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Tracing through the Ether: legal and technical barriers to cryptoasset recovery
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This article examines contemporary barriers to digital asset recovery, arguing that the central legal issue is not the proprietary status of cryptoassets, but the juridical character of the user’s interest vis-à-vis a centralised exchange (CEX). It analyses obstacles to establishing a trust in the CEX context, including the “Terms of Service Paradox”, the pooling and sweeping of assets in omnibus wallets, and the resulting uncertainty of subject matter, alongside constraints imposed by tracing doctrine, bona fide purchaser defences, the lowest intermediate balance rule, and apportionment in insolvency. Absent doctrinal recalibration, user protection in centralised custody risks remaining conceptually and practically illusory.
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