Monday, June 07, 2021

One of the potential risks of less-than-rigorously-completed sale transactions, this time involving bitcoin ...


The BC Supreme Court recently handed down a decision involving a claim by a buyer of bitcoin against the seller who failed to transfer the bitcoin to the buyer:

The sale was supposed to have completed in June, 2019, when the buyer paid the seller $535,000 (in traditional Canadian funds) for 50 bitcoin.

In February, 2021, about a month before the trial proceeded in court, that 50 bitcoin was worth a little over $3,000,000.

The court held that the buyer could obtain judgment against the seller, but only for the purchase price of $535,000, not for the (much higher) current fair-market value of the bitcoin.  The rationale was that the parties to the transaction effectively allocated in their bargain the risk that the bitcoin might go up or down in value (relative to Canadian funds) after the transaction, and the fact that the buyer turned out to be correct when the bitcoin later increased in value did not justify awarding him that lost increased value.

The judge also ordered the seller to pay pre-judgment "court order interest" to the buyer from June, 2019, to the date of judgment.  (The rate of pre-judgment interest from June, 2019, until the trial in March, 2021, varied from 1.95% to 0.45%.)