Bermuda’s Court of Appeal has delivered a landmark ruling on the treatment of digital assets, finding that cryptocurrency held by Bittrex Global does not belong to the company and cannot be distributed to its shareholders.

The judgment, handed down on March 10, clarifies how client assets must be handled under Bermuda’s Digital Asset Business Act and could have implications for digital asset businesses operating in Bermuda and around the world.

At the centre of the case was approximately $63 million in unclaimed digital assets. The exchange’s sole shareholder, Bittrex Global Inc, argued that these funds could be treated as a surplus and paid out under the company’s terms and conditions.

The Court of Appeal rejected that argument, ruling that customer assets held in hosted wallets stay the property of clients and must be returned to them — or, if unclaimed, dealt with according to Bermuda law rather than paid out as a windfall.

In doing so, the court made clear that contractual terms cannot override lawful protections. It stated: “The whole point of legislation whose express purpose is to regulate firms so as to protect clients’ interests … was to restrict the firm’s ability to freely contract.”

The ruling reinforces parts of DABA, including requirements for segregation and safeguarding of client assets. The court stressed that these protections are fundamental and cannot be circumvented by drafting.

Drawing on established British case law, the court also pointed out the risks of allowing firms to determine which kinds of protections customers get, and how many. It warned that without safeguards, “the greater the level of incompetence (or misconduct) … the lesser the protection for clients”.

The decision follows the collapse of Bittrex Global, which entered liquidation in 2024after shutting down. A proof-of-debt process turned up hundreds of thousands of account holders, many with relatively small balances.

Legal observers say the judgment offers clarity on consumer protections to Bermuda’s 45 licensed digital asset businesses, which include large crypto exchanges like Coinbase, Kraken and CashApp, to a handful of smaller businesses.

The ruling comes after a separate legal challenge by Bittrex Global’s owners and former directors against the Bermuda Monetary Authority was dismissed by the Supreme Court, which found that the company — rather than its shareholders — had been afforded due process under DABA.