Singapore’s Court of Appeals has finally put an end to a landmark cryptocurrency case against digital asset exchange Quoine after it arbitrary canceled 7 of the client’s orders.
The decision concludes the legal battle that started almost three years ago and sets a precedent of how the computer errors should be evaluated when both parties of a smart contract are algorithms, not humans.
1 ether for 10 bitcoins
The controversy started back in 2017 when the UK registered user B2C2 placed seven orders in a digital currency exchange Quoine. Transactions were set to sell ether for bitcoin when the mistake occurred.
The Singapore-based exchange, that fills in orders at the current prices deriving from other crypto exchanges, experienced an incident. A bug in Quoine’s system disabled access from other exchanges, which caused the value of assets to stop changing and become misleading.
Therefore traders’ software initiated an emergency protocol at a price, which led to selling 1 ETH at the exchange rate of 10 BTC each, roughly around 250 times higher than the actual price. At the time the current price of 1 BTC was approximately $1k, ending with the whole amount of more than $3 million.
Quoine to pay damages
After Quoine identified an error the next day, it arbitrarily canceled the order, causing B2C2 to claim for damages. The exchange, in turn, argued that traders knew the trades were incorrectly priced and still acted under the assumption of them being of fair market value.
The Singapore International Commercial Court (SICC) ruled in 2019 that the exchange was responsible for breach of contract and trust when it reversed all seven trades. However, Quoine appealed the decision, claiming that the transactions were a mistake.
Finally, after three years of lawsuit, the case has been put to an end by Singapore’s Court of Appeals, saying there was the platform’s responsibility to ensure trading contracts between a computer system and a participant. Even if there was a bug in the system, the user’s trading software was not aware of it when executing the orders.
The legal judgment sets a precedent that can be used as a guide for similar cases in the future events of the blockchain industry.