Case Update: B2C2 Ltd v Quoine Pte Ltd [2019] SGHC(I) 3 – SICC decides on cryptocurrency trade dispute

SICC decision in B2C2 v Quoine is groundbreaking. A few comments:

1. Cryptocurrency is deemed akin to property which can be held on trust. Significance: crypto assets will be ringfenced if trustee becomes insolvent.

2. Cryptocurrency exchange platform (or any other type of digital exchange) must expressly contract for the right to reverse trades in certain scenarios.

3. In determining the application of the legal doctrine of unilateral and common mistake, the court considered the knowledge and intent of the programmer of the trading algorithm—whether the algo was intended to be opportunistic of mistakes. Strangely, it’s possible that if a human was the one who executed the same trades, the doctrine may apply to deny the plaintiff’s claim.

4. Significance: legal doctrine is being bent by algorithm and technology. This decision may pave the approach for application of doctrine to scenarios of automated technology replacing human actors.

5. Remedy in this case was not return of the cryptocurrency because of the substantial value increase since the events. Instead damages were to be assessed. This may matter if the defendant is cash light.

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Article: So you want to conduct an initial coin offering (ICO) or digital token sale?

Introduction

So you are a tech startup who want to raise funds. You figure that instead of incurring debt, issuing equity, entering into convertible loan agreements (CLA), you will conduct an initial coin offering (ICO) or digital token sale. Not least because the amounts of money which have been raised by recent ICOs are huge. (I am using ICO because it is a shorter well-recognised abbreviation than “digital token sale”, even though the term ICO may be a bit of a misnomer.)

For every ICO that makes headlines, there are probably many ICOs which fall far below the issuers’ expectations. A lot of this of course is based on investors/purchasers’ sentiment and speculation. But some of that is also dependent on a few things like good marketing, viable underlying business model or technology, a credible team, and fair and reasonable terms of sale. If you do wish to build credibility for your ICO, there are some things which you would want to consider from a legal, regulatory perspective.

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MAS clarifies approach to ICO or token sales

On 1 August 2017, MAS issued a press release clarifying its approach to initial coin or token offerings (ICO) or token issuance or sales. This note provides some comments on MAS’ clarification. It is of significant interest because there have been several ICOs conducted in Singapore recently, and has thus attracted interest in prospective issuers looking to raise funds by way of ICO. This comes shortly after the US Securities and Exchange Commission (SEC) announced that certain ICOs would amount to “securities”.

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