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The trial over alleged wrongful reversals of seven bitcoin trades that occurred last year has reportedly begun in Singapore. Cryptocurrency exchange Quoine has been sued by a market maker. The plaintiff is seeking to recover 3,085 BTC from the exchange.
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Plaintiff Seeks 3,085 BTC
The trial over a series of alleged wrongful bitcoin trade reversals, reportedly Singapore’s first legal dispute involving BTC, has begun. Market maker B2c2 sued cryptocurrency exchange Quoine on April 19 last year, seeking to recover about 3,085 BTC from the exchange.
Singapore’s International Commercial Court is expected to decide whether seven BTC-ETH trades conducted by B2c2 were wrongfully reversed by Quoine, leading to proceeds being deducted from the plaintiff’s account without authorization, the Straits Times reported.
According to B2c2’s lawyer, Quoine abused its role as the trading platform operator and acted in breach of trust as the custodian. The plaintiff’s opening statement alleges:
It is B2c2’s contention 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 … proceeds from the account.
B2c2 continued to explain that Quoine’s action ensured the exchange would not have to seek payment from its customers and would be at no risk of non-payment.
Quoine explained that it was “unable to access external market price data” for BTC and ETH at the time of the disputed trades because it suffered a glitch in its program. “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 news outlet noted.
The Disputed Trades
The plaintiff placed seven orders to sell ETH for BTC at a rate of 10 BTC per ETH on April 19 last year, which were filled and credited on the same day. ETH was trading at about 0.04 BTC at the time.
The market maker paid 309.2518 ETH and received 3092.517116 BTC, the Straits Times detailed. However, Quoine reversed the trades the following day and deducted 3084.78582325 BTC from the plaintiff’s account without authorization.
The publication elaborated:
While B2c2 contends that nothing in their previous terms and conditions allows Quoine to reverse the fulfillment of an order or any resulting trade, Quoine cites a risk disclosure statement to say it can cancel any transaction that ‘took effect based on an aberrant value.’
The market maker argued that under its custodian agreement with Quoine, its cryptocurrencies cannot be deducted or withdrawn without prior approval. The founder of B2c2, Maxime Boonen, took the stand on Wednesday. He was asked “whether a market maker like his firm has a role to promote a fair and orderly market, keeping prices stable on exchanges,” the news outlet conveyed. Boonen did not believe so, stating that “prices are taken as they are, and he does not decide what they ought to be.”
Quoine’s lawyer Paul Ong pointed out that other exchanges which B2c2 trades on “have clauses allowing them to cancel orders that were accepted if they were found to be ‘erroneous’ or constitute ‘market abuse.’” Without disputing the claim, Boonen maintained his company would not have agreed to these conditions with Quoine.
The defendant argued:
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 (the two currencies) then traded on the platform.
The publication added that the “trial is expected to conclude next week, with Quoine chief technology officer Mario Antonio Gomez Lozada expected to take the stand.”
Do you think Quoine has the right to reverse the trades? Let us know in the comments section below.
Images courtesy of Shutterstock.
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