A Singaporean court today made a landmark judgment on a cryptocurrency related case by ordering that a crypto exchange, Quoine is liable to pay for a trade even though computer error was responsible for a miscalculation.
On April 19 2017, a crypto market liquidity provider B2C2 initiated a trade in which it swapped ether for bitcoin. However a computer glitch occurred giving the seller undue advantage by awarding the equivalent of 10 BTC instead of 0.36 BTC.
Reversal of Trade
When the error was discovered, Quoine reversed the transaction prompting a court action by B2C2.
In the judgment handed down by the Singapore International Commercial Court (SICC), the ruling stated that Quoine had no authority to reserve the transaction based on its terms of service.
It was observed that the exchange’s ToS explicitly made it clear that trades on crypto was irreversible thereby nullifying the reversal. The court consequently ordered making payments to B2C2.
309… Why Not A Million Trades?
Interestingly, B2C2 was able to execute 309 of such trades for which it demanded that the exchange honor since 2019 even though the market price of ether swapped by the company at the time was $14,000, they were able to generate $3.9 million from the trades.
This has raised issues on the indemnity offered by crypto exchanges considering that B2C2 should have acknowledged that the error was a technical fault from the computer but rather decided to take legal action to enforce the trade.
The B2C2 legal team demanded an expedited hearing of the case even as both sides made submissions arguing both sides of the matter.
3000 BTC Awarded
Although the exchange may not have been expecting it, the ruling that the trade was wrongfully reversed was shocking considering that the price of cryptocurrencies have continually fluctuated since the April 2017 trade.
Quoine was of the opinion that B2C2 took advantage of the error its computer made by latching on to exploit the exchange.
Although the judge stated that the funds be fully paid which would amount to more than $11 million, there is hope that an adjustment would be made to prevent massive losses that could lead to bankruptcy for Quoine.