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Learn more about how Brandsmiths secured the first UK proprietary injunction over crypto assets.
We did the U.K.’s first proprietary injunction over crypto assets, after our client paid a ransom after one of their own clients got hacked. Proprietary means that it’s over specific property or it’s traceable proceeds. An injunction is basically an order from the court to do or not do something, so it's a way to treat property.
There was a Canadian hospital and their systems got hacked and they had an insurance policy with our client who is a London-based insurer. When they got hacked they called the insurer to pay, because the hackers asked for a ransom to be paid and the ransom was demanded by the hackers via a file that was opened up on all the screens. So all the screens said 'you have to pay us $1.2 million in bitcoin to get all your data back and get access to your system.' After sometime it was negotiated down to 96 bitcoin, which was then paid by our client the UK insurer. The reason the insurer paid is because they had a policy with their own client in Canada so they are under that policy required to pay ransomers.
And what that did is that allowed the Canadian company to get access to their data and their systems. But one of the really important things, certainly in the market for insurers, is that they are really fed up of paying ransoms, which essentially fuels the industry. They are paying the criminals who understand that this system works and are then ransoming other people, it's self fulfilling - it circulates over and over again. The insurers are paying because it works.
At the moment the money is transferred, the insurance company then contacts us, Brandsmiths to try and break the chain, and to try and locate have been transferred to. We use tracing software to locate where on the blockchain those assets have ended up. In this case they ended up at an exchange called Bitfinex, which is a BVI listed company. They're an exchange, they are able to assist with the purchasing of cryptocurrencies amongst other things like trading. It ended up at an account held by Bitfinex. Whilst tracing it might be relatively easy, the difficulty is freezing it because the trading of cryptocurrencies can happen at the click of a finger. So we had to act really quickly once we understood where the cc was. The software enabled us to located where it was but it can be transferred out of the account at any time. We had to contact Bitfinex very quickly. We used our contacts around the world to insure that they could freeze (without their own client knowing) over that account to ensure that money wasn't dissipated.