The District Court of The Hague ruled on November 7, 2024 in a case in which a victim of investment fraud held crypto platform Binance liable and demanded, among other things, that Binance provide the data of the fraudsters. Just like other (internet) platforms, a crypto platform cannot simply get away with not providing data for the sake of privacy.
A sophisticated fraud scheme
The case began in the summer of 2024, when the plaintiff came into contact with a person via a dating platform who managed to convince her to invest in cryptocurrencies. The sophisticated approach led to her transferring an amount of €186,000 in six transactions to a platform that later turned out to be a fraudulent front. After forensic investigation by DataExpert, it turned out that part of her cryptocurrencies had ended up in a user account at Binance.
The claimant turned to Binance with the request to find out the identity of the account holder and to freeze the account. However, Binance refused to cooperate without a court order. This led to summary proceedings in which the claimant requested, among other things, identifying information, access to the assets, and freezing of the account.
The interim relief judge largely ruled in favor of the plaintiff. Binance was ordered to:
- To provide the account holder’s name and address information.
- Keep the account frozen until substantive proceedings are completed.
- Disclose the value and nature of the assets held in the account.
- To cooperate in the transfer of the assets to the claimant, provided that it is established in the substantive proceedings that these assets belong to her.
The judge ruled that the privacy of Binance customers should not prevail over the legitimate interest of the victim.
The requirement to provide name and address details – the Lycos/Pessers criteria:
An important legal framework for the allocation of NAW data was formed years ago in the Lycos/Pessers case, which is still leading. This resulted in four criteria that must be met in order to oblige an (internet) service provider to release data of a user:
- Real chance of wrongful conduct: It must be plausible that the user has acted unlawfully through the service. In this case, the involvement of the Binance account in the fraud was demonstrated by forensic investigation.
- Interest of the claimant: The injured party must have a sufficiently weighty interest in the provision of the data. The claimant had a direct financial interest, as she had lost €186,000 due to fraud.
- No less drastic alternative: There must be no other, less drastic ways to discover the user’s identity. Here, Binance appeared to be the only party that had the necessary data.
- Balancing of interests: The interest of the claimant must outweigh the privacy interests of the user and the service provider. Given the seriousness of the fraud and the lack of legitimate interests of the user, this criterion was met.
The interim relief judge ruled that these criteria had been met and that Binance was obliged to provide the requested data.
A precedent with consequences
This ruling is not only a victory for the plaintiff, but also an important step in the regulation of the crypto market. Crypto platforms are increasingly confronted with their responsibility to cooperate with law enforcement. Anonymity is no longer a carte blanche to commit criminal acts in the crypto world. For victims of fraud, this ruling – although it is still very questionable how useful the data will ultimately prove to be – offers a legal basis to take action. Information from such a platform often ensures that one ultimately ends up with the right party or person on the basis of this data (for example a bank account).
Conclusion
The ruling of the District Court of The Hague emphasizes that internet and crypto platforms also bear responsibility for combating fraud. They cannot simply refuse to release identifying data of users under the guise of privacy protection. This case shows that legal action against intermediaries such as crypto platforms, social networks, and other digital services is becoming increasingly effective, provided that the right legal steps are taken.
At Guldemond Advocaten we have extensive experience in requesting data from a wide range of (internet) service providers, such as crypto platforms, hosting providers, banks and other parties.
Are you dealing with fraud or do you need legal assistance in obtaining data from an intermediary? Then contact Sascha Lang or Thomas Kriense. They are ready to guide you through your legal process and ensure that you take the right steps to protect your interests.
