Ownership and Digital Assets: A Landmark Case in Crypto Disputes

As digital assets continue to reshape the financial and legal landscape, courts are increasingly addressing the complexities of cryptocurrency ownership and control. The recent case of Howells v Newport City Council [2025] EWHC 22 (Ch) highlights how traditional property laws still play a significant role, even in disputes involving emerging technologies like Bitcoin and blockchain.

The Case at a Glance

In 2009, Mr. Howells mined 8,000 Bitcoin, storing the private key on a hard drive. This hard drive was later mistakenly discarded at a landfill site in Newport. Realising his loss, Mr. Howells sought permission from Newport City Council to excavate the site, but the request was denied due to environmental concerns. He subsequently launched legal proceedings, seeking either recovery of the hard drive or compensation equivalent to the Bitcoin’s current value—over £600 million.

Key Legal Issues in the Case

1. Does Bitcoin Have a Physical Location?

   • The court reaffirmed that Bitcoin is not a tangible asset. Unlike cash or property, it exists purely as a digital construct and is considered a “third category” of personal property—distinct from both physical and intangible assets.

   • The judge ruled that the hard drive itself did not store the Bitcoin, only a digital record of the private key, meaning access to the Bitcoin was theoretically possible if another copy of the key existed.

2. Ownership of the Hard Drive

   • The council successfully argued that, under the Control of Pollution Act 1974, any item deposited at a landfill site belongs to the disposal authority.

   • Mr. Howells’ claim for ownership of the hard drive was dismissed, as the legal transfer of property had already taken place when it was discarded.

3. Constructive Trust and Unconscionability

   • Mr. Howells argued that the council was holding the hard drive under a constructive trust, meaning they had an obligation to return it based on fairness.

   • The court rejected this claim, stating that the council was not retaining the hard drive for profit but due to environmental and logistical constraints. There was no unconscionable conduct on their part.

Implications for Digital Asset Disputes

This case underscores several important takeaways for commercial law and digital asset ownership:

• Traditional property laws still apply. While cryptocurrencies and NFTs are unique in nature, ownership disputes will often be assessed using well-established legal principles.

• Possession and control are critical. Losing access to private keys can result in irreversible losses, as demonstrated in this case.

• Environmental and regulatory concerns matter. Even if an asset has immense value, courts may prioritize public interest considerations over individual financial losses.

Conclusion: The Future of Digital Asset Litigation

For lawyers and businesses dealing with cryptocurrency disputes, this case serves as a cautionary tale about the importance of safeguarding digital assets and the potential legal hurdles in recovering them. As the UK legal system continues to adapt to the realities of blockchain technology, this decision reinforces the need for clear regulations on ownership, access, and legal remedies for digital asset losses.

If your business is navigating the complexities of crypto-related disputes, property law, or asset recovery, seeking legal expertise is crucial to mitigating risks and ensuring compliance with evolving regulations.

Need legal advice on? Contact us to stay ahead of 2025’s evolving competition law landscape.

David Orchard

+44 743 789 4552