How Courts Are Treating Crypto Assets: Property, Securities, and Jurisdictional Battles in 2025

When someone steals your Bitcoin, who do you sue? Where do you file the case? Can a judge order the return of Ether held on a blockchain? These aren’t theoretical questions anymore-they’re being answered in courtrooms across the U.S. and Australia, and the answers are changing how crypto works in the real world.

Crypto as Property: Australia’s Landmark Ruling

In 2024, the Supreme Court of Victoria in Australia made a decision that sent shockwaves through global crypto law. In In the matter of Blockchain Tech Pty Ltd VSC 690: Chen & Anor v Zhao & Ors, the court ruled definitively that Bitcoin is property under Australian law. This wasn’t just a technicality-it was a legal revolution.

The court laid out four clear criteria for something to count as property:

• It must have an identifiable subject matter (like a unique wallet address)
• It must be recognizable by third parties (anyone can verify ownership on the blockchain)
• It must have a degree of permanence (it doesn’t vanish when the power goes out)
• It must be transferable (you can send it to someone else)

This ruling meant crypto could now be seized, inherited, divided in divorce, and held in trust. It also opened the door for courts to appoint receivers to manage stolen or frozen crypto assets-a tool previously reserved for traditional property like real estate or stocks.

But there’s a catch. The court also said crypto can’t be subject to bailment, a legal concept where one person holds another’s property for safekeeping. Why? Because you can’t “return” a digital asset the way you’d return a car to a mechanic. Once it’s sent, it’s gone. That’s why courts are now crafting new remedies instead of stretching old ones.

The U.S. Split: Securities vs. Property

While Australia focused on whether crypto is property, U.S. courts have been stuck on whether it’s a security. The SEC has spent years trying to force crypto tokens into the same box as stocks, using the decades-old Howey Test. But courts are pushing back.

In February 2025, the Second Circuit Court of Appeals ruled in Risley v. Universal Navigation that liability under federal securities laws depends on whether an exchange intermediates transactions. If an exchange acts like a middleman-holding users’ funds, matching orders, and charging fees-it can be sued as a statutory seller. But if it’s just a decentralized protocol that runs on smart contracts, like Uniswap or SushiSwap, it’s not legally responsible for what users trade.

That same month, the Southern District of New York reinforced this in Underwood v. Coinbase Global. The court dismissed claims against Coinbase’s decentralized trading platform because it didn’t act as a seller. But it left the door open for liability if Coinbase’s centralized exchange had sold unregistered tokens.

This created a legal fork in the road: centralized exchanges face heavy liability; decentralized protocols are largely shielded-for now.

The Jurisdictional Nightmare: Who Controls Crypto?

Here’s where things get messy. In October 2025, the Delaware Court of Chancery ruled in Timoria LLC v. Anis that it had no jurisdiction over stolen Ether-even though the thief transferred it to a Delaware-based company. Why? Because crypto doesn’t have a physical location. You can’t say it’s “in Delaware” just because a company there holds the private keys.

This decision shattered the old idea that jurisdiction follows where title is held. Courts now have to ask: Where did the theft occur? Where was the wallet controlled from? Where did the victim reside? The answer isn’t obvious.

Meanwhile, the GENIUS Act of October 2025 tried to fix this by creating a federal framework for stablecoins. But it didn’t cover Bitcoin, Ethereum, or other decentralized assets. So while stablecoin issuers now have clear rules, everyone else is still flying blind.

Decentralized vs. Centralized: The Legal Line in the Sand

The biggest legal divide today isn’t between Bitcoin and Ethereum-it’s between centralized and decentralized platforms.

Centralized exchanges like Coinbase, Kraken, or Binance U.S. are treated like banks. They hold your keys. They control your account. They report to regulators. That means they’re on the hook if they list an unregistered token or freeze your funds without cause.

Decentralized platforms? They’re treated like open-source software. The developers don’t control the code once it’s live. No one owns the protocol. No one is in charge. Courts are starting to see them as tools-not companies.

In July 2025, the Underwood v. Coinbase Global case set a new precedent: discovery must be bifurcated. First, courts force plaintiffs to prove whether the platform is centralized or decentralized. Only then can they move on to claims about securities violations. This is a huge win for developers of DeFi apps. It means they can’t be sued just because someone used their protocol to trade a questionable token.

Enforcement Is Getting Real

The DOJ isn’t waiting for Congress to act. In June 2025, they filed a civil forfeiture complaint for $7.74 million in crypto tied to North Korean hackers. That same week, they indicted Iurii Gugnin, founder of Evita, for laundering over $500 million in crypto to hide transactions involving sanctioned Russian entities.

These aren’t rare cases. The District of Massachusetts has charged 17 people with wash trading-using bots to fake volume on crypto exchanges. The District of Columbia is now the go-to venue for forfeiture cases. And ASIC in Australia has been the most active regulator in court, filing enforcement actions nearly every month in 2024.

For crypto businesses, this means compliance isn’t optional anymore. You need to track where your users are from. You need to screen wallets for sanctions. You need to document whether your platform is centralized or decentralized. One mistake can cost millions.

What’s Next? The SEC’s Big Reckoning

On January 13, 2025, the Third Circuit Court of Appeals did something unprecedented. It ruled that the SEC’s refusal to create crypto-specific rules was “arbitrary and capricious.” The court didn’t say crypto is or isn’t a security. It just said the SEC can’t ignore the issue forever.

The SEC now has to explain why its old rules for stocks and bonds make sense for decentralized tokens that aren’t issued by companies, aren’t traded on traditional exchanges, and can’t be held in custody the way stocks can.

This ruling has forced the SEC to reconsider its entire approach. If they don’t respond with real rules by late 2026, courts may start creating their own standards-which could lead to even more inconsistency.

What This Means for You

If you’re a crypto investor: your assets are now legally recognized as property in Australia and increasingly in the U.S. But that doesn’t mean they’re safe. If you’re holding crypto on a centralized exchange, you’re trusting a company with your keys-and that company is now legally liable for how they handle your assets.

If you’re building a DeFi app: your legal risk just dropped. Courts are starting to treat open-source protocols like tools, not companies. But you still need to be clear about what your product does. If your platform holds user funds, you’re no longer a developer-you’re a financial intermediary.

If you’re a business: compliance is now part of your tech stack. You need to know where your users are. You need to know if your tokens are securities. You need to know if your platform is centralized or decentralized. There’s no gray area anymore.

The courts aren’t trying to kill crypto. They’re trying to fit it into the legal system we already have. And in doing so, they’re forcing the industry to grow up.