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England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Blockchain Optimization SA & Anor v LFE Market Ltd & Ors  EWHC 2027 (Comm) (28 July 2020)
Cite as:  EWHC 2027 (Comm)
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BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
(Sitting as a Judge of the High Court)
| (1) BLOCKCHAIN OPTIMIZATION S.A.
(2) PETROCHEMICAL LOGISTICS LTD
|- and –
|(1) LFE MARKET LTD
(2) LFE GROUP HOLDINGS LIMITED
(3) JAMES (AKA JIM) AYLWARD
(4) BENJAMIN LEIGH HUNT
(5) WHITE TIGER GLOBAL OPPORTUNITIES FUND
(6) WHITE TIGER ASSET MANAGEMENT LTD
Thomas Roe QC (instructed by Pinder Reaux) for the Defendants
Hearing dates: 15, 16 July
Crown Copyright ©
Sir William Blair:
(1) Ds' application to discharge a worldwide freezing injunction granted by Butcher J on 14 January 2020 on grounds of material non-disclosure (except for D3 who was not subject to the injunction);
(2) Cs' application to continue the injunction against D1, D2 and D4;
(3) Ds' application to strike out parts of the claim (except for D3);
(4) Ds' alternative application for summary judgment on parts of the claim (except for D3);
(5) Cs' application to amend the Particulars of Claim – it has been agreed that this can likely be agreed by the parties in the light of the judgment, and I need not rule on it now.
The freezing injunction applications
"At the heart of this case is one of the latest cryptocurrency shams worth millions of pounds. The sooner this Court and the Serious Fraud Office investigate it, the fewer victims the sham will make.
The Defendants are behind this sham. The sham is operational and seeks to defraud cryptocurrency investors in this country and elsewhere by making fraudulent misrepresentations about the nature and intentions of the Defendants' business. The Defendants have harvested some US$2.2 million from the Claimants alone, excluding the value of the services provided to the Defendants, whose value the parties estimated at US$3 million. The Defendants have likely defrauded many other investors and, as this document is being prepared, seek to defraud even more."
'The kernel of the Claimants' case is that the Defendant's entire scheme was designed to extract moneys from investors, and that the Defendants never had any intention to perform any of the expected or intended activities identified in their White Paper (an equivalent of a Prospectus) […]." [underlining added]
The application to discharge the injunction
"b. Failure to disclose a material fact will sometimes require immediate discharge of the order. This is likely to be the court's starting point, at least when the failure is substantial or deliberate.
c. Nevertheless the court has a discretion to continue the injunction (or to impose a fresh injunction) despite a failure of disclosure; although it has been said that this discretion should be exercised sparingly, the overriding consideration will always be the interests of justice.
d. In considering where the interests of justice lie, it is necessary to take account of all the circumstances of the case including (without attempting an exhaustive list) (i) the importance of the fact not disclosed to the issues which the judge making the freezing order had to decide; (ii) the need to encourage proper compliance with the need for full and frank disclosure and to deter non-compliance; (iii) whether or to what extent the failure to disclose was culpable; and (iv) the injustice to a claimant which may occur if an order is discharged leaving a defendant free to dissipate assets, although a strong case on the merits will never be a good excuse for a failure to disclose material facts.
e. The interests of justice may sometimes require that a freezing order be continued, but that a failure of disclosure be marked in some other way, for example by a suitable order as to costs."
Ds' application to strike out parts of the claim/summary judgment