A $14m Bitcoin disagreement is heading to court…
A case centred on a multi-million dollar quarrel over Bitcoin trading losses has begun in Singapore’s International Commercial Court.
Market maker B2C2 alleges that cryptoexchange operator Quoine wrongly reversed a series of Bitcoin trades in April 2017, leading to drastic damages. The case is the nation-state’s first of its kind and is being closely watched by both financial regulators and institutional investors.
B2C2 is seeking to recover around 3,085 Bitcoins ($14m) from Quoine, according to local paper the Straits Times, which is reporting on the case.
B2C2 is one of the world’s largest crypto liquidity providers, founded in the UK in 2015. It started life as an over-the-counter trading firm before adding high-profile regulatory staff from Citigroup and Royal Bank of Scotland.
In opening arguments, counsel for B2C2 said that Quoine had failed in its duty to provide custodial services and had “abuse[d] its role as operator of the platform”.
On April 19 2017, B2C2 tried to place seven orders selling 10 BTC for 1 ETH each time. The trades were reversed on April 20 without authorisation from B2C2.
Lawyers for Quoine noted that “there is no other way than to describe these orders as abnormally and absurdly priced orders, given that they were about 250 times higher than the average price at which [Bitcoin and Ethereum] then traded on the platform”.
Quoine’s position is that it was a technical glitch that left it unable to access external market price data for Ethereum and Bitcoin and which it stopped placing new orders at the time.
According to the complaint, B2C2 filed that “in the face of serious risk of itself having to bear the financial loss arising from the trades… Quoine chose the most advantageous course to mitigate such risk – by simply reversing the ‘irreversible’ trades and deducting the bitcoin proceeds from the account.”
Under its agreement with Quoine, B2C2’s cryptocurrency balances should be held as “a custodian on trust” and trades should not be reversed without prior agreement, the market maker argued. Quoine countered that it could cancel any transaction “based on aberrant value”.
The trial is expected to run until next week. The case continues.