Singapore’s First Cryptocurrency Court Case Favors a Trader
A court in Singapore says the practice of trade reversal on Exchanges is not right. The court’s judgment was in favor of a trader known as B2C2 over cryptocurrency exchange firm, Quoine. B2C2’s orders (7) were arbitrarily cancelled by Quoine during the 2017 bull market.
Interestingly, both parties in the transactions were algorithms. It did not involve fat fingers or human error. The operations of the exchange involve the derivation of price from other cryptocurrency exchanges.
The exchange’s system could not access other exchanges due to some glitches when the incident happened. The trading software used by B2C2 then initiated the emergency protocol: a fail-safe price of 10 BTC for 1 ETH, thereby using it to carry out seven trades in 2017.
B2C2 received 3,092 Bitcoins in exchange for almost 309 Ethereum debited, which is 250 times more than the actual price. Quoine cancelled the orders the following day and the trader dragged them to court. Then, 3,092 Bitcoins were worth over $3 million.
Five judges were in charge of the case and four of them favored B2C2. According to the four judges, the actions of the trading software were not with bad will, as B2C2 did not make it to leverage the mistake.
What happened was based on contracts laid in agreement with the owners. Therefore, even if it seems the exchange is not totally at fault, it must pay for its computer programs’ mistakes.
B2C2 was favored based on breach of contract and trust. The sum in damages will be decided.
Three Arrows Capital’s CEO, Su Zhu, commented about trade reversals:
Big win for b2c2 v quoine in Singapore's highest court yesterday
Has some implications imo for any other crypto exchanges who may believe they can reverse customer trades if necessaryhttps://t.co/4IxtSkE7SG
— Su Zhu (@zhusu) February 25, 2020
Somehow, there may be reimbursement via insurance or exchanges may act as agreed with the users in the event of faulty trades. Nevertheless, trade reversals lead to legal tussles.
Featured image courtesy of Shutterstock. Source: Cryptopress.