Bitcoin: He Accuses His Wife of Diverting 2,323 BTC Using His Recovery Phrase

A divorce and 2,323 disputed bitcoins. Ping Fai Yuen accuses his estranged wife of diverting his cryptocurrencies after obtaining his recovery phrase without his knowledge. In a ruling on March 10, the High Court of London assesses his chances of success as very high, while dismissing one of the legal grounds invoked. This procedural decision does not definitively resolve his wife's liability.

Key Points

• The dispute concerns 2,323.28 BTC, transferred without the owner's consent in August 2023.
• The husband relies on recorded conversations and material seized by the police.
• The judge dismisses a civil action reserved for tangible property but allows other remedies.
• He also refuses to impose a security for the legal costs of the wife on the applicant.

Bitcoins Transferred After Alleged Compromise of a Recovery Phrase

According to the ruling Ping Fai Yuen v. Fun Yung Li and another defendant, the bitcoins were accessible from a Trezor hardware wallet protected by a six-digit code. However, his 24-word recovery phrase allowed access to the funds on another device.

The applicant claims that his wife obtained these words by secretly recording him, while a divorce was being contemplated. Alerted by his eldest daughter, he had himself installed audio recorders. He presents conversations from July 29 and 31, 2023, particularly concerning the transfers, their traceability, and the difficulties in converting the funds.

The bitcoins left their address on August 2, 2023, before ending up on 71 addresses! At the time of the ruling, they had not moved since December 21, 2023. Their value had fluctuated between £160 million and £180 million (approximately €192 million to €216 million) during the proceedings.

After discovering the transfers, the husband assaulted his wife. He was convicted in September 2024 after pleading guilty. Meanwhile, the police arrested the wife in December 2023 and seized ten hardware wallets as well as five recovery phrases. According to the ruling, she had not taken any further action pending new evidence.

The Court Maintains Several Remedies but Dismisses the Conversion Action

The dispute raises a legal difficulty: recognizing Bitcoin as property does not automatically make all actions protecting physical objects applicable.

Judge Cotter thus dismisses the request based on conversion, a civil action in English law sanctioning certain infringements of tangible property. He considers that existing case law prevents its extension to Bitcoin, despite the British law on digital assets from 2025.

However, the case continues on other grounds, including unjust enrichment, breach of confidentiality, and restitution of assets. The preservation order remains in place: it imposes legal obligations without constituting a technical lock on the blockchain.

The magistrate also rejects the request for security for legal costs, initially set at nearly £679,000. He deems the estimates excessive and considers that the husband presents a very high probability of success, given the available evidence.

This assessment remains provisional. The defense contests the accuracy of the transcripts and mentions other possible responsible parties. The case illustrates two concrete issues: the recovery phrase can bypass the protection of a hardware wallet, and ownership of a digital asset must be accompanied by appropriate remedies to allow for its restitution. The battle for custody of his BTC is not over.

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