Lawyers in Dubai for Crypto Custody Disputes

A customer can see a crypto balance in an account but cannot withdraw it. The platform may refer to a compliance review, a technical incident or a shortage of assets. Each explanation raises different questions about the customer’s rights and the steps needed to protect them.

Lawyers in Dubai handling crypto custody disputes should examine the legal relationship behind the account. The analysis includes who owns the assets, who controls them, which service was provided and which rules apply to the provider. A displayed balance and a blockchain transaction can both be important evidence, but neither alone explains every contractual or ownership issue.

Identify the service that created the dispute

Review the agreement and the product used when the assets were transferred. Ordinary custody may differ from lending, staking, collateral or an investment product. The same application can offer several services through different entities and on different terms.

Record whether the customer expected assets to be held for safekeeping or authorised another activity. Identify the version of the terms accepted and any later amendment. A general marketing statement should be compared with the specific account and service documents.

The cause of the restriction also matters. A request for further identification, a disputed transfer instruction and a reported security breach require different evidence. Obtain a written explanation rather than relying only on an automated account notification.

Establish the responsible legal entity and regulator

Find the company’s legal name in the custody agreement, statements and payment records. Check whether it matches the brand and the entity appearing on the relevant official register. Group membership does not by itself establish that every company in the group owes the same obligation.

VARA regulates relevant virtual asset activities in Dubai outside the DIFC. The DIFC and ADGM have separate financial regulatory systems under the DFSA and FSRA respectively. The service, entity and location must be assessed before alleging a breach of a particular regulator’s rules.

An authorisation should be checked for the activity concerned. Permission to provide one service should not be treated as confirmation that the provider can lawfully carry out every product available through its website.

A review of VARA’s public register on 27 October 2026 identified six active VASPs with Custody Services listed among their licensed activities: Ceffu Custody, Bitpanda Custody, BitGo Custody, Zand Bank, Hex Trust and Komainu. This is a count of the published register entries, not a figure for custody disputes or guaranteed recovery; activity permissions and status should be rechecked for the provider concerned.

Understand the custody rules on segregation

Within VARA’s Custody Services Rulebook, Rule III.B provides that assets held in custody are not the provider’s assets or depository liabilities. It generally requires each client’s assets to be held in separate wallets and prohibits rehypothecation of assets held under the custody service, even with client consent.

The current rulebook must be read as a whole. Its provisions on Collateral Wallet Services contain a limited exception to the separate client wallet requirement for the designated wallets used for that service. They also preserve the provider’s responsibility for safekeeping. A pooled arrangement therefore needs assessment against the exact service and applicable exception.

The practical enquiry is whether the records, wallet arrangements and actual use of assets comply with the governing requirements. A contractual description should be tested against what the provider did.

Reconstruct the customer’s entitlement

Create a schedule of deposits, purchases, transfers, withdrawals, rewards and charges. Record the asset, quantity, network and relevant transaction reference. Compare the account ledger with the available blockchain history and identify unexplained differences.

Keep the original statements and exports. If the provider changes the displayed balance, record the date and explanation. Where a claim includes a cash value, preserve the evidence supporting the proposed valuation date and price rather than choosing a favourable market peak without a legal basis.

For example, a transfer to a wallet may establish that assets moved to an address. Further evidence may be needed to connect that address to the contractual provider and show why the transfer occurred. Technical tracing and legal analysis answer related but different questions.

Distinguish control of a key from ownership

Disputes can arise within businesses and families as well as with regulated custodians. An employee may have created a company wallet, or several founders may share the authority needed to approve a transfer.

Identify who funded the wallet, the purpose for which assets were held and the agreed limits on each person’s authority. Company resolutions, accounting entries and contemporaneous communications can help explain the arrangement. Technical ability to sign a transfer does not by itself establish legal entitlement to the assets.

Preserve the relevant access and approval records without disclosing private keys or recovery phrases in ordinary correspondence. Where access needs to change during a dispute, obtain advice on the authority and evidence implications before taking action that could prejudice another person’s rights.

Respond to a withdrawal restriction with a focused request

Ask the provider to identify the affected assets, the reason for the restriction and the contractual or legal basis relied upon. Supply legitimate information requests through verified channels and retain evidence of what was provided.

A compliance restriction may have a lawful basis, and some information may not be disclosable. That does not remove the need to assess the scope and duration of the restriction against the relevant duties. Separate what the provider has confirmed from what the customer suspects.

Keep a record of the requested withdrawal, acknowledgments, response dates and subsequent explanations. If a complaint procedure applies, follow it without assuming that it suspends every court or contractual deadline.

Investigate a security incident without losing evidence

If the provider reports a hack, obtain the incident notice and any explanation of the assets affected. Identify when the loss occurred, which instructions were processed and what the provider says about recovery or insurance.

Preserve login alerts, account messages and transaction records. A blockchain specialist may help explain the flow of assets, but the report should state its assumptions and limitations. Attribution to a person usually requires more than identifying a wallet address.

Federal Decree Law No. 35 of 2022 recognises electronic evidence within the civil evidence framework. Original records, their source and their integrity remain important when presenting account data or communications in a dispute.

Choose a remedy that matches the legal right

A demand for return of identifiable assets differs from a claim for compensation for breach of a custody duty. A dispute about an unauthorised transaction may raise questions about instructions, security procedures and responsibility for the loss.

Examine the governing law and dispute clause, including any arbitration agreement. Identify where the defendant and relevant assets are located. Where urgent preservation is justified, counsel should assess the competent forum, supporting evidence and available relief.

Article 247 of the federal Civil Procedure Code provides for prejudgment attachment in specified circumstances. It does not make every allegation of a missing crypto balance sufficient for an order, and the procedural requirements must be satisfied.

Assess insolvency and competing claims

A withdrawal freeze does not necessarily mean that formal insolvency proceedings have started. Obtain the official notice, identify the entity concerned and determine the governing insolvency regime.

Federal Decree Law No. 51 of 2023 applies to entities within its scope. DIFC, ADGM and foreign insolvency proceedings may operate differently. The status of client assets, any property claim, a proof of debt and restrictions on individual enforcement must be examined in the relevant process.

Segregation records can be important, but should not be treated as a guarantee of full recovery. A shortfall, disputed ownership or conflicting claims may still require investigation and a decision by the competent authority or court.

Read insurance and settlement proposals carefully

A statement that the provider is insured does not explain whether a particular customer’s loss is covered. Ask for the relevant policy information, the insured entity, the covered event and the limits or exclusions that may affect a claim.

The customer may also receive an offer to accept replacement tokens, a reduced balance or staged repayments. Compare the proposed benefit with the rights being released and the conditions for payment. Clarify whether accepting one undisputed withdrawal affects the remaining claim.

Any settlement should identify the asset or currency, payment schedule, transfer costs and default consequences. If payment depends on another company’s cooperation, establish that company’s role and obligation before signing.

Preparing a consultation with lawyers in Dubai

Provide the agreement, account records, transaction schedule, relevant communications and any incident or insolvency notice. Explain whether the objective is access to assets, compensation, a response to an allegation or clarification of shared ownership.

Ask which legal and technical questions remain unresolved and who will address them. The engagement should distinguish regulatory work, court or arbitration proceedings and any overseas enforcement. Clear scope and fees are particularly useful where several jurisdictions or specialists are involved.

About the author

Dr. Hassan Elhais is a Senior Legal Consultant at Amal Al Rashedi Lawyers and Legal Consultants in Dubai. He advises on UAE family, civil, commercial and criminal law matters.

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