#0002 - BC Supreme Court decides on the value of stolen Bitcoin
Should crypto be returned in kind, or the CAD value at the time of theft?
Imagine you sent someone 50 bitcoin in 2019. 50 bitcoin.
Today that’s worth almost $3.5 million CAD, but their value at the time was $535,000.
Now imagine they sent you nothing in return. Nada. Zip.
They didn't even pay you the $535,000.
That is the true story of a recent decision from the B.C. Supreme Court.
Michael Gokturk, the founder of failed Einstein Exchange, was ordered to pay $535,000 to the man who sold Gokturk 50 bitcoin in 2019. Gokturk's exchange shut its doors in 2019 amid a B.C. Securities Commission investigation, complaints, lawsuits, and debts of $16 million.
The man who sent Gokturk the bitcoin, Scott Nelson, transferred the bitcoin at an agreed price of $10,700 a coin. When he received nothing in return, despite multiple assurances from Hokturk, Nelson sued.
Nelson wanted either the amount the bitcoin is worth today, or $535,000. There is obviously a big distinction between 50 bitcoin today and 50 bitcoin two years ago.
This case highlights a critical point - should successful litigants be entitled to an equal amount of crypto returned, or to the dollar amount at the time of the sale?
Using the date of the breach to assess damages, Justice Sheila Tucker of the BC Court of Appeals awarded Nelson the value lost at the time, not the amount his bitcoin would be worth in 2021. She also did not force the repayment “in kind.”
This case represents a part of a limited but growing body of Canadian law dealing with disputes involving cryptocurrencies such as Bitcoin, Ethereum, and Dogecoin.
Canadian law treats bitcoin (digital currency) as property, the same way they treat a physical asset like gold.
It's well-settled law that breaches of contract disputes assign a value at the date the breach occurred.
However, the doctrine of specific performance (i.e. people request 50 bitcoin, instead of cash) could see an interesting application in future cases.