Singapore’s Quione crypto exchange sued for over $13M

Singapore-based cryptocurrency exchange Quione is going to have to answer in court for over $13 million in missing funds. The exchange is being sued by B2C2, a liquidity provider, over the former’s “universal reversal” of a handful of trades on its platform without permission.

The debacle started in April 2017 when Quione reversed seven trades without B2C2’s authorization. The result was a loss of around 3,085 Bitcoin Core (BTC) and the accusation that the exchange had “[abused] its role as operator of the platform” and that it had “acted in breach” of trust as B2C2’s custodian.

According to court documents, “[I]t is B2C2’s contention that in the face of 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.”

Quione asserts that the reversals were due to a technical glitch. That glitch, according to the exchange, allowed B2C2 to establish trades at an “absurdly” high rate of 10 BTC to 1 Ether (ETH), leading the exchange to force the reversal. It explains, “There is no other way than to describe these orders as abnormally and absurdly priced orders, given that they were about 250 times higher than the average price at which (the two currencies) then traded on the platform.”

B2C2 alleges that the exchange, through the two parties’ mutual agreement, did not have the legal ability to reverse the trades. Quione has countered by stating that a risk disclosure agreement exists that stipulates that it can cancel any transaction if the platform determines that it “took effect based on an aberrant value.”

The glitch also led the exchange’s quoter program to stop creating or placing new orders, which led to problems with liquidity. That glitch caused the program to be “unable to access external market price data” for both BTC and ETH.

The trial is taking place in Singapore International Commercial Court and is expected to take about a week. There was no indication if B2C2 is going to attempt to fight for the current BTC value or the value at the time the reversals took place.