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How Courts Are Treating Crypto Assets: Property, Securities, and Jurisdictional Battles in 2025
When you hold Bitcoin or Ether, what exactly do you own? It’s not a physical coin. It’s not a bank account. And until recently, courts weren’t sure how to treat it at all. But in 2025, the legal landscape has shifted dramatically. Courts around the world are now forced to answer a basic question: Are crypto assets property, securities, or something entirely new? The answer determines who can sue, where they can sue, and what happens when someone steals your coins.
Crypto as Property: Australia Leads the Way
In 2024, the Supreme Court of Victoria in Australia made a landmark ruling that changed everything. In In the matter of Blockchain Tech Pty Ltd, the court declared Bitcoin qualifies as property under Australian law. It didn’t just say it - it laid out four clear tests any digital asset must meet:- Identifiable subject matter: The asset must be clearly defined - like a unique wallet address or token ID.
- Third-party identifiability: Others must be able to recognize who owns it, even if they don’t control it.
- Degree of permanence: It must persist over time, not vanish when the network updates.
- Transfer capability: It must be able to be moved from one person to another.
This wasn’t just a legal footnote. It meant courts could now appoint receivers to freeze stolen crypto, order its return, or even include it in bankruptcy proceedings. For the first time, crypto owners had real legal standing. ASIC, Australia’s financial regulator, used this ruling to push forward enforcement actions - not because they wanted to ban crypto, but because they could now treat it like any other asset under the law.
But there’s a catch. The court also ruled crypto cannot be subject to bailment - a legal concept where one person holds something for another. That means you can’t sue someone for “holding your Bitcoin” the way you’d sue a bank for losing your cash. It’s property, yes - but not in the same way as a car or a painting.
The U.S. Split: Securities vs. Exchange Type
While Australia focused on ownership, U.S. courts have been wrestling with a different question: Is this token a security?The answer hinges on the Howey Test - a decades-old rule from a 1946 Supreme Court case about orange groves. Today, it’s used to decide if a crypto token is an investment contract. If yes, it’s regulated like a stock. If no, it’s treated more like a commodity.
But here’s the twist: U.S. courts are now splitting cases based on who’s handling the trade. In February 2025, the Second Circuit Court of Appeals ruled in Risley v. Universal Navigation that liability under federal securities law depends entirely on whether an exchange is centralized or decentralized.
Centralized exchanges - like Coinbase or Binance - act as middlemen. They hold your keys, match orders, and process payments. That makes them look like brokers. And under the law, brokers who sell unregistered securities are liable. The court found these platforms could be sued under Section 12(a)(1) of the Securities Act.
Decentralized exchanges - like Uniswap or SushiSwap - don’t hold your money. They run on smart contracts. You trade directly with other users. In Underwood v. Coinbase Global (2025), the Southern District of New York ruled these platforms aren’t statutory sellers. They’re just code. No human controls the trade. No one profits from the sale. So they’re not liable.
This created a new legal filter. Courts now demand proof of intermediation before allowing securities claims to proceed. In July 2025, the same court ordered bifurcated discovery - meaning plaintiffs must first prove the exchange acted as a middleman before getting access to internal documents. This isn’t just procedure. It’s a shield for decentralized projects.
The SEC Is Under Pressure
The SEC has spent years saying crypto tokens are securities - but never clearly defining which ones or why. That changed in January 2025. The Third Circuit Court of Appeals ruled the SEC’s refusal to create crypto-specific rules was “arbitrary and capricious.”The court didn’t say crypto isn’t a security. It said the SEC can’t just ignore the problem. The agency had failed to explain why existing rules for banks and broker-dealers - designed for paper stocks and physical vaults - make sense for decentralized networks where no single entity holds assets.
Now the SEC has to go back and justify its inaction. That’s a huge win for crypto companies. But it also creates chaos. Until the SEC responds, businesses are stuck in legal limbo. Is your token a security? No one knows. And that uncertainty is fueling dozens of new class action lawsuits every month.
According to Duane Morris, 2025 has seen “dozens of new crypto class action cases” and “several multimillion-dollar settlements.” Most involve claims that tokens were sold as unregistered securities. But now, defendants are winning on procedural grounds - if the exchange was decentralized, the case often gets dismissed.
Jurisdictional Nightmares: Who Owns What Where?
Here’s where things get messy. In October 2025, the Delaware Court of Chancery ruled in Timoria LLC v. Anis that it couldn’t seize Ether - even though the stolen coins were transferred to a Delaware-based company.Why? Because the court said cryptocurrency doesn’t have a “situs” - a legal location - just because it’s held by a company in that state. Unlike a bank account, which is tied to a physical branch, crypto moves across borders instantly. A wallet address in Delaware doesn’t mean the asset is legally in Delaware.
This ruling throws a wrench into global enforcement. If a hacker steals your crypto and sends it to a wallet in Singapore, then to a Delaware LLC, can a U.S. court freeze it? Maybe not. This creates safe havens for bad actors - and makes cross-border recovery nearly impossible without international cooperation.
Meanwhile, the U.S. Department of Justice is taking a different approach. In June 2025, they filed a civil forfeiture complaint to seize $7.74 million in crypto linked to North Korean hackers. In another case, Iurii Gugnin was indicted for using his company Evita to move over $500 million in crypto tied to sanctioned Russian entities. These aren’t civil disputes - they’re criminal cases. And here, the DOJ doesn’t care if crypto is property or a security. They care that it was used to break sanctions or launder money.
What This Means for You
If you’re a crypto investor, here’s what you need to know:- Ownership matters. If your coins are on a centralized exchange, you don’t own them - the exchange does. You own a claim to them. If the exchange goes under, you’re just another creditor.
- Decentralized wallets are safer legally. If you control your keys, you have stronger legal standing. Courts are more likely to recognize your ownership.
- Don’t assume regulation = protection. The GENIUS Act in the U.S. brought stablecoins into the financial system, but it didn’t solve the core problem: How do you regulate something that doesn’t have a central point of control?
- Enforcement is picking up. If you’re trading crypto tied to sanctioned entities, or running wash trades to inflate volume, you’re now a target. The District of Massachusetts charged 17 people in October 2024 for bot-driven market manipulation.
For businesses, the message is clear: Document everything. If you run an exchange, you must be able to prove whether you’re centralized or decentralized. If you’re issuing tokens, you need legal advice - not just a whitepaper. The courts aren’t waiting for Congress to act. They’re making the rules now.
The Road Ahead
The legal treatment of crypto assets is no longer theoretical. It’s happening in real courtrooms, with real consequences. Australia’s property ruling is being cited in Canada and the UK. The U.S. is tightening the screws on centralized platforms while leaving decentralized ones in a gray zone. The SEC is under judicial pressure to respond. And jurisdictional battles are just beginning.One thing is certain: Crypto isn’t going away. And the law is catching up - slowly, unevenly, and sometimes painfully. The next few years will see more appellate rulings, more regulatory filings, and more cases where someone loses millions because a judge didn’t think their Bitcoin counted as property.
Until then, the best advice is simple: Know who holds your keys. Know where your assets are legally recognized. And know that courts are watching - not with fear, but with growing clarity.
Are crypto assets considered property in court?
Yes, in several jurisdictions. Australia’s Supreme Court of Victoria ruled in 2024 that Bitcoin qualifies as property under four legal criteria: identifiable subject matter, third-party identifiability, permanence, and transferability. Other countries, including the U.S., are moving toward similar recognition, though the focus there remains on whether crypto is a security. Property status allows courts to freeze, recover, or distribute crypto in legal disputes.
Can you sue someone for stealing your cryptocurrency?
Yes - but only if you can prove ownership and jurisdiction. If you hold your crypto in a personal wallet and can trace the theft to a specific address, courts in Australia, the UK, and parts of the U.S. have allowed lawsuits for conversion or trespass to chattels. However, if the coins are held on a centralized exchange, you may only have a contractual claim, not direct ownership. Jurisdictional issues also complicate recovery, as seen in the 2025 Delaware ruling that denied in rem jurisdiction over Ether.
Are decentralized exchanges legally safer than centralized ones?
Legally, yes - for now. U.S. courts, including the Second Circuit and Southern District of New York, have ruled that decentralized exchanges (like Uniswap) aren’t statutory sellers under securities law because they don’t intermediate trades. Centralized exchanges (like Coinbase) act as intermediaries and can be held liable for selling unregistered tokens. This distinction is now a key filter in securities lawsuits, with courts ordering discovery focused first on whether an exchange controlled the transaction.
Why is the SEC being forced to act on crypto regulation?
In January 2025, the Third Circuit Court of Appeals ruled the SEC’s refusal to create crypto-specific rules was “arbitrary and capricious.” The court found the SEC failed to explain why outdated rules for banks and broker-dealers apply to decentralized networks. The SEC must now justify its inaction - a major legal setback that opens the door for clearer, tailored regulations. Until then, businesses operate in uncertainty.
Can courts seize crypto assets tied to crime?
Absolutely. The U.S. Department of Justice has seized millions in crypto linked to North Korean hackers and sanctioned Russian entities. In June 2025, a civil forfeiture complaint targeted $7.74 million in crypto tied to state-sponsored laundering. The DOJ doesn’t need to classify crypto as property or a security - it only needs to prove it was used in a crime. Criminal forfeiture is far more straightforward than civil disputes over ownership.
What’s the biggest legal risk for crypto businesses in 2025?
The biggest risk is misclassifying your platform. If you claim to be decentralized but actually hold user funds or control trade matching, you could be held liable as a securities seller. Courts are now demanding detailed documentation on transaction intermediation. Companies that can’t prove they’re truly decentralized face class actions, SEC enforcement, and massive liability. Compliance isn’t optional - it’s a legal defense.
Cory Munoz
October 30, 2025 AT 20:25Been holding BTC since 2017 and honestly never thought I'd see courts treat it like real property. Australia's ruling makes sense - if you can trace it, move it, and prove ownership, it's no different than holding shares in a private company.
Just wish more people understood that custody isn't ownership. If your coins are on Coinbase, you're basically renting them.
Still, good to see the law catching up, even if it's messy.
Jasmine Neo
October 31, 2025 AT 04:05Of course Australia led. They’ve been regulating everything into oblivion since 2019. Meanwhile, the US is still arguing over whether a smart contract counts as a ‘person’ under the law. Pathetic.
And don’t get me started on this ‘decentralized’ loophole. Uniswap is just a front for hedge funds with Python scripts. The SEC is asleep at the wheel.
Ron Murphy
November 1, 2025 AT 01:10Interesting how the jurisdictional stuff is unraveling. Delaware ruling makes sense - crypto doesn’t have a physical location, so why should a company’s incorporation state determine asset situs?
But it’s a nightmare for enforcement. If a hacker sends stolen ETH to a wallet controlled by a Cayman LLC, then to a US-based mixer, who gets to seize it? No one, probably. The system’s broken.
Prateek Kumar Mondal
November 1, 2025 AT 07:04Nick Cooney
November 3, 2025 AT 02:16So… the SEC got told ‘your inaction is arbitrary’ and now everyone’s waiting for them to… do something? Classic. Like waiting for a sloth to sprint.
Meanwhile, I’m still confused why a decentralized exchange isn’t a ‘seller’ if it’s literally facilitating the sale of unregistered securities. The code doesn’t care if you’re ‘neutral’ - it just moves money.
Also, typo in ‘bifurcated’ - should be ‘bifurcated’? Or is that just my brain glitching again.
Clarice Coelho Marlière Arruda
November 4, 2025 AT 06:20Wait so if I use Uniswap and buy a token that turns out to be a scam… I can’t sue the platform? But if I use Coinbase and they get hacked, I can sue them? That feels backwards.
Also I think I misread the part about bailment - does that mean if someone ‘holds’ my ETH for me, I can’t sue them for not giving it back? Like… at all?
Brian Collett
November 4, 2025 AT 07:39Biggest takeaway? If you’re not self-custodied, you’re not an owner - you’re a customer. And customers get wiped out in bankruptcies.
Also, the DOJ seizing crypto tied to North Korea? That’s the only part of this that actually works. Criminal law doesn’t care about ‘property vs security’ - it just wants the money back.
Why can’t all crypto cases be criminal? Too messy? Or just too profitable for the banks?
Allison Andrews
November 5, 2025 AT 11:26It’s fascinating how the law is being forced to evolve without a blueprint. Property law was built for tangible things - land, livestock, paintings. Now we’re trying to shoehorn a digital ledger into centuries-old frameworks.
Is it property? Maybe. But is it *the same kind* of property? That’s the real question. And no court has answered it yet - they’re just patching holes with precedent.
Feels like we’re building a house while the storm’s still coming.