The SICC (Singapore International Commercial Court) has ruled against cryptocurrency exchange Quoine in a landmark case, declaring that it wrongfully reversed seven crypto transactions in April 2017.
An electronic market maker is known as B2C2, the plaintiff, had alleged in November that Quoine abused its role as exchange operator and acted in “breach of trust” as a custodian when it reversed the trades. The disputed trades had already been completed at prices around 10 BTC for 1 ETH (market prices at the time were ~0.04 BTC for 1 ETH), resulting in a net position for B2C2 of approximately 3085 bitcoins.
Quoine had argued that a technical glitch had made it unable to access external market price data for the two cryptocurrencies in question and caused the order book to become completely empty, resulting in “absurdly priced Abnormal Orders” being executed at “250 times higher” than the average price at the time, in fulfillment of forced and/or erroneous liquidation of two other clients’ positions due to margin calls.
B2C2 sought the SICC’s intervention to help it recover the bitcoins – worth approximately USD 12 million at current prices – saying that Quoine had “no contractual right” to unilaterally cancel the trades once the orders were completed. Quoine said the trades were only allowed to be executed due to the system malfunction, and as such, it was entitled to reverse them.
Source: Manesh Samtani | Regulation Asia