Singapore's first bitcoin trial: Quoine exchange found liable for reversing B2C2's trades

IN the first legal dispute in Singapore involving the bitcoin cryptocurrency, the Singapore International Commercial Court (SICC) found that operator of virtual currency exchange platform Quoine had wrongfully reversed seven trades from electronic market maker B2C2 in April 2017.

The SICC in a judgement issued on Thursday found the Singapore-registered platform liable for breach of contract and breach of trust for unilaterally reversing B2C2's orders made at an abnormal exchange rate.

B2C2 had on April 19, 2017, placed seven orders to sell ethereum for bitcoin at a rate of 10 bitcoins for one ethereum. The trades were reversed the following day.

As an electronic market maker, B2C2 provides liquidity on exchange platforms by actively buying or selling at the prices it quotes for virtual currency pairs, thereby generating trading revenue.

B2C2 has sought in the trial to recover about 3,085 bitcoins from Quoine, alleging that Quoine had abused its role as operator of the platform and acted in breach of trust as a custodian for B2C2.

Quoine countered that a glitch in its program leading up to the disputed trades had made it unable to access external market price data for the two cryptocurrencies in question, ethereum and bitcoin. Due to the glitch, the program stopped creating or placing new orders involving these currencies on the platform, causing issues with liquidity and, therefore, problems with the orders made by B2C2.

The SICC having found in B2C2's favour, however, declined to order Quoine to transfer the bitcoins in question to B2C2 at today's price, which is substantially higher than that in April 2017 when the trades were executed, saying it would result in substantial hardship to Quoine.

Instead, B2C2 will be compensated with an amount to be agreed upon by the feuding parties. Should they fail to come to an agreement, the court will assess damages at a subsequent hearing.

Quoine told The Business Times that it was disappointed with the ruling. Its chief executive Mike Kayamori said: "We are reviewing the judgement and considering our options, including the possibility of an appeal."