In January 2026, the Court of Appeal handed down its judgment in R v Lakeman, holding that “gold pieces”, a form of virtual wealth within the role-playing video game ‘Old School Runescape’, constitute “property” pursuant to section 4 of the Theft Act 1968. This month, the Supreme Court has refused Mr Lakeman permission to appeal this earlier decision, leaving the Court of Appeal judgment as the settled position.

In March 2026, the Court of Justice of the European Union handed down judgment in MB Žaidimų Valiuta (Case C-472/24), clarifying the VAT treatment of in-game virtual currency. When read together (noting the CJEU decision is not binding in the UK), the two rulings confirm a clear direction of travel: where a digital asset has an ascertainable, tradeable value, the law will treat it as property capable of being stolen; and also as a supply capable of being taxed.[1]

Background: R v Lakeman

Lakeman concerned a worldwide role-playing game with more than 100,000 concurrent players, where users accumulate in-game wealth to enhance avatars and unlock levels. Although the game’s developer, Jagex, barred ‘cashing out’ and prohibited external sales of the gold pieces through its EULA, the gold pieces nonetheless had real-world value; they were regularly traded offline for fiat currency or cryptocurrency, with transfers completed in-game.

Mr Lakeman had been a content developer for Jagex Limited, and was alleged to have accessed 68 player accounts, removing 705 billion gold pieces from those accounts, before selling them for £543,123 of Bitcoin and fiat currency. Jagex terminated Mr Lakeman’s employment and criminal proceedings were instigated, on the basis Mr Lakeman committed the offence of theft concerning “property” contrary to the Theft Act. A preparatory hearing was ordered to consider whether the gold pieces were “property”, with the Crown Court answering that question in the negative. The ruling from the Crown Court was that, although the gold pieces met the four Ainsworth criteria[2] (the civil test for “property” being something that is definable, identifiable, capable of assumption by third parties, and sufficiently permanent or stable), the judge found the gold pieces were not “rivalrous[3]”, were closer to pure information, and therefore were not property.

The Court of Appeal’s decision

The Court of Appeal allowed the appeal, overruling the Crown Court’s decision and finding that the gold pieces are “property” for the purposes of the Theft Act. That judgment was reached on the following basis:

• The civil law tests are not determinative in a criminal context. Whether a digital asset is “property” for the purposes of criminal conduct does not require such asset to also be “property” in a civil context. In the court’s view, both the starting point and the central focus of the inquiry in Lakeman ought to be the words of the Theft Act as a statute seeking to criminalise the dishonest taking of things. In particular, the criminal law is concerned with “keeping the Queen’s peace, not vindicating individual property rights” and the Court of Appeal was keen to ensure that the alleged dishonest behaviour shouldn’t go unpunished through a potential failure to fully reconcile the gold pieces within the civil law test for “property”.
• The language of the Theft Act is deliberately broad. The phrase “other intangible property” in section 4 uses words of the widest ambit; it is apt to catch anything which, as a matter of the normal use of language, can be described as “capable of being stolen”, unless there is good reason to except it. As is made clear in section 1(1), the Theft Act is aimed at “property” in the sense of a thing which someone can steal and criminalises the dishonest appropriation of such property. The expansive nature of the definition and the criminal context suggest, as a starting point, that “property” should be construed as capable of applying to any thing which can, as a matter of normal use of language, be described as capable of being stolen, unless there are good reasons why such a thing should be excepted. The Court of Appeal did not consider that any such good reason applied in the current case.
• Jagex’s ability to revoke the licence of the gold pieces is irrelevant to their treatment as “property”. Unless and until the licence is revoked, the player is free to transfer the gold pieces within the rules of the game. The Court found the gold pieces also have the necessary degree of permanence and stability. Counsel for Mr Lakeman argued that this last criterion is not met because Jagex has the power to withdraw or destroy them at any time or remove the gold pieces from a player’s account. However, the Judges found that does not prevent them having some degree of permanence and stability, noting only a small degree of permanence or stability is required to meet the legal threshold of property. For example, a melting ice lolly or burning match will qualify as property. Similarly, the Bank of England may withdraw notes or coins as legal tender at any time, but that does not prevent them being property.
• The gold pieces were not “pure knowledge”. Functionally, they existed as identifiable assets, distinct from the code that gave rise to them and outside the minds of people. Knowledge is not something which can be stolen because the transfer of knowledge from A to B does not deprive A of that knowledge or A’s ability to use it. That cannot be said to apply to the gold pieces which exist as identifiable assets and can be transferred outside the minds of people.
• There was no policy reason to except the gold pieces from “property”. The gold pieces had an ascertainable monetary value, could be traded for that value both inside and outside the game, represented money’s worth, and were capable of dishonest dealing that deprived their possessor of their use and value. The Court of Appeal considered it would be “surprising and unsatisfactory” if such dishonest dealing did not amount to theft, further commenting that there is a general public expectation that the criminal law would penalise the stealing of items of commercial and monetary value, whether or not held in digital form.
• The gold pieces were sufficiently rivalrous. The Court of Appeal differed from the findings of the first instance Judge on the absence of rivalrousness in the gold pieces. One reason given by that Judge was that “one gold piece is like any other, and their supply is infinite”. The Court of Appeal found that this did not, however, distinguish the gold pieces from many other forms of rivalrous property, giving the example that one paper clip from a given manufacturer is like any other; and the manufacture and supply of them infinite, in the sense that is not capped at any finite number. Yet each paper clip constitutes property, with the CA Judges finding the same is equally true of gold pieces. The Court of Appeal also disagreed that digital assets needed to have a quality of “uniqueness” in order to qualify as property.

The VAT dimension: MB Žaidimų Valiuta (C-472/24)

The CJEU’s decision in MB Žaidimų Valiuta concerns the VAT treatment of in-game virtual currency and its trade outside the game environment, which is precisely the type of secondary market that featured in Lakeman.

The thread running through the decision is that the supply of in-game virtual currency for real-world consideration constitutes “taxable supplies of electronic services” and amounts to a supply of services for VAT purposes, falling within the scope of the EU VAT regime. In other words, where virtual currency is exchanged for genuine consideration in a real economic transaction, the tax law will look through the “virtual” label to the economic reality of what is being supplied.

Key Takeaways

While these two judgments come from different courts, jurisdictions and areas of law, they point in the same direction. Once a digital asset has an ascertainable, tradeable value (i.e. once it represents and can be traded for money’s worth) it is liable to be drawn into the established frameworks of “property”, for the purposes of criminal and tax law alike. Lakeman shows that such assets can be the target of theft; MB Žaidimų Valiuta shows that they can attract VAT.

The message for those businesses operating in the gaming ecosystem is that “virtual” is not a synonym for “outside the law”. Some practical considerations following these cases include: (i) assess internal controls and access rights, particularly for staff and developers with privileged access to player accounts, given the conduct alleged in Lakeman; (ii) consider the VAT treatment of any supplies of in-game virtual currency or assets exchanged for “real-world” consideration; and (iii) review end user terms and conditions and licence agreements dealing with the ownership, transfer and trading of in-game assets, including any prohibitions on out-of-game sales.

References

[1] https://meridianglobalservices.com/de/ecj-clarifies-vat-treatment-of-in-game-virtual-currency-case-c-472-24-mb-zaidimu-valiuta/

[2] These four criteria are often taken as the starting point for determining whether something constitutes “property” (in a civil law context), as per the House of Lords’ decision in National Provincial Bank v Ainsworth

[3] “Rivalrous” is a specific legal term and key characteristic of property under both civil and criminal law. It is a term popularised in mid 20^th century economics which was adopted as a relevant criterion for whether digital assets should be treated as property by the Law Commission in its Report in 2024. The term has been taken up in subsequent cases, notably by the Court of Appeal in Tulip Trading. The Law Commission defined a thing as rivalrous “if the use or consumption of the thing by a person, or of a specific group of persons, necessarily prejudices the use or consumption of that thing by one or more other persons.”