A recent UK Court of Appeal judgment has delivered a significant legal victory for cryptocurrency exchanges, particularly Binance, against Bitcoin SV (BSV) investors. This ruling shapes how speculative loss claims are handled following digital asset delistings.
Court Rejects Substantial Compensation Claims
Investors in BSV pursued compensation totaling close to $12 billion (£8.9 billion). They alleged a conspiracy that resulted in BSV’s delisting in 2019, which they claimed deprived them of hypothetical future earnings. Nevertheless, the court predominantly dismissed these assertions.
The court determined that investors who possessed BSV at the time of its delisting were not eligible for remuneration based on speculative losses. It was observed by the court that BSV lacked uniqueness, given that the plaintiffs themselves referenced Bitcoin and Bitcoin Cash as comparable substitute assets.
Investor Accountability and Market Volatility
A core element of the court’s rationale was the concept of “loss of chance.” The court concluded that investors were bound by a “duty to mitigate their losses,” implying that they had the option to sell their BSV or redeploy their capital into other investments subsequent to the delisting. Judge Geoffrey Vos remarked, “Cryptocurrencies are by their nature volatile investments,” which underscored the unacceptability of claims founded on hypothetical future profits.
Restricted Scope for Additional Claims
Although the court largely ruled in favor of the exchanges, it will entertain claims from certain investors regarding insufficient notification of the delisting. Any awarded compensation would be stringently capped at the asset’s value prior to delisting and confined to direct, verifiable losses.
This judgment unequivocally represents a victory for Binance. The exchange is currently advocating for the dismissal of a distinct $1.76 billion lawsuit initiated by FTX’s liquidators, contending that FTX’s downfall was a consequence of internal fraudulent activities, a position bolstered by Sam Bankman-Fried’s conviction.
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