Financial technology, also known as fintech, has been gaining momentous traction these days resulting in more and more governments attempting to not only regulate this uncharted territory but yet at the same time seed innovation. Cryptocurrency is not spared the legal microscope. As the year draws to a close, we take a look at some of the litigation involving cryptocurrency.

While the case was heard in 2018, the judgment was only recently published. In this case, the Claimant had sought for an injunction against a company  and its directors to freeze her cryptocurrency held by the company on its trading platform. The High Court granted the freezing order against the company and its directors but stated that the freezing order was a “very preliminary order”.

The case involved automated trading on a cryptocurrency trading platform. However, as a result of a series of events, the platform sold B2C2 Ltd’s cryptocurrency at approximately 250 times the previous going rate. When Quoine became aware of the trades and considered the exchange rate to be an abnormal deviation from the previous going rate, the trades were cancelled and the transactions reversed. B2C2 then brought an action against Quoine premised on a breach of contract and breach of trust.

The Singapore International Commercial Court found in favour of B2C2 and ordered damages to be agreed upon and paid to B2C2 and for a subsequent hearing on the amount of damages payable if the parties could not reach an agreement on the quantum.

A class action lawsuit (“the Lawsuit“) was filed in October 2019 against a number of companies owning or operating cryptocurrency exchange platforms (“the Companies“). The Lawsuit is seeking damages of more than  $1 trillion.

The Plaintiffs essentially alleges that the Comapnies had engaged in deceptive, anti-competitive and market manipulating practices that resulted in the plaintiffs sustaining damages arising out of these practices.

The suit is still ongoing at the time of writing.

In 2018, a bankruptcy petition was filed in the Italian courts to declare entities that operated the cryptocurrency exchange platform BitGrail bankrupt. This followed an announcement by Firano Francesco (“Firano”), the owner of BitGrail, on the now offline BitGrail website that there were unauthorised transactions leading to a 17 million Nano shorfall

The Italian Bankruptcy Court found that, based on the evidence and on the facts, Firano was personally liable and therefore was declared a bankrupt and his assets seized and liquidated compensate the victims for the losses.

The judgment can be accessed here.

Conclusion

As fintech and cryptocurrency cements its place in modern society, it is no doubt that we will see more regulation and certainly more litigation in this area. With countries such as Singapore allowing fully digital banks, new cryptocurrencies and e-wallets being created and used, new policies and sandboxes being enacted for fintech and a wider awareness and acceptance of financial technology, this area of law is definitely an exciting plane to keep an eye on in the coming year.

2 Comments

  • — by Paige
    Posted November 26, 2019 9:23 pm

    Is that it? These are foreign cases. What about the implication it has in Malaysia, safeguarding crypto currency purchases, via ICO, fraud, pyramids, cross border transactions, and so forth

    • — by Richard Wee Chambers
      Posted December 5, 2019 4:50 pm

      Hi Paige,

      Much obliged for your comment and interacting with us.

      The article was focused on litigation involving cryptocurrency. As cryptocurrency is new in Malaysia (particularly in terms of law), as far as we know there has yet to be a litigation case involving cryptocurrency in the Malaysian courts yet.

      Nonetheless, on the premise that there is yet to be a Malaysian case involving cryptocurrency, we can only draw from foreign jurisdictions which may become a persuasive authority should such a case arise in Malaysia. Issues of cryptocurrency being a “property” or whether or not in can be injuncted are matters that, if litigated, would have to refer to foreign cases.

      Issues such as safeguarding cryptocurrency purchases and/or trades, ICO, scams and fraud are issues probably best discussed in an article regarding the policies and regulations of cryptocurrency in Malaysia, of which we might write one in due time.

      Thank you once again and do continue interacting with us! Stay tuned for more!

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