Singapore has embraced cryptocurrency regulation and pursued ways to integrate Distributed Ledger Technology (DLT) into its financial market. In 2019, the authority announced it was working on a new bill to regulate exchanges, yet another reason why many blockchain and cryptocurrency companies have been trickling in.
With favourable laws, a free-market economy and high internet penetration, Singapore gained favour and attention from crypto investors. With many crypto related business springing up in Singapore over the past few years, an inevitable has finally happened in its crypto industry.
In the country’s first legal dispute involving cryptocurrency, the Singapore Court of Appeals has ruled against digital currency exchange Quoine in a landmark case relating to a breach of contract when the platform unlawfully reversed seven trades. The exchange must pay damages to electronic market maker B2C2. This case marks the first of its kind in Singapore involving a cryptocurrency dispute.
The court rejected Quoine’s appeal over the claim it had the right to cancel orders placed by market maker B2C2 on its platform based on the premise those transactions were a “mistake.” Quoine had argued that the parties who transacted with B2C2 were under the mistaken belief that the trades were at market price and that B2C2 is well aware of this “mistake”.
In April 2017, B2C2 had placed seven trades in which it sold ether (ETH) at an exchange rate of 10 bitcoin (BTC) each, approximately 250 times higher than the market rate of about 0.04 BTC to 1 ETH at the time, according to court documents.
A day after the trades took place, where 309 ETH were exchanged for 3,092 BTC ($12 million at the time), Quoine noticed the abnormality and unilaterally reversed the transactions. B2C2, represented by Mr Danny Ong, then sued Quoine, arguing that the cancellations amounted to a breach of contract and a breach of trust.
The Singapore’s Court ruled in March 2019 that Quoine was liable for the breach of contract and breach of trust in reversing B2C2’s trades. Quoine then filed for an appeal.
Majority of the presiding judges on the appeal panel dismissed Quione’s appeal argument, saying it is the programmer’s state of knowledge that is relevant in the context of digital agreements between a computer system and a participant on the platform.
The court said there was no mistake in the terms of the trading contract and, even if there was a flaw, B2C2’s trading software was not aware of it when executing the orders, according to the report.
Quoine, the parent company of Japanese trading platform Liquid, now faces settlement proceedings.