D’Aloia v Persons Unknown: When the Methodology Fails, Not the Trace

Core idea

The claimant’s expert purported to apply FIFO to trace USDT through a series of addresses to an exchange account. Under cross-examination the UK High Court found that a subjective approach had actually been applied instead, and described the expert’s evidence as “chaotic and, ultimately, contradictory.” The claim failed. Not because the funds had not been traced, but because the method used to trace them could not withstand judicial scrutiny. The court held the claimant had not proved, on the balance of probabilities, that any of his funds reached the defendant’s wallet.

Citation as given by the source and not independently verified here. Check it before it goes near a filing.

When to use

As the answer to “does it really matter which commingling convention I use, as long as the trace is right?” It does. And as the reference point for two rules that now govern UK crypto tracing evidence.

Components

Two things the judgment establishes, both of which generalise well beyond the UK:

• Consistency is not optional. Naming a convention and then departing from it transaction by transaction is worse than picking a less favourable convention and applying it throughout. Selective application is fatal, because it means no reviewer can reproduce the result. A convention has to be applied consistently, transparently, and in a form the court and an opposing expert can audit arithmetically.
• Black box evidence does not survive. The court identified the opacity of proprietary analytics as fundamentally problematic: evidence that cannot be explained, replicated, or independently verified is evidence that cannot properly be tested. This is the civil-court counterpart to the US Daubert line of challenge.

Example

The failure mode in one sentence: the chef claimed to be following a specific recipe, but when the kitchen was inspected the dish on the pass bore no consistent relationship to any recipe that could be written down, reproduced, or verified. The court sent it back.

Related

Asset-Tracing Methodologies for Commingled Funds (PIFO, LIBR, LIFO, FIFO, Pari Passu, Rolling Charge) · Six Characteristics of a Court-Credible Forensic Report · Commercial Analytics & the Daubert Challenge · Glass Box Attribution · Expert Evidence Rules: USA, UK, Australia · Reviewing an Opposing Forensic Report · Recovery Jurisdictions and Crypto Case Law · Separate On-Chain Fact from Analytical Inference