Crypto wallet tells court it will ‘be there to serve’ when the Canadian dollar ‘becomes worthless’
Crypto wallet provider Nunchuk tweeted that it had been ordered to release information and freeze assets but cannot comply with the court order as it is unable to do so "by design."
A Canadian court issued a Mareva Injunction against crypto wallet provider Nunchuk, among other intermediaries and individuals, ordering it to disclose user information and freeze any assets related to the Freedom Convoy 2022 protests.
This is the first time the injunction has been used against cryptocurrency.
The company tweeted on February 19th that it had rejected the court’s order as it is unable to comply with the order and the only user data it stores are email addresses.
“We do not hold any keys. Therefore, we cannot freeze our users’ assets. We cannot prevent them from being moved. We do not have knowledge of the existence, nature, value and location of our users’ assets. This is by design.”
Nunchuk responded in an email to the court, adding that it served as a software provider for its users and not a financial intermediary and thus had no control over their assets.
“When the Canadian dollar becomes worthless, we will be here to serve you, too.”
The company separately tweeted that it would now prioritize a login option without using email on its roadmap.
Freedom Convoy and crypto
Last week, the Canadian government expanded its AML rules to cover crypto and crowdfunding in a bid to crackdown on the Freedom Convoy 2022 protestors.
The movement was being supported financially via crowdfunding platforms initially and then through crypto donations, once crowdfunding became impossible.
The Canadian court’s Mareva Injunction came after a group of Ottawa residents won a private class action suit to freeze crypto wallets funding the Freedom Convoy 2022 movement.
However, the government’s efforts to crack down on the crypto transactions supporting the movement have not been very fruitful so far despite freezing the bank accounts of the movement’s known leaders.
Governments’ disconnect with technology
States are trying to crack down on crypto that is being used in financial crimes, however, there is a clear disconnect between these governments and new technology like blockchain.
Crypto allows unprecedented levels of financial control and direct trade between individuals, meaning as long as the coins are held in a private wallet they are completely secure and only accessible by the owner.
The Canadian court does not fully understand how crypto wallets function so it issued an order that was bound to fail. Many governments are trying to exert control over crypto activity without understanding that the technology is inherently averse to concentrated control.
El Salvador is looking to adopt bitcoin as its main currency, while other countries like China and Iran have outright bans on all crypto activity. Meanwhile, some governments are getting ready to, or have already begun work on, regulating cryptocurrencies.
US President Joe Biden is expected to issue an executive order this week directing various government agencies to begin comprehensive work on understanding the risks virtual currencies pose to financial stability. They will also be tasked with formulating a regulatory framework.