Territorial Jurisdiction Regarding Blockchain

In the case NN re. jurisdiction and asset recovery, Division VI of the National Court of Appeals in Criminal and Correctional Matters upheld the national court’s declination of jurisdiction in favor of the San Martin Judicial District in a cryptocurrency fraud investigation.

The case arose from a scheme in which unidentified individuals allegedly gained unauthorized access to an API linked to the victim’s account on a crypto exchange platform. According to the investigation, the attackers reconfigured the API to automatically execute thousands of transactions involving low-liquidity cryptoassets, gradually depleting the victim’s holdings and resulting in significant economic losses.

During the investigation, authorities identified that the accounts benefiting from the transactions were registered in the names of Russian nationals and had operated from IP addresses geolocated in Russia. It was also established that the victim’s account had been accessed from locations within the Province of Buenos Aires and that the victim resided in Bella Vista, within the jurisdiction of the San Martin courts.

In addressing the jurisdictional dispute, the court emphasized that the bitcoins involved were stored on a blockchain, a distributed database replicated across multiple nodes worldwide. In that context, it noted that cryptoassets are not hosted on a specific server and therefore cannot be assigned a particular geographic location.

The Court of Appeals thus concluded that none of the acts relevant to the alleged scheme had taken place within the City of Buenos Aires. It further rejected the argument that the prior transfer of funds from that jurisdiction was sufficient to establish jurisdiction. The court also recalled that, in so-called distance crimes, an offense may be deemed to have been committed both where the conduct took place and where its effects were had. Accordingly, it held that the investigation should continue before the San Martin courts, which had first assumed jurisdiction over the matter.

This case provides relevant guidance for determining territorial jurisdiction in matters involving cryptoassets, by acknowledging that the decentralized nature of blockchain technology makes it difficult to associate digital assets with a specific geographic location.