British Columbia has made the news twice this week for situations pertaining to cryptocurrency. While we reported encouraging news just recently, these new developments stand to make murky waters even harder to navigate.
QuadrigaCX vs CIBC
As stated, we reported earlier this week on positive developments within the industry. We saw Coinsquare announce a partnership with a Canadian big 5 bank (BMO). While this is fantastic news for the industry, not all banks are as welcoming to the idea of cryptocurrencies.
CIBC and Canadian based crypto-exchange, QuadrigaCX, have been butting heads for months now. Due to a varying interpretation of ownership, CIBC has frozen over $28 million worth of QuadrigaCX assets. In a situation that has now reached the courts, a war of words has ensued.
QuadrigaCX feels as though they are being treated unfairly, with CIBC painting the industry with a broad brush, assuming that the exchange facilitates criminal activity. Speaking on the matter, lawyers representing QuadrigaCX stated, “This court should not succumb to the bank’s unsubstantiated and highly offensive speculation that there must be shady dealings afoot because Quadriga’s business is a trading platform for individuals trading in cryptocurrencies.”
All eyes will be on this situation, as ruling on the nature of asset ownership, and the discriminatory actions of the big banks, stands to affect the entire industry.
British Columbia Supreme Court rules on Copytrack
While two heavyweights in QuadrigaCX and CIBC duke it out in the courts, another impactful situation has developed between smaller parties. Their situation no less important to the development of cryptocurrency, however.
An individual participating in an ICO in early 2018 has been ordered to give 530 ETH to Copytrack. The ICO in question was being hosted by Copytrack. The individual took part in the crowdsale, purchasing 530 of the start-ups to-be-distributed tokens. Upon time of distribution, rather than sending the investor their 530 Copytrack tokens, they mistakenly sent 530 ETH. Obviously the value of the 530 ETH greatly exceeded the value of the Copytrack tokens.
Only now, nearly a year later, has a ruling been reached on the situation. The Supreme Court of British Columbia has stated that the investor must return the ETH to Copytrack.
Where this becomes significant is ownership. In the time since their distribution, these tokens could have been sent to exchanges, where they could have been traded, and sent to different investors. As each ETH is unique and identifiable, we know exactly which tokens are those that belong to Copytrack. How will they track the tokens, and who will pay them back? The ruling states that the current holder of the tokens must pay them back to Copytrack.
To further complicate the situation, the original investor has died since receiving the ETH from Copytrack, with his estate claiming that they were stolen.
While the courts have ruled in favour of Copytrack, the public may have a different perspective. Who should be on the hook for these tokens that were mistakenly distributed? Copytrack, the investor’s estate, or the current holder?
Both of these situations deal with ownership of cryptocurrencies. As such, rulings on either case will prove to have lasting effects throughout Canada towards how this situations are handled in the future.