Article

Withers successfully defends clients in high-profile bitcoin-mining dispute

22 January 2025 | Applicable law: England and Wales | 3 minute read

Withers' litigation team is pleased to report a successful outcome for our clients in the case of: Yermek Alimov v (1) Abdumalik Mirakhmedov (2) Rashit Makhat (3) Andrey Kim (4) Genesis Digital Assets Limited (a company incorporated in Cyprus) [2024] EWHC 3322 (Comm)

The Withers team of Roberto Moruzzi, Andrew Fremlin-Key, Daniel Gore and Daisy Wetherill acted for the First Defendant and the Third Defendant in these proceedings, instructing Edward Cumming KC of XXIV Old Buildings. 

Proceedings

The dispute centred around bitcoin mining projects located in Kazakhstan.  The First, Second and Third Defendants are shareholders in one of the leading bitcoin-mining companies in the world, the Fourth Defendant, Genesis Digital Assets Limited.  

The Claimant issued proceedings in May 2023 seeking an alleged entitlement to a 35% interest of the First, Second and Third Defendant's interest in GDA.  He also claimed historic payments of the bitcoin generated by GDA as well as payments for the provision of electricity in Kazakhstan.  The technical legal causes of action were all advanced under the Law of Kazakhstan in recognition of the international standard conflict of law regulations.  

The Claimant purported to serve the First Defendant with the Claim Form and Particulars of Claim at several addresses in England in September 2023.  The Claimant then obtained permission on a without notice application in October 2023 to serve the Claim Form and Particulars of Claim out of the jurisdiction on all of the Defendants (in the UAE and Cyprus).   

The Defendants all issued applications to challenge the jurisdiction of the English Courts on forum non conveniens grounds and also to set aside the Court's Order following the without notice application, including for reasons of material non-disclosure.  We also required expert evidence on the local law in Kazakhstan and the UAE (Dubai).  

Decision 

The hearing took place across two days in October 2024 before Mr Simon Birt KC.  The Defendants were successful and the Judge decided that Kazakhstan was an available forum and clearly and distinctly the more appropriate for the claim to be heard.  The Judge also ordered the previous Court Order to be set aside.  

In particular, the Judge determined that any connection with England in these proceedings was 'relatively slight compared to the very substantial connections with Kazakhstan' and agreed with the First and Third Defendants that there were 'numerous and significant' connections to Kazakhstan, including the applicable law, the connection of the individual parties to Kazakhstan, the events almost all taking place in Kazakhstan, a large number of substantial assets being in Kazakhstan and the location and language of witnesses and documents being Russian or Kazakhstani.  The Judge also analysed and dismissed the Claimant's arguments over a risk of a substantial injustice if the proceedings were transferred to Kazakhstan, including issues around the interpretation of foreign law and allegations of witness intimidation.

The Judge also made it clear that he could not conduct a 'mini-trial' and so could not make a decision on some significant factual disputes.  While he said he found parts of Mr Alimov's arguments 'plausible', he also commented that he found 'certain apparent difficulties or oddities about the Claimant’s case'.  

The Defendants also succeeded on their applications to set aside the Order obtained by Mr Alimov on a without notice basis, allowing him to serve his claim on the Defendants out of the jurisdiction (in the UAE).  With regards to Mr Alimov's without notice application and hearing, and his duty to provide a full and fair presentation to the Court, the Judge found that he had displayed a 'highly cavalier attitude' towards this important duty and that there was 'a clear failure to make full and frank disclosure of material facts', concluding that there had been a 'substantial breach' of this obligation on his part which had led to the granting of the Order.  The Order for service outside the jurisdiction was therefore set aside on this and other grounds.

This case is a great demonstration of our strength in representing clients from the CIS region and advising on digital asset disputes, two of our firm's specialisms.  

The full Judgment can be found here.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.

Share

Related experience

As a full-service law firm, we are able to provide advice and information about a wide range of other issues. Here are some related areas.

Join the club

We have lots more news and information that you'll find informative and useful. Let us know what you're interested in and we'll keep you up to date on the issues that matter to you.