CORRECTION: This article has been corrected to indicate that B2C2’s suit against Quoine has not been dismissed. Its application for summary judgement was dismissed. The suit will now proceed to trial.
A United Kingdom-based company’s application for summary judgement in its suit against a Singapore-registered virtual currency exchange platform has been dismissed by the Singapore International Commercial Court.
In what is one of the first cases of its kind here, the court issued its grounds of decision on Thursday (28 December) for dismissing electronic market maker B2C2’s application. The application was heard and dismissed with brief oral grounds on 5 December.
The suit is ongoing and will now proceed to trial.
B2C2 had placed certain orders for the exchange of one form of cryptocurrency, Ethereum (ETH), for another, Bitcoin (BTC), on a virtual platform operated by the defendant, Quoine, a Singapore company.
These trades were unilaterally reversed by the defendant on the basis that they had been executed at an abnormal exchange rate resulting from a technical glitch on the platform. The plaintiff commenced the suit to recover its loss arising from the reversed trades.
In his grounds of decision issued on Wednesday (27 December), International Judge Justice Simon Thorley noted that Quoine had convinced the court that there were two arguable defences. Namely, a term displayed on the defendant’s website was incorporated into the parties’ agreement giving the defendant the right to reverse the trades, and the trades were void because of a unilateral mistake at common law.
“The plaintiff must have known that the price was wholly out of line with all the other prices it had been seeking to trade at during that day (all of which were more than 250 times lower),” noted Justice Thorley.
“As for actual knowledge on the part of the plaintiff, the defendant submitted that however the abnormally high limit order price came to be offered, it could not have represented a genuine offer to sell in a realistic market.”
The case stemmed from an incident on 19 April this year, when B2C2 sought to buy and sell ETH for BTC on Quoine. It placed 12,617 ETH/BTC orders of which only 15 were filled, including seven which formed the subject of the dispute.
The defendant contended that sometime after 11.30pm on the same day, its platform experienced a technical glitch such that no true market price was available. This led to an exchange rate of 10 BTC for 1 ETH.
Ultimately, an aggregate of 3092.517116 BTC was credited to the plaintiff’s account and 309.2518 ETH debited from that account, in what Justice Thorley called “highly advantageous transactions”.
The following day, Quoine became aware of the glitch and unilaterally reversed the trades. This prompted B2C2’s case, as it contended that the reversals were in breach of the platform’s terms and conditions and in breach of trust.
It commenced proceedings in the High Court on 18 May, seeking relief for these alleged breaches.