Babbitt column | Case study: Exchange "downtime", does the holder lose any compensation?

Source of this article: Xiao Sa

Author: Tan Hao Guo Xiao Sa

The currency circle trading platform advertises that "20ms" and "10ms" will never get stuck and will never go down to attract customers. However, currency prices fluctuate, and the trading volume of major mainstream virtual currencies often exceeds 100 million in a single day; the trading system is under great pressure. Due to the downtime and stuttering, the transaction cannot be carried out normally, which is likely to cause a large loss to the user; some "futures" investors will even encounter a forced flat, resulting in no penny left. Can property remedies be obtained through legal channels for property losses caused by system problems?

Basic case

In November 2016, Feng registered an account with Ok coin and purchased 38.748 bitcoins on January 12, 2017. Soon after, on August 1, the BTC main chain encountered a fork event, forking into two chains, BTC and BCC.

Ok coin warned and issued a notice on July 18, 2017; and announced again on July 25, 2017, promising to take an account snapshot on August 1 and provide the same amount of BCC to accounts holding BTC.

Subsequently, on August 1, 2017, Okcoin issued another announcement, requiring users to click on the "collect" button in the OKCoin bank account to obtain BCC; and promised that all the received bit cash will be directly credited into the user's OKEx spot account.

However, in December 2017, after logging in to his account, Feng found that there was no "claim" button described in the announcement on the webpage, and there was no income BCC in his account.

Later, the plaintiff consulted the defendant's customer service and learned that the bitcoin cash collection channel has been closed, and because bitcoin cash has not been collected before, it cannot be collected later.

On the day that Feng Mou wanted to withdraw BCC (November 25, 2017), the currency price was 1,358.12 USD / piece; and then the BCC price fell all the way, and as of the prosecution date (July 12, 2018), it had fallen to 694.07 USD / piece. The failure to collect and trade resulted in a total loss of 169,969.22 yuan for the plaintiff.

Feng's appeal
1. Immediately pay 38.748 BCCs to their OKEx account.

2. Compensation for the loss of 169,969.22 yuan due to the inability to trade in time.

case study

The problem in this case is actually the question of whether the platform should repay the resulting losses due to system problems leading to the inability to trade; that is, the legal liability of non-performance and improper performance of the contract in the Contract Law.

When we refine the problems in this case, we can find that Feng ’s loss in this case can be divided into two parts: the first part is the BCC that the platform did not pay according to the promise; the second part is the loss caused by the inability to trade. Whether the compensation for the two parts of the loss can be supported is the two disputed issues in this case.

1 Is the promise made by Okcoin through the announcement effective?

In this case, Feng established a contractual relationship with the Okcoin platform. This is because when Feng signed a contract with Okcoin through a data message, and according to the provisions of Article 26 of the Contract Law, a contract was concluded in the form of a data message, the commitment will take effect when it arrives.

In other words, the contractual relationship between the two parties was announced when Feng registered an account and confirmed to agree to the terms of service.

And OKCoin's terms of service stated: "All notices issued to users, OKCoin will be served through page announcements, etc …" According to Article 139 of the "General Rules of Civil Law": "Made by announcement Means that the announcement will take effect when the announcement is made. "

According to the above-mentioned laws, from the date Okcoin issued an announcement promising to pay BCC, Okcoin has an obligation to pay Feng. The 38.748 BCC mentioned above are the subject of the contract. According to the provisions of Article 107 of the Contract Law, if a party fails to perform its contractual obligations or does not meet the contractual obligations, it shall be liable for breach of contract , such as continuing performance, taking remedial measures, or compensating for losses .

According to this, the court ordered: "The platform should fulfill its promised obligations." 38.7480 BCCs were paid to Feng's account.

2 Should the counterparty lose due to improper performance of the contract?

In this regard, Article 113 of the Contract Law clearly states: "If one party fails to perform its contractual obligations or the contractual obligations do not comply with the agreement and cause losses to the other party, the amount of damages shall be equal to the losses due to breach of contract, including contract performance The benefits that can be obtained afterwards shall not exceed the losses that may be caused by the breach of the contract that was foreseen or should be foreseen when the party in breach of the contract concluded the contract. "

According to this article, the relative losses caused by improper performance of the contract can be divided into two types:

(1) Expected loss of benefits; such loss can be compensated in accordance with Article 113 of the Contract Law.

(2) Unexpected loss of benefits; such losses cannot be compensated in accordance with Article 113 of the Contract Law.

Whether the loss can be expected, the inspection criteria is foreseen or should be foreseen when one party to the contract concludes the contract, and the possible loss due to breach of contract.

In this case, Feng's right to receive BCC was based on the platform's unilateral commitment, and there was no transaction; therefore, the platform's payment lacked the corresponding consideration. Because there is no consideration, the platform cannot foresee the possible benefits of the contract when the contract is concluded. As mentioned earlier, the expectation of loss requires one party to foresee or should foresee when the contract is concluded. Therefore, Feng's "loss" lacks the basis for consideration, and the other party's unforeseen range of benefits should not be compensated.

Referee result

As analyzed above, the court supported Feng's first lawsuit; but did not support his second lawsuit.

Court order
1. Beijing Rocoin Network Technology Co., Ltd. (Okcoin) shall issue 38.7480 BCC to Feng's registered account within ten days after the judgment becomes effective.

2. Does not support Feng's other lawsuits.

The case opens

If we assume that the currency itself is in the account, but due to platform problems, it can not be sold in time to cause losses. Can Feng's request be supported at this time?

The answer remains: not necessarily.

As mentioned above, the range of losses foreseen or should be foreseen when the contract is concluded should comprehensively consider the influence of a party ’s breach of contract on the loss, the purpose of the contract, etc., combined with the rules of foreseeable rules, derogation rules, profit and loss offset rules and fault offset , To specifically examine the foreseeable range of losses.

In this case, the international market price of bitcoin and other virtual commodities fluctuated greatly , a fact known to investors at this time. Based on the nature of virtual goods such as Bitcoin, price fluctuations within a certain range are not the scope of "benefits that can be obtained after the performance of the contract" in the contract law; causing economic loss to one party is not a loss stipulated in the contract law. At this time, the loss does not comply with the provisions of Article 113 of the Contract Law and will not be compensated.

However, if the platform has the behavior that Yang Ma said in the 3.15 announcement, for example, through robot brushing, malicious downtime, and forced leverage to explode positions; the resulting loss is not only a breach of contract in the "Contract Law" Causes a loss to a party; it may also meet the requirements for the establishment of a tort in accordance with Article 19 of the Tort Law. If the circumstances are serious, it may even violate the relevant provisions of the Criminal Law and constitute a crime.