A cryptocurrency trial between B2C2—market maker and liquidity provider and cryptocurrency exchange Quoine has officially become Singapore’s first cryptocurrency trial.
Purpose of the Cryptocurrency Trial
The trial is to determine whether a questionable trading practice has exited during the cause of these two companies dealings. The trial began today, 21, November 2018.
According to the court papers, it was made known that B2C2 believes and has proof that Quoine wrongfully reversed seven trades in April 2017, and without seeking any form of authorization from B2C2, the proceeds of the trades was deducted.
According to the report, B2C2 is claiming that the authorised action taken by Quoine cost it 3,085 bitcoins. In today’s market, this translates to not less than $13 Million. The market maker is looking to recover the lost coins.
The location of the trial is the Singapore International Commercial Court.
In B2C2’s opening statement, the company’s legal team alleged that Quoine had abused its role as the operator of the platform and that it had acted in “breach of trust” as B2C2’s custodian.
Price Complication
According to the court papers, the event took place in March of 2017. At this time, the price of bitcoin was around the $1,200 mark. Since then, the price has moved to an all-time high of about $20,000. Presently, the price of Bitcoin is hovering around the $4,500.
Experts on the subject have made it known that this is a major bone of contention simply because, even if Quoine decides to settle and return the coins, the value is way beyond what it was when the incident took place. Also if they decided to pay based on the old price, the number of coins to be returned will be way lesser than 3,085 bitcoins which the market maker is fighting for.
Today B2C2 opened up the case arguing that: “It is B2C2’s contention that in the face of the serious risk of itself having to bear the financial loss arising from the trades… Quoine chose the most advantageous course to mitigate such risk – by simply reversing the ‘irreversible’ trades and deducting the… proceeds from the account…”
In Quoine’s Defense
However, according to Quoine, the reversal was a result of a programming glitch which preceded the trades that led to the platform’s inability to access accurate market price data on the cryptocurrencies in question, bitcoin, and ethereum.
The exchange further made it known that it as a result of this glitch, the platform stopped creating or placing new orders, and this affected those of B2C2.
The exchange also added that the
“orders placed by B2C2 were abnormal and involved absurdly high prices. They were about 250 times higher than the average price at which [the two currencies] then traded on the platform.”