In the legal battle between crypto exchange Quoine and its Liquidity provider B2C2, a Singapore court today ruled in favor of the market maker.
The Singapore International Commercial Court (SICC) has found the exchange operator guilty of wrongfully reversing seven crypto trades in April 2017.
As detailed in the court judgment, the Singapore-registered exchange had breached its contract with the market maker by unilaterally reversing its orders, which were based on abnormal market rates.
B2C2 is one of the leading Liquidity Providers in the crypto market. The firm has enhanced its offerings for the over-the-counter settlements and also received a go-ahead from the Financial Conduct Authority (FCA) in January to deal in contracts for difference (CFDs).
Faulty Orders Created Havoc
The London-based company had placed seven orders to sell Ethereum for Bitcoin at a rate of 10 Bitcoins for one Ethereum - around 250 times higher than the market rate of about 0.04 BTC to 1 ETH at the time, according to the court document. The proceeds of the trade were automatically credited to B2C2’s account as the corresponding amount of 309 ETH was debited.
The exchange, however, reversed the seven faulty trades the following day.
A month later, the market maker initiated legal proceedings against the crypto exchange to recover the 3,092 BTC, which are presently worth around $12 million.
“The plaintiff claimed that the defendant’s reversal of the trades was in breach of the Terms and Conditions which governed the trading relationship between the plaintiff and the defendant at the material time, and was thus a breach of contract,” the court document noted.
“Further, the plaintiff also claimed that the defendant held the proceeds of its account on trust for it and that the unilateral withdrawal of the BTC which had been credited to its account was therefore in breach of trust.”
Can't Evaluate Damages Based on the Market Price
Though the court’s ruling was in favor of B2C2, it did not order the digital asset exchange to return the 3,085 Bitcoins as the value of the coins “substantially” increased over the years - a single Bitcoin was priced around $1,300 when the dispute started between the firms, whereas, as of press time, BTC is valued at $3,908, as seen on Coinmarketcap.com.
“The plaintiff’s remedy lay only in damages which, if not agreed, will be assessed at a subsequent hearing,” the SICC ruled.
Responding to the court’s verdict, the crypto exchange expressed disappointment and, in a press statement, Mike Kayamori, its CEO, said: “We are reviewing the judgment and considering our options, including the possibility of an appeal.”
