Introduction

As cryptocurrency becomes a more common vehicle for storing and transferring wealth, Australian regulators and courts have increasingly had to grapple with how traditional asset-preservation mechanisms, such as freezing orders, apply to digital assets.

Recent decisions of the Federal Court have provided insight into how ASIC and court-appointed receivers can locate, preserve, and realise cryptocurrency in the context of enforcement and investor-protection proceedings.

ASIC’s Approach to Freezing Orders Over Digital Assets

When ASIC obtains freezing orders, they typically extend to any assets, wherever located, whether tangible or intangible, including digital assets and cryptocurrency wallets. Once such an order is made, the respondent is immediately prohibited from dealing with, transferring, or otherwise disposing of those assets without leave of the Court or the receivers’ consent.

It is becoming increasingly common that  ASIC’s investigators are  tracing crypto transactions through both domestic and offshore platforms (including popular platforms like Revolut and Binance) to identify holdings in coins. The orders empower ASIC and the receivers to require those exchanges to provide records, enabling identification and control of the frozen wallets

How Receivers Recover and Manage Cryptocurrency

Under the terms of the Court’s directions, receivers are commonly authorised to act on behalf of the defendants to secure and, if necessary, liquidate digital assets. The orders authorise the receivers to:

1. Instruct the cryptocurrency exchange to transfer the digital assets from the respondent’s personal wallet to an account under the receivers’ control;
2. Exercise their power of sale in respect of that cryptocurrency; and
3. Deposit the proceeds of sale into a designated receivership account for distribution in accordance with the Court’s supervision.

The exchange itself is generally ordered to act on the receivers’ written instruction within a specified period (usually 60 days), ensuring there is an enforceable mechanism to compel compliance even where private keys or credentials are not voluntarily provided.

Implications for Crypto Holders and Advisors

For individuals holding cryptocurrency, the key takeaway is that digital assets are not beyond the reach of Australian freezing orders. ASIC, through its statutory powers under the Australian Securities and Investments Commission Act 2001 (Cth), can compel production of account records and direct receivers to secure the assets.

Any person or entity holding cryptocurrency should be aware that:

1. Even offshore accounts or exchanges are subject to disclosure and potential restraint if linked to Australian proceedings;
2. Failing to disclose crypto holdings in response to freezing orders may expose individuals to findings of contempt; and
3. Once a receiver is appointed, any dealing with cryptocurrency (including conversion or withdrawal) without their consent may breach both the court orders and the equitable duties arising from the receivership.

Conclusion

The Court’s evolving jurisprudence makes clear that cryptocurrency enjoys no immunity from regulatory oversight. ASIC and receivers are now equipped with both procedural tools and judicial endorsement to trace, secure, and liquidate digital assets just as they would with traditional property.

For individuals and entities holding funds in crypto wallets, transparency and compliance are essential. Legal practitioners should ensure clients understand the breadth of freezing orders and the real-world consequences of non-disclosure in an increasingly digital financial landscape.

Russell Hall 

Associate