Crypto group protests court order to freeze trucker convoy accounts — says it ‘cannot’ freeze money or prevent it from being moved

A cryptocurrency group whose software was used to funnel bitcoin to the “freedom convoy” in Ottawa says it cannot fulfill an Ontario judge’s order to freeze accounts associated with the protest, testing the legal system’s ability to curtail the flow of digital currency.

On Friday, after Ontario Superior Court Justice Calum MacLeod granted an injunction to a private citizens’ effort to stop funding for the protest — including more than $1 million in bitcoin — crypto exchange Nunchuck.io said that it “cannot” freeze its users money or prevent it from being moved because it does not have access to their digital wallets.

“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,” the group wrote in a tweetshowing a screenshot of an emailed response they claim to have sent to the court.

The group’s defiant response was shared thousands of times on social media, including by prominent pundits like American conservative commentator Glenn Beck.

According to one protest organizer80 per cent of crypto funds raised for the convoy are held in Nunchuck wallets.

But despite the court’s orders to halt those transactions, independent experts say the crypto group appears to be right — Nunchuck can’t keep its users from exchanging cryptocurrency.

Nunchuck.io — which boasts “the safest self-custody solution for your bitcoin” on its website — designs software that allows people to store their cryptocurrency in a digital wallet they download through the group’s app.

When that wallet is downloaded onto the users’ personal device, Nunchuck cannot access what’s inside, says Andreas Park, a professor of finance at the University of Toronto’s Rotman School of Management.

“The same way that Google can’t just reach into your computer and uninstall Chrome,” said Park.

“(The court order) is a bit like writing to Bellroy, telling them to remotely apply a tool so that the button doesn’t open and wallet owners can’t take out their cash,” said Park, referring to the Australian accessories brand.

As part of the injunction issued Thursday, the Ontario Superior Court ordered several financial institutions, fundraising platforms and digital asset platforms to halt all financial transactions from the bank accounts and digital wallets belonging to protest organizers.

The order applied to TD Bank, GoFundMe, GiveSendGo and nine cryptocurrency groups including Bitbuy, TallyCoin, Shakepay and Nunchuck.

A spokesperson for Bitbuy, a cryptocurrency exchange service, told the Star in an emailed statement they will comply with the court’s order.

The reason Bitbuy can comply with the injunction is because it’s an exchange service — a place where users go to buy, sell and hold cryptocurrency, Park explained. Since users exchange crypto on BitBuy’s website, the company can intercept assets and freeze accounts by monitoring users’ activity.

“This is where court orders have some bite, because with crypto exchanges there’s a third party that has custody over your assets,” Park said.

Since Nunchuck is not an exchange and does not oversee cryptocurrency transactions — rather, it allows users to download software to hold their assets on their personal devices — it cannot regulate the flow of digital currency.

“They would have no concept of the location, nature or identity of users, and if this was actually part of a court order served upon them, it would be inapplicable to them since they could not technically comply with those aspects,” said Christine Duhaime , a financial crime expert with Fusion Intelligence.

The Ontario Superior Court did not respond to the Star’s request for comment Tuesday morning.

In an email to the court on Friday, following the injunction, Nunchuck wrote: “Please look up how self custody and private keys work. When the Canadian dollar becomes worthless, we will be here to serve you, too.”

A Nunchuck spokesperson told the Star it has not been heard from the court since, and declined to comment further.

Lawyer Paul Champ, acting on behalf of a group of Ottawa residents that launched a class-action lawsuit against the protest organizers, said the plaintiffs are “very aware of (Nunchuck’s) online statements” but declined to comment further.

The case returns to court on Monday.