We have touched on the topic of cryptocurrencies and related blockchain products in our previous blogs (here and here for those interested in further reading). In these blogs, we discussed common issues and certain precautions that can be taken when estate planning for digital assets. However, at times, despite diligent planning, disputes can still arise. 

In the event of disputes, it may be necessary to seek the preservation of estate assets. With traditional assets, such as real estate, this may be, relatively speaking, straightforward, including measures such as obtaining a Certificate of Pending Litigation.   

When dealing with blockchain based digital assets such as cryptocurrencies, however, securing these assets becomes more challenging as access and control can be restricted to only those individuals with the “keys” to the ”wallet” in which the cryptocurrency is stored. These “keys” are often a long series of randomized words, without which it is almost impossible to access the digital wallets in which cryptocurrency is stored.  

In a recent endorsement from Cicada 137 LLC v. Medjedovic, 2021 ONSC 8581, the court faced the issue of securing $15 million in stolen cryptocurrency. The court took the exceptional measure of granting an Anton Piller order, which is a form of injunctive relief which compels a defendant to permit a complainant to enter its property to search for and seize evidence and records, including electronic data and equipment. Such orders are rare and potentially difficult to obtain. 

While the circumstances of the case did not involve an estate, the core issue of securing digital assets is relevant to the context of disputes over estate assets. While securing a digital wallet’s “key” through measures such as an Anton Piller order may be successful, it is not a guarantee, especially where the key cannot be found or a physical or digital record of it does not exist. The fact remains that enforcing orders against digital assets can be challenging, if not impossible, in certain circumstances.  

These challenges should be kept in mind when planning for an estate involving digital assets – bulletproof safety measures may not be possible, but steps can be taken to mitigate the risk as we discussed here. 

Thank you for reading and enjoy the rest of your day.  

Suzana Popovic-Montag and Raphael Leitz