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)
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.Is cryptocurrency considered property in U.S. courts?
U.S. courts haven’t made a nationwide ruling that crypto is property, but they’re moving in that direction. The SEC treats many tokens as securities, while state courts are starting to recognize crypto as property in cases involving theft, inheritance, and divorce. The 2025 Delaware ruling in Timoria LLC v. Anis showed that even when property status is assumed, jurisdictional rules still don’t apply cleanly. Australia’s 2024 ruling is the clearest legal precedent globally.
Can I sue someone for stealing my crypto?
Yes, but it’s complicated. You need to prove ownership (via wallet records and transaction history), identify the thief (often through blockchain analysis), and find a court with jurisdiction. If the thief moved the crypto to a centralized exchange, you can sue the exchange for freezing the funds. If it went to a decentralized wallet, you may need to work with law enforcement or a blockchain forensic firm. Australia has already appointed receivers to recover stolen crypto-U.S. courts are starting to follow.
Are decentralized exchanges like Uniswap legally protected?
As of 2025, yes-under current rulings. The Second Circuit and Southern District of New York have ruled that decentralized exchanges aren’t statutory sellers under securities law because they don’t control transactions. They’re seen as software tools, not financial intermediaries. But if you add features like fiat on-ramps, user accounts, or custody services, you may lose that protection. The line is thin, and courts are watching closely.
Why does the SEC keep saying crypto is a security?
The SEC argues that most tokens are sold with the expectation of profit based on others’ efforts-meeting the Howey Test. But courts are pushing back because crypto assets don’t fit neatly into stock-like models. Many tokens are used for access, not investment. The Third Circuit’s January 2025 ruling forced the SEC to justify why its old rules apply. The agency is now under pressure to either create new rules or stop suing projects that don’t act like traditional securities.
What’s the difference between the GENIUS Act and other crypto laws?
The GENIUS Act, passed in October 2025, only applies to stablecoins-digital currencies pegged to the U.S. dollar. It gives them a clear regulatory path: issuers must be licensed, hold reserves, and report audits. But it doesn’t cover Bitcoin, Ethereum, or any other decentralized asset. That means while stablecoin companies now have rules to follow, everyone else is still operating in a legal gray zone. The act was a step forward, but only for one slice of the crypto market.
What should crypto businesses do right now?
First, determine if your platform is centralized or decentralized. If you hold user funds, you’re likely a financial intermediary and need compliance systems. If you’re a pure protocol, document how your code works and avoid any user-facing control. Second, screen all transactions for sanctions and suspicious activity. Third, prepare for litigation-class actions are surging, and courts are now demanding detailed records on exchange structure. Don’t wait for a lawsuit to start thinking about legal risk.
steven sun
January 22, 2026 AT 04:12bro i just sent my eth to the wrong wallet and cried for 3 days lmao. courts cant help me but at least i learned my lesson. dont trust your fingers with crypto.
Arielle Hernandez
January 23, 2026 AT 14:10The Australian ruling in Blockchain Tech Pty Ltd v. Chen is a watershed moment in digital asset jurisprudence. By affirming Bitcoin’s status as property under the four canonical criteria-identifiable subject matter, third-party recognition, permanence, and transferability-the court has effectively aligned blockchain assets with centuries-old common law principles of chattel property. This foundational recognition enables equitable remedies such as receiverships and trust arrangements, which were previously inaccessible. The exclusion of bailment, however, is both logically consistent and legally prudent; digital assets cannot be ‘held’ in the traditional sense, as they lack physicality and are non-rivalrous. This necessitates the development of novel legal instruments tailored to the immutable, decentralized nature of distributed ledgers.
Mathew Finch
January 25, 2026 AT 11:14Australia? Seriously? We’ve had property rights for crypto since 2018 in the U.S. The SEC just doesn’t want to admit it because then they’d have to stop pretending every token is a security. This whole ‘property’ thing is just a distraction so regulators can keep chasing ghosts.
Roshmi Chatterjee
January 25, 2026 AT 14:25Really interesting breakdown! I’m from India and we’re still trying to figure out if crypto is even legal here. But seeing how courts are adapting-especially with receivers being appointed-is giving me hope. Maybe one day we’ll catch up without having to ban everything first.
Deepu Verma
January 26, 2026 AT 12:07Don’t let the naysayers scare you. If you’re holding crypto on a decentralized platform, you’re safer than you think. Courts are finally getting it-code isn’t a company. Developers aren’t CEOs. And if your wallet isn’t held by a bank, then you’re not at the mercy of their compliance team. Just keep your keys safe and stay informed. This is the future, and it’s already here.
MICHELLE REICHARD
January 27, 2026 AT 17:55Of course the courts are calling it property-because then they can tax it, seize it, and regulate it. The moment something becomes valuable, the state wants to own it. Don’t be fooled by the ‘legal recognition’ nonsense. This isn’t freedom-it’s just another cage with a fancy label.
Bonnie Sands
January 28, 2026 AT 04:36They’re all lying. The real reason the SEC won’t classify crypto as property is because they know if it’s property, then the Fed can’t control it. They’re terrified of decentralized money. That’s why they’re pushing the ‘security’ narrative-it keeps you dependent on banks and regulators. Wake up. This is a power grab disguised as regulation.
Jennifer Duke
January 28, 2026 AT 15:48It’s fascinating how the U.S. is so fragmented on this. One court says crypto is property, another says it’s a security, and then Delaware says ‘we don’t have jurisdiction’-as if blockchain has a ZIP code. Honestly, it’s a mess. But honestly? That’s the beauty of it. The system is too slow to keep up, and that’s exactly why crypto will win in the long run.
Andy Marsland
January 28, 2026 AT 23:52Let’s be clear: the idea that decentralized protocols are ‘tools’ and not companies is a dangerous fantasy. Every line of code is written by a human. Every fork is initiated by a team. Every gas fee is collected by a group of developers who profit from network usage. Calling Uniswap a ‘tool’ is like calling a gun a ‘tool’ because it doesn’t have a trigger guard. The law doesn’t care about your intentions-it cares about outcomes. If your protocol enables money laundering, fraud, or tax evasion, you’re not a developer-you’re a facilitator. And you will be held accountable. The courts are just beginning to peel back the layer of ‘open-source’ obfuscation. Don’t get caught flat-footed.
Jeffrey Dufoe
January 30, 2026 AT 22:03So if I got my crypto stolen, I can go to court and get it back? That’s actually kinda cool. I didn’t think the system could handle this stuff. Feels good to know there’s some hope.
Jonny Lindva
February 1, 2026 AT 09:34Big win for DeFi devs! The bifurcated discovery rule is huge. Now plaintiffs can’t just sue every crypto project and hope something sticks. First they gotta prove if you’re centralized or not. That’s fair. If you’re just putting code out there, you shouldn’t be liable for how people use it. Keep building, stay decentralized, and don’t let the suits scare you off.
Jen Allanson
February 2, 2026 AT 13:00It is imperative to recognize that the GENIUS Act, while laudable in its intent to provide regulatory clarity for stablecoin issuers, represents a profoundly incomplete legislative response to the broader crypto ecosystem. By excluding non-stablecoin assets, the Act implicitly endorses a two-tiered system wherein only fiat-pegged digital currencies are deemed worthy of legal recognition. This creates a perverse incentive structure: projects will artificially tether their tokens to the dollar to gain regulatory safety, thereby undermining the very decentralization that crypto was designed to foster. The judiciary’s refusal to apply antiquated securities frameworks to non-investment-grade tokens is not merely prudent-it is constitutionally necessary.
Dave Ellender
February 2, 2026 AT 20:33Interesting how Australia led on this. Over here in the UK, we’re still stuck in ‘it’s a commodity’ limbo. But I reckon the property ruling will ripple through Commonwealth courts. Just hope they don’t mess it up with tax laws next.
Adam Fularz
February 3, 2026 AT 06:43So now we gotta hire lawyers just to know if our wallet is legal? Great. Another reason to ditch crypto. Who wants to live like this?
Adam Lewkovitz
February 3, 2026 AT 19:40U.S. courts are finally waking up. Australia didn’t invent this-America did. We just let the SEC bury it under paperwork. Now that the Third Circuit called them out, it’s only a matter of time before the Supreme Court says crypto is property. And when they do, the SEC’s whole empire crumbles. Don’t believe the hype. This isn’t about regulation-it’s about control. And control is losing.