Singapore is witness to its first legal battle regarding cryptocurrency and Bitcoin, according to local newspaper, The Straits Times. The lawsuit revolves around a series of trades placed by UK based market maker B2C2 on the “World’s Most Advanced Bitcoin Trading Platform”, Quoine. Specifically, the market maker claims that trades were unlawfully reversed by Quoine, leading to proceeds being “misappropriated” without authorization.
You Mentioned a Bitcoin Pricing Error
We’ve all been there. Nonchalantly browsing around a store, not really looking for anything in particular. Suddenly, we stop in our tracks. “I didn’t even know I wanted a suede jacket, but that’s supposed to be £120 and it’s marked down to £20!”
Feverishly, we pick up the item and inspect it. Everything looks kosher. We make our way to the checkout, palms sweaty, fearing that at any moment somebody will notice the mistake. The cashier rings it through the till… success. Money paid, we stride masterfully out of the shop, looking over our shoulder only occasionally because we can’t quite believe we’ve just got away with that.
Now imagine how it must have felt to stumble across an opportunity to sell ether for bitcoin, at the price of 10 bitcoin for each ether.
[*spits out coffee*]
Yep. B2C2 placed a series of orders, which were filled on April 19, with the end result being the purchase of 3092.517116 bitcoin for a measly 309.2518 ether. I say measly, but that was $15.7k worth at the time, so not to be sniffed at. $3.78m worth of bitcoin was deposited in B2C2’s trading account later that day though, so ya know, same same.
Sadly, the following day, Quoine realized their mistake and the bitcoin was removed, and herein lies the point of contention. B2C2 accuses Quoine of fraud, claiming the agreement states that a filled order is “irreversible”. It is seeking damages of 3084.785-something bitcoin. Canny, as that is now worth almost $8.5m.
Quoine claimed that is was entitled to reverse the trades as they were “mostly trades with huge markup over fair global market price”. It also claimed that B2C2 was “being opportunistic and seeking to profit from a technical glitch“.
So… How Do We Sort This Out Then?
Firstly, I should state that I have almost zero formal training in Singaporean corporate law, so all of this should be taken with a pinch of salt. However, being brought up in the UK (before I moved to the internet), I was always of the belief (incorrectly as I have today found out), that a shop had to honor an advertised price, wrong or not.
It seems that in reality, it all comes down to contract (in UK retail law, so why not Singaporean corporate law?), and that happens at the point of delivery. If the agreement did state that a filled order is irreversible, then this is equivalent to not being able to ask for the money back once an item has been delivered. None of Quoine’s explanations about how the glitch arose make the slightest bit of difference in this case.
However, in the filing, Quoine describes B2C2 as a “sophisticated” investor, and this might just make the difference. It could be argued that a sophisticated investor should have realized from the “stark difference between the abnormal rate and the actual market prices of bitcoin and ethereum on April 19”, that the “abnormal rate” was a mistake.
If they can show that B2C2 knew that the price advertised was not a genuine offer then perhaps they have something to go on… in UK retail law anyway, in Singapore, who knows. It will be interesting to see the outcome.
Would they be able to use the same argument against an unsophisticated investor like me? Again, this is all conjecture at this stage, but hypothetically, I’d have hot-footed it away from the shop as fast as my little legs would carry me, and sold that bitcoin before they got the chance to ask for it back!
But Back to the Jacket…
I’m ashamed to admit (now), that I have even in the past, argued with shop assistants (sometimes successfully), that they had to sell me the item at the advertised price “by law”. To avoid embarrassment with the jacket though, I checked the £20 price before going to the till. “Oh yes,” said the assistant, “and there’s an extra 25% off everything today because there’s a blue cross sale on.”… £15 for a suede jacket? I strutted out of the shop that day!
Do you think Quoine was within their rights to reverse the orders? Should B2C2 be able to keep the bitcoin if they knew the pricing was the result of a technical glitch? Let us know in the comments below.
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