According to reports made by Singapore’s The Straits Times, an online electronic market maker has sued cryptocurrency exchange company Quoine over trades that were allegedly wrongfully reversed without expressed permission, which resulted in the trade’s proceeds being deducted.
It should be noted that this is the first case of a legal dispute involving cryptocurrency in Singapore and the object of the dispute is Quoine, a major bitcoin exchange platform. Apart from the company website they also have their exchange portal, which was recently renamed Quoinex. Also of note is that they recently launched their own crypto-only exchange called QRYPTOS back in June.
An electronic market maker is suing Quoine over trades that were allegedly wrongfully reversed, which resulted in proceeds being deducted. The market maker, known as B2C2 said it placed orders on Quoine’s platform to sell ethereum – another cryptocurrency – for bitcoin at the price of 10 bitcoins for merely one ethereum!
The orders were made to be filled in a series of trades on April 19th earlier this year, resulting in B2C2 paying just 309.2518 ethereum for 3092.517116 bitcoin! The bitcoin was subsequently credited into B2C2’s account that day.
But the next day, B2C2 discovered to their dismay that the trades were reversed by Quoine and the proceeds were allegedly “misappropriated” from the account without due authorization and permission. Further reports revealed that Quoine told B2C2 that it was entitled to do so because the trades were “mostly trades with huge markup over fair global market price,” the suit said.
But B2C2 refuted the allegations and claims that Quoine had “acted fraudulently” because the agreement stated that an order, once it has been filled, is “irreversible.” B2C2, therefore, is seeking to recover the 3,000+ bitcoins from Quoine in the High Court.
At the time of the trade, the US dollar amount effectively translated to about USD $3.78 million based on an exchange rate of USD $1,226.94 per bitcoin on April 19th but as of today’s rates of USD $2,750 it amounts to almost $8.5 million.
In a counter-reply, Quoine claims that B2C2 is “opportunistically seeking to profit massively from a technical glitch that happened.” According to Quoine, the trades were “inadvertently” executed at the abnormal rate of “10 bitcoins for one ethereum” which was approximately 125 times higher than the actual market price of ethereum on April 19 because of a technical glitch.
They also said the average market price that day was only about 0.03929075 bitcoin for one ethereum. It was made aware that the glitch severely disrupted Quoine’s ability to retrieve actual market prices for bitcoin and ethereum for that transaction. It said the glitch arose because it was reconfiguring passwords for its critical systems to fend off persistent attempts by hackers to break into its systems.
In an official report by the exchange, “stark difference between the abnormal rate and the actual market prices of bitcoin and ethereum on April 19” B2C2, which Quoine called a “sophisticated and well-versed” investor with experience trading virtual currencies, should have suspected the “abnormal rate” was a mistake. It also made known that B2C2 had done other bitcoin and ethereum-related trades on Quoine at prevailing market rates between April 15th and April 18th.
In a separate comment, Quoine said that “publicly available cryptocurrency resources would have been able to actually show that the abnormal rate could really not be an accurate reflection of the market prices of those two virtual currencies on that specified date.”
QUOINE’s Response Regarding B2C2 Lawsuit
We believe B2C2’s claims against QUOINE are completely without merit. We take all complaints seriously, including court cases, and will vigorously defend ourselves in the court proceedings.
This dispute concerns certain orders which were placed by B2C2 on QUOINE’s exchange (known as “QUOINEX”).
These were orders to sell a certain amount of Ethereum for Bitcoin.
The orders were filled in a series of trades which were inadvertently executed by QUOINEX at abnormally high prices (~10 BTC for 1 ETH). which did not reflect the prevailing market prices of Ethereum and Bitcoin at the material time in April 2017. This occurred because of a technical glitch which affected the exchange on the day that the trades were done.
Accordingly, we proceeded to reverse/cancel the trades and the affected parties were duly informed. However, B2C2 is now claiming that we acted wrongfully in reversing the trades, a claim which we do not agree with. B2C2 has, therefore, commenced proceedings against QUOINE in the Singapore High Court. In these proceedings, B2C2 is seeking, amongst other things, an order that QUOINE pays B2C2 the proceeds that it initially received from the trades which have been reversed.
As the proceedings are ongoing and still being heard in the Singapore High Court, we are not at liberty to comment further on the case until the matter has been resolved by the Court.
In the meantime, we wish to reassure our customers that QUOINE remains fully committed to providing its services in accordance with all applicable laws, rules, and regulations.