HDHK acted for a sophisticated trader who dealt in a high volume of crypto derivatives on a prominent crypto currency exchange at a price perceived to be attractive. The trades resulted in a paper profit of around HK$310m within two months. However, the said exchange then unilaterally adjusted its customer ledger and withdrew the entire profits from our client’s account without consent. HDHK advised the client in relation to commencing arbitration at the Hong Kong International Arbitration Centre under the HKIAC Rules 2018 and represented the client in negotiations with the said exchange and its Magic Circle legal advisors. HDHK then successfully extracted a highly favourable outcome, with the settlement paid in bitcoins. This led to a variety of considerations and further negotiations surrounding the precise bitcoin transfer mechanism, the reversibility thereof, virtual asset regulations and anti-money laundering concerns.
This matter is significant as it concerns an unsettled debate as to the circumstances in which crypto transactions on centralised exchanges are / should be reversible when there is alleged to be unusual market activity.
