Cryptocurrency has firmly established itself in the global financial landscape, with its total market capitalization surpassing $2 trillion. While much of the discourse has centered on regulatory compliance and legality, far less attention has been paid to dispute resolution involving digital assets—particularly when it comes to valuation and legal remedies. This article explores the practical challenges of seeking redress in cryptocurrency-related disputes, focusing on enforceability, valuation methodologies, and proactive contract design.
What Is Cryptocurrency?
Despite being called a "currency," cryptocurrency differs fundamentally from traditional fiat money like the U.S. dollar or Hong Kong dollar. Unlike government-backed currencies, cryptocurrencies operate without central banks or sovereign support. Instead, they exist purely as digital assets verified and recorded on decentralized, cryptographically secured ledgers known as blockchains.
According to the Singapore High Court case Fantom Foundation Ltd v Multichain Foundation Ltd & Multichain Pte Ltd [2024] SGHC 173, cryptocurrencies generally fall into four categories:
- Native coins are cryptocurrencies that run natively on their own blockchain. Examples include Bitcoin (BTC), Ethereum (ETH), and Fantom (FTM).
- Tokens (or non-native tokens) operate on existing blockchain platforms rather than independent networks. These are often tradable and can be exchanged for native coins.
- Stablecoins are pegged to traditional assets such as the U.S. dollar or gold. For instance, Tether (USDT) is backed one-to-one by dollar reserves.
- Wrapped tokens represent digital assets backed by a locked underlying asset on another blockchain. Wrapped Bitcoin (WBTC), for example, mirrors BTC’s value but operates on the Ethereum network.
While common law jurisdictions—including Hong Kong—increasingly recognize cryptocurrency as property, there is no universal consensus on its classification. In Re Gatecoin Limited (In Liquidation) [2023] 2 HKLRD 1079, the Hong Kong courts affirmed that crypto meets the classic legal definition of property: it is definable, identifiable by third parties, capable of being assumed by others, and possesses a degree of permanence.
However, cryptocurrency is not considered legal tender in most jurisdictions. In Hong Kong, under the Currency Ordinance (Cap. 65), it does not qualify as official currency. Similarly, the UK Law Commission has expressed skepticism about treating crypto as foreign currency—impacting the types of remedies courts can grant.
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Legal Remedies in Cryptocurrency Disputes
Because cryptocurrencies are not widely recognized as “money” in legal terms, creditors face significant hurdles. A debt claim requires a fixed sum of money, but crypto transactions typically involve delivery of an asset—not monetary payment. As a result, claimants usually pursue breach of contract claims for non-delivery, rather than straightforward debt recovery.
The standard remedy for breach of contract is compensatory damages, designed to place the injured party in the position they would have occupied had the contract been fulfilled. While courts may order specific performance—forcing a party to complete the transaction—this is discretionary and granted only when:
- Damages are inadequate to compensate the plaintiff; and
- Enforcement would not impose undue hardship on the defendant.
This rule has exceptions, particularly for unique assets like real estate. However, despite their digital uniqueness, most courts do not treat individual units of cryptocurrency as irreplaceable.
Given extreme price volatility, plaintiffs often struggle to decide between seeking damages or specific performance. When prices surge, they may prefer delivery; when prices drop, monetary compensation becomes more attractive.
Recent rulings suggest that obtaining specific performance for crypto transfers remains challenging. In B2C2 Ltd v Quoine Pte Ltd [2019] SGHC(I) 3, a Singapore court found that a crypto exchange breached its obligations by unilaterally reversing Bitcoin trades. Yet, it rejected the plaintiff’s argument that damages were inadequate due to BTC’s volatility. The court also noted that forcing the defendant to repurchase BTC at current market rates—far above the original trade price—would cause undue hardship.
Similarly, in Oliver Southgate v Adam Graham [2024] EWHC 1692 (Ch), an English court declined to order specific performance of an oral agreement to repay ETH equivalent to £50,000. Although not ruling out such relief in “appropriate” cases, the court emphasized that crypto transfer contracts are not inherently different from other commercial agreements warranting mandatory enforcement.
Valuation Challenges in Crypto Litigation
Given the uncertainty around specific performance and the discretionary nature of judicial remedies, valuation becomes critical in assessing damages for cryptocurrency breaches. Two key aspects require careful consideration: valuation date and valuation sources.
Valuation Date: When Does Value Matter?
Due to rapid price swings, choosing the correct valuation date can dramatically affect compensation amounts.
While the default rule is to assess damages as of the date of breach (“breach date rule”), courts may deviate based on fairness and loss mitigation principles.
In Southgate v Graham, the defendant failed to return 115.69 ETH in October 2019—a time when prices had dropped significantly compared to the original transfer date. By the time of appeal in 2024, ETH had appreciated substantially, making the owed amount worth approximately £350,000.
The appellate court held that while breach date valuation is typical, it is not absolute. Factors influencing alternative dates include:
- Whether compensating based on breach date leads to inadequate recovery;
- Whether the plaintiff acted reasonably in mitigating losses;
- Whether pursuing specific performance throughout litigation was justified.
Ultimately, the court referred the issue to a subsequent remedies hearing to determine the appropriate valuation point.
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Valuation Sources: Where Do You Get Reliable Data?
Another major challenge is identifying credible sources for pricing digital assets.
Unlike stocks traded on centralized exchanges, cryptocurrencies are decentralized and listed across multiple platforms—meaning there is no single “source of truth.” Moreover, most cryptos lack intrinsic value tied to cash flows or ownership rights; their worth stems largely from market sentiment.
In Fantom Foundation, the court accepted expert evidence relying on data from CoinMarketCap and CoinGecko—two leading cryptocurrency price aggregators. These platforms were deemed reliable due to their widespread use and citation by reputable financial publications like The Wall Street Journal.
The plaintiff successfully argued that even wrapped tokens without direct asset backing retain market value through speculation. For Fantom (FTM) valuation, experts used trading pairs against USDT on Binance—one of the largest exchanges—to establish fair market value.
This precedent underscores the importance of using recognized, transparent data sources when presenting valuations in court.
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Preventing Disputes: Contractual Safeguards
To minimize litigation risks and valuation disputes, parties should incorporate clear contractual terms upfront:
- Specific performance clauses: While courts retain discretion, including a clause affirming the intention to allow enforcement strengthens arguments for mandatory delivery.
- Liquidated damages provisions: Agreed-upon compensation amounts are enforceable unless they constitute a penalty—i.e., grossly disproportionate to actual harm (Cavendish Square Holding BV v Talal El Makdessi [2015] UKSC 67).
- Valuation mechanisms: Contracts can designate independent valuers or specify pricing sources (e.g., CoinGecko average over a 7-day window), binding both parties unless fraud or clear error is proven (Veba Oil Supply & Trading GmbH v Petrotrade Inc [2001] EWCA Civ 1832).
Frequently Asked Questions
Q: Can I sue someone for failing to deliver cryptocurrency?
A: Yes—though not as a debt claim, you can pursue a breach of contract action for non-delivery of digital assets.
Q: Is cryptocurrency considered property under common law?
A: Yes, jurisdictions like Hong Kong and Singapore recognize crypto as property due to its definability and transferability.
Q: How do courts value volatile assets like Bitcoin or Ethereum?
A: Courts rely on reputable price aggregators like CoinMarketCap or CoinGecko, often using exchange-traded pairs (e.g., BTC/USDT).
Q: Can I force someone to return my crypto through court order?
A: Specific performance is possible but discretionary—courts weigh adequacy of damages and burden on the defendant.
Q: What happens if crypto prices change drastically after a breach?
A: The valuation date impacts compensation. Courts may consider dates beyond breach if damages would otherwise be insufficient.
Q: How can I protect myself in a crypto transaction?
A: Use clear contracts with valuation clauses, liquidated damages terms, and dispute resolution mechanisms.
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