets’ was sufficiently secure between the parties and there was no evidence that the broad meaning of ‘assets’ was being abused. Sanita Heer of Pinsent Masons said: “This case is a helpful reminder of the need to ensure that the term ‘assets’ in a settlement agreement is clearly defined and encompasses all known assets, whether or not they are crypto assets.”