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One of the world’s major Bitcoin exchange operators, Quoine, gets sued by an electronic market maker, B2C2. As reported, the trades were allegedly wrongfully reversed, which resulted in proceeds being deducted.
According to B2C2, the company placed orders on Quoine’s platform to sell Ethereum for Bitcoin at the price of 10 bitcoins for one Ethereum.
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On April 19th, the orders were filled in a series of trades resulting in B2C2 paying 309.2518 Ethereum for 3092.517116 Bitcoin.
However, the next day, the trades were reversed by Quoine and the proceeds allegedly “misappropriated” from the account without authorisation. As Quoine told B2C2, it was entitled to do so because the trades were “mostly trades with huge mark-up over fair global market price”.
B2C2 claims Quoine had “acted fraudulently” because the agreement stated that an order, once filled, is “irreversible”. It is seeking to recover 3084.78582325 Bitcoin from Quoine in the High Court.
10 BTC for 1 ETH is 125 times higher than the average market price. The purchase became possible only due to a system error in Quoine, so the seller suffered losses from such a transaction and canceled it.
No dollar value for that amount of Bitcoin was provided in the lawsuit but according to cryptocurrency exchange CoinDesk, that amount translates to US$3.78 million based on an exchange rate of US$1,226.94 for a Bitcoin on April 19. Quoine in turn claims that B2C2 is “being opportunistic and seeking to profit from a technical glitch”
Given the “stark difference between the abnormal rate and the actual market prices of bitcoin and ethereum on April 19”, B2C2, which Quoine called a “sophisticated” investor with experience trading virtual currencies, should have suspected the “abnormal rate” was a mistake.
However, as B2C2 insists, under the terms of the agreement the deal was not subject to cancellation. Accusing Quoine of intending to cancel the transaction by fraud, the British company appealed to the court.