Bitcoin seller loses lawsuit over deal involving $320k in cash
A face-to-face transaction to sell $320,000 worth of bitcoin went awry when a quarrel broke out over who was entitled to the cash after the buyer denied having received the cryptocurrency, despite the bitcoin network confirming the transfer.
Mr Christofle Rio, who had transferred 12.14 bitcoin to a digital wallet, eventually left the Tanjong Pagar apartment without the cash and bereft of the cryptocurrency.
He then sued Mr Malcolm Tan Chun Chuen, the man who transacted with him, for breach of contract for failing to pay the agreed price.
But Mr Tan argued that his company, Qrypt Technologies, was merely a middleman that facilitated the sale of bitcoin from Mr Rio’s company, GCXpress Commerce (GCX), to the actual buyers.
He contended that he cannot be liable, nor does Mr Rio have the legal standing to sue, simply because the agreement was not between them as individuals, but between their respective companies.
Mr Rio’s lawsuit was dismissed last Wednesday, after the High Court found that both men were not the proper parties to the contract as they were acting on behalf of their respective companies, and not in their personal capacities.
Mr Rio set up GCX in 2019 as a cryptocurrencies trading business, while Mr Tan, a disbarred lawyer, was the managing director of Qrypt, a digital assets and blockchain company.
According to Mr Tan, he was contacted on Dec 1, 2020 via messaging app Telegram by someone identified as “Kenneth”, who asked to buy more than $300,000 worth of bitcoin.
Mr Tan then contacted Mr Rio, who said he had $320,000 worth of bitcoin to sell. They arranged to conduct the transaction at Mr Tan’s office at 18 Spottiswoode Park Road that afternoon.
Mr Tan then informed Kenneth about the meeting. Kenneth said he would be present at the office with his staff, and emphasised that all communications should be done via Telegram.
At 4.10pm, three men, who identified themselves as Kenneth, Eric Foo and Chua Hong You, arrived at Mr Tan’s office. Mr Foo took cash out of a bag and placed it on a table in the room.
Mr Tan asked Kenneth for his identity card to allow Qrypt’s compliance manager to complete the checks to comply with Monetary Authority of Singapore regulations.
Kenneth declined and asked Mr Chua to provide his identity card instead. Mr Chua was cleared to proceed with the transaction.
Some confusion was caused when a second buyer showed up, also carrying $320,000 in cash. The buyers had apparently arranged for him to wait downstairs. He was told to leave the premises.
At about 4.30pm, Mr Rio, accompanied by a Mr Phoon Chee Kong, arrived with counting machines. After the cash was counted, Mr Rio transferred 12.14 bitcoin to the wallet specified by Mr Tan.
Mr Tan then sent 11.982443 bitcoin – after deducting a 1 per cent administrative fee – to the wallet address stated in the Telegram chat.
However, the verification process took over an hour. Mr Rio and Mr Phoon were stopped by the three buyers from leaving with the cash until the transfer has been verified.
Things fell apart after confirmation was received from the bitcoin network.
Mr Tan said the person to whom he had transferred the bitcoin deleted their entire Telegram chat, while Kenneth denied that the Bitcoin was transferred to his wallet.
Mr Rio called the police and statements were taken from all six men. The buyers were allowed to keep the cash pending further investigations.
Mr Tan transferred the admin fee to GCX’s wallet and also made a police report.
Mr Rio sued Mr Tan for the balance of 11.982443 bitcoin, or $315,846.93 in monetary terms.
Justice Lee said the fundamental question in the suit was who were the proper parties to the contract.
He noted that it was a trite principle of law that only parties to a contract have the standing to sue and enforce those contractual obligations.
The judge said a number of factors point to the conclusion that Mr Rio was not acting in his personal capacity, including the fact that he had communicated with Mr Tan via a chat group that was operated by GCX to facilitate transactions.
As for Mr Tan, the judge said he could not have intended to enter into the agreement in his personal capacity, as it was Qrypt that was allowed by MAS to provide a digital payment token service.
Justice Lee also suggested that the relevant authority look into whether the due diligence process in this case was satisfactory. He noted that Mr Tan was prepared to forgo compliance checks on Kenneth, whom he believed was the ultimate buyer.
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