Updated December 26, 2019 – On November 1, 2019, the High Court of Hong Kong reversed its decision and agreed to order a mareva injunction sought by Nico Constantijn Samara against CitiBank and Gatecoin digital currency exchange.
This is one of those stories that could only happen in the Bitcoin world.
In June 2017, a guy named Nico Constantijn Samara, from the Netherlands, who owned over 1,000 Bitcoin worth US$3.1 million, travelled to Hong Kong to sell them to a stranger. When he arrived, he discovered that under Hong Kong banking law, non-residents cannot open accounts. So he allegedly agreed to transfer his Bitcoin to a stranger, who would use an exchange to cash out the Bitcoin, and because he could not obtain a bank account, he would allow the proceeds from the Bitcoin sales to go to the stranger’s bank account at Citi.
The stranger’s name was Stive Jean-Paul Dan, aka Steve jean-Paul Dan, aka Stive Jean Paul Dan, aka Steve Jean Paul Dan.
According to Court documents, Mr. Samara transferred 1,000 Bitcoin away, to a wallet address at Gatecoin, where Mr. Dan had an account. And Mr. Samara started selling some of the Bitcoin and cashed out, from time to time, from the exchange to his Citi bank account.
According to Court documents, the stranger gave Mr. Samara access to his Citi bank account online so that he could transfer the proceeds to Germany, where Mr. Samara had a bank account.
Allegedly, a total of $520,000 was transferred from the exchange to Citibank and accessed by Mr. Samara from Hong Kong, where he transferred it to Germany. But Mr. Samara had transferred $3,118,139 in Bitcoin to Mr. Dan. Soon after, his access to the Citibank account was allegedly removed and he was out $2.5 million, and shortly thereafter, he was unable to reach Mr. Dan.
Mr. Samara asked the exchange, Gatecoin, to place a hold on the Bitcoin wallet of Mr. Dan, which they did without a Court order. They informed Mr. Samara that Mr. Dan had only 40 Bitcoin left. A month after that blockage, Mr. Dan tried to withdraw funds at Gatecoin, which Gatecoin informed Mr. Samara of.
Mr. Samara applied to the Hong Kong Court ex parte, for a mareva injunction successfully over the bank account and Bitcoin wallet.
Mr. Dan applied to have the mareva injunction set aside on the basis that there was no basis for it to have been done ex parte.
The Hong Kong Court held that there was no reason for Mr. Samara to have applied ex parte because Citibank and Gatecoin had already, without Court orders, frozen the accounts and the lack of movement for 3 months on a mareva made it non-urgent. Mr. Samara’s delayed for three months because his law firm appears to have taken that long to work on it, according to the affidavit evidence.
The Hong Kong Court accepted that a mareva injunction is a nuclear weapon in law and there must be objective evidence that ties the order to the person for the Court to agree to launch a nuclear weapon against a person. It will not be done on mere allegations, unsupported by real evidence. At the hearing, the defendant denied all the allegations.
A mareva injunction requires an undertaking as to damages by the applicant (for the harm they cause by that nuclear weapon if they are later determined to have been wrong). Mr. Samara was asked to provide an undertaking to continue the mareva injunction, but refused to show his financials. As a result, the mareva was removed.
This case is additionally odd because while a mareva injunction is a nuclear weapon, this one was not – it was merely over two accounts which held funds owned by Mr. Samara.
We don’t know what happened to Mr. Samara’s $3M in Bitcoin.