To some, the name Tamara Lich invokes visions of semi-trailer trucks blaring their horns and large crowds of protestors chanting, “Freedom!”
To others, especially those in crypto, Lich is a defendant in a class-action lawsuit that represents a defining moment in Canada’s crypto history: the first time private citizens successfully petitioned a judge to grant a Mareva injunction and thereby “freeze” cryptocurrency wallets (although so far, the injunction seems to have been only partially successful).
So what’s a Mareva injunction? The name “Mareva” comes from the original 1975 English case: Mareva Compania Naviera SA v. International Bulkcarriers SA. In Canada (which has a separate and independent legal system from the United Kingdom), if a purported fraud victim, or plaintiff, sues an alleged fraudster, or defendant, the plaintiff can request the court proactively freeze the defendant’s assets before the trial. This prevents the defendant from disposing of the assets to avoid paying the plaintiff in the event of an unfavorable civil judgment.
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Lich became a Mareva defendant, and the face of the so-called Canada “Freedom Convoy,” due to her role in organizing and raising funds for the month-long protests that sought to pressure politicians to remove Canada’s COVID-19 mandates.
She didn’t act alone, but as one of the more popular figures (if not the most popular) among the protests’ organizers, she became the face of the protest movement. Embittered downtown Ottawa residents (where the protests took place from Jan. 22 to Feb. 23, 2022) named her (and 79 other defendants) in a class-action lawsuit seeking over C$306 million (currently US$228 million) in “compensation for damages inflicted upon those who live, carry on business, or work in the [Ottawa] downtown core.”
Court documents show Lich was “the organizer of the Freedom Convoy’s fundraiser on the crowdsourced fundraising platforms GoFundMe and GiveSendGo.” According to The National Post, a Canadian newspaper, the convoy raised over $24 million, most of which was returned to donors after GoFundMe raised concerns about the nature of the protests. GiveSendGo followed suit after being forced to halt the campaign via a court order initiated by the Ontario provincial government.
During the final days of the demonstrations, Canadian Prime Minister Justin Trudeau invoked the Emergencies Act for the first time in the country’s history. This gave the federal government additional powers to help quell the protests, such as the ability to freeze bank accounts linked to the Freedom Convoy and its supporters.
Then the class action plaintiffs came across “considerable evidence about the plans to distribute the funds as soon as possible, in part to benefit the individual protestors, but also, to avoid any enforcement activity,” court documents state. That’s when the Mareva injunction was requested and granted.
The injunction seems to have been partially successful, and a combination of crypto and cash totaling over $6 million was eventually transferred to a third-party escrow account and frozen until the conclusion of the class action, which is still ongoing as of this publication.
The key word there is "partially." According to an article by the Canadian Broadcasting Corporation (CBC), police only managed to seize about 6 BTC out of the 20 BTC raised. Nevertheless, authorities seem confident they can track down and seize the remaining bitcoin, which seems to have been moved to "hundreds of smaller wallets."
According to the article, the Royal Canadian Mounted Police (RCMP) claims "it has the capability to seize and recover digital currency assets, pointing to past cases where the Crown successfully prosecuted crypto criminals."
One key lesson Lich and her counterparts have taught us (albeit inadvertently) is that crypto is no longer some obscure asset immune to regulatory enforcement. The crypto community was reminded of this when the U.S. Treasury Department banned American citizens from using decentralized crypto-mixing service Tornado Cash in August.
The second lesson is that, at least in Canada, not only can courts seize crypto as part of regulatory enforcement, but also as part of private litigation.
UPDATE (Dec. 9, 21:30 UTC): The court granted the Mareva injunction but the story has been clarified to show that it was only successful in seizing a portion of the money. In addition, the authorities seized money, rather than freezing accounts. Corresponding changes have been made throughout the story, including the headline, sub headline and concluding two paragraphs.
*All amounts are in Canadian dollars (CAD)
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