Bitcoin SV (BSV) investors have asked the UK Court of Appeal to readmit their claim that Binance’s delisting of BSV in April 2019 caused them to lose out on significant growth in the value of their holdings.
In July 2024, the Competition Appeal Tribunal struck out a particular element of the group’s complaint, which argued that the Binance delisting resulted in a “forgone growth effect,” preventing BSV from developing into a “top tier” cryptocurrency.
It’s this particular claim that would allow for the highest possible financial penalty against Binance (above $13 billion), based on the assumption that BSV would have grown to what Bitcoin’s value was in July 2022, when the group originally filed their complaint.
And at the Court of Appeal on Thursday, the group’s legal representatives argued that the “loss of chance” claim should be heard when the case goes to trial, because the delisting has caused a “permanent ongoing loss of value.”
“Because of the delisting, there has been damage which continues to this day,” said John Wardell KC. “If it hadn’t been for the delisting, BSV would be a first-tier currency like Bitcoin.”
In arriving at a pre-trial judgment in July 2024, the Competition Appeal Tribunal refused Binance’s request to throw out the case completely.
However, it sided with the exchange in agreeing that the “market mitigation rule” applied to the delisting, meaning that the vast majority of Bitcoin SV holders would have been aware of BSV’s removal and would have had the opportunity to trade into alternatives.
The tribunal’s judges concluded at the time, “The evidence currently before us as to the extent to which any BSV holders could reasonably have remained sufficiently unaware so as to exclude the market mitigation rule is […] scant and high-level.”
Yet lawyers for the BSV investors argued this week the market mitigation rule does not apply in this case, allegedly because the investors weren’t able to avoid loss by trading into alternative cryptocurrencies.
“There is no duty to mitigate if your damaged asset cannot generate sufficient funds,” said Wardell. “It is well established that defendants will not be prejudiced by financial inability to mitigate.”
Lawyers representing Binance argued against this line of reasoning, with Brian Kennelly KC of Blackstone Chambers urging the Court of Appeal not to reverse the 2024 decision on the so-called foregone growth effect.
“BSV could have been exchanged for Bitcoin or other cryptocurrencies,” he said. “BSV is and was, at all relevant times, a readily marketable asset.”
The case against Binance is part of a class action also involving Kraken, ShapeShift and Bittylicious, which all delisted BSV between April and June 2019.
The claims were submitted by BSV Claims Limited, a special purpose vehicle for which Lord Currie of Marylebone—who was the chair of UK telecoms regulator Ofcom and the Competition and Markets Authority—sits as the sole director.
The case was brought on behalf of all UK-based Bitcoin SV holders between April 2019 and July 2022, estimated to be in the region of 243,000 investors.
It represents the UK’s first collective case related to cryptocurrencies and competition, with the complainant alleging that the four exchanges conspired to delist BSV.
Speaking to Decrypt, Ashley Fairbrother—a partner at legal firm Edmonds Marshall McMahon—acknowledges that the case is “very novel” and has “an equally extraordinary” backstory.
“Last year, in an unprecedented case, the English High Court found that Dr Craig Wright was not Satoshi and that he had orchestrated a fraud not only on many people and companies, but also on the Courts of England and Wales, Norway, and the USA,” he said.
According to Fairbrother, Wright used his false claims to influence investment in BSV, which enabled him to profit from his lies.
“If the BSV coin was created by a fraudster with a view to realizing the fruits of a fraud, it is easy to understand why the community took the steps that it did to delist BSV, to deter the damaging impact on the continued development of Bitcoin,” Fairbrother adds.
Fairbrother also noted that recent years have brought a few examples of investors attempting to bring claims against exchanges, although these claims have usually been “fundamentally flawed,” as witnessed in Piroozzadeh v Persons Unknown (2023).
“While legal action against exchanges is theoretically possible, much like claims against traditional banks, significant legal and practical hurdles would need to be overcome,” Fairbrother explained. “Many leading exchanges are increasingly adopting more robust compliance and regulatory frameworks, which are likely to make successful claims even more difficult in the future than they already are.”
Such factors lead Fairbrother to be uncertain as to whether BSV Claims Limited will be successful against Binance and the other exchanges, admitting that the question is a “very difficult” one to answer.
“The BSV investors are well-resourced and well-funded,” he added, “however the natural consequence of them winning will be that the court has aided Craig Wright to some extent to realize some value from his fraudulent claims.”
Edited by Andrew Hayward
