Legal Trial Over a Bitcoin Trading Dispute – The trial for Singapore’s first legal dispute involving the cryptocurrency, Bitcoin, started on Wednesday (Nov 21), as the market maker and liquidity provider B2C2 sues cryptocurrency exchange Quoine. The court is expected to decide whether Quoine wrongfully reversed a number of trades done in April last year – leading to proceeds deducted, allegedly, without B2C2’s authorization.
The case is being heard at the Singapore International Commercial Court. B2C2 claims that the action taken by the Quoine violated the two companies’ agreement terms. And it seeks to recover some 3,085 bitcoins from Quoine. Although none was given, in today’s dollar price that translates to roughly $13 million.
According to Singapore’s Straits Times, in their opening statement, B2C2’s legal team alleged that Quoine had abused its role as the operator of the platform and that it had acted in “breach of trust” as B2C2’s custodian.
While Bitcoin prices have since been on a roller coaster ride reaching a meteoric peak of $19,783.21 on December 17 and crashing back down to around $4,500 today, in March of 2017, prices were hovering around the $12,000 mark. This further demonstrates the complexity of the case. Since the value of the bitcoin in question is significantly higher today. Similarly, then it was at the time of the trade reversal.
B2C2 opened up the case arguing that:
“It is B2C2’s contention that in the face of the serious risk of itself. And having to bear the financial loss arising from the trade. Quoine chose the most advantageous course to mitigate such risk – by simply reversing the ‘irreversible’ trades and deducting them… proceeds from the account…”
Quoine Defended Its Actions:
Legal Trial Over a Bitcoin Trading Dispute -Quoine defended the reversal move primarily as a programming glitch prior to the trades that caused the platform’s inability to access accurate market price data on the cryptocurrencies in question: bitcoin, and ethereum. They maintain that because of the fault, the platform stopped creating and placing new orders, and this affected those of B2C2.
Then they went on to add that the orders placed by B2C2 were abnormal and involved absurdly high prices, stating that:
“ It was about 250 times higher than the average price at which [the two currencies] then traded on the platform.”
It emerged that B2C2 placed seven orders at an extremely inflated rate on April 19 of last year to sell ethereum for bitcoin–for 10 bitcoins for one ethereum. However, unusual as these orders were, the market maker B2C2 upholds. That the exchange was not within its rights to reverse them since the trades were meant to be “irreversible.”
B2C2 maintains that Quoine had nothing in their trading terms and conditions. That could allow the exchange to carry out such a maneuver. However, Quoine points to its risk disclosure statement that gives it the right to cancel any transaction that “took effect based on an aberrant value.”
The trial is expected to reach its conclusion by next week. Whichever side the verdict falls, it marks a historic case for Singapore and its High Court. And will surely set a precedent for further such cases to come.