Binance wins partial dismissal of lawsuit from Bitcoin SV investors

The United Kingdom’s Court of Appeal has partially dismissed a lawsuit brought by Bitcoin SV investors against major crypto exchanges, including Binance

The United Kingdom’s Court of Appeal has partially dismissed a lawsuit brought by Bitcoin SV (BSV) investors against major cryptocurrency exchanges, including Binance, for allegedly conspiring to delist the token in 2019.

The case, which began in 2019 and saw investors attempt to resurrect the suit in 2023, was initially filed by several BSV investors who claimed they suffered billions of pounds in damages as a result of the delisting.

The lower court ruled in favor of the investors, but the Court of Appeal partially reversed that decision, striking out claims for speculative damages and upholding the application of the market mitigation rule.

Investors aiming to claim speculative damages were those who held BSV through the delisting period and were classified as “sub-class B.”

These investors claimed over 8.9 billion British pounds ($11.9 billion) in damages, asserting that Binance’s delisting deprived holders of the chance to profit from BSV’s potential rise to a “top-tier cryptocurrency” like Bitcoin (BTC) or Bitcoin Cash (BCH).

The court rejected this “foregone growth effect” theory, stating, “BSV was obviously not a unique cryptocurrency without reasonably similar substitutes,” pointing out the representative’s own use of Bitcoin and Bitcoin Cash as comparators.

Sub-class B’s central claim was that delisting led to a missed opportunity to benefit from price appreciation. However, the court determined that these investors had ample chance to mitigate losses by selling or reinvesting in other crypto assets.

“They had a duty to mitigate their losses,” wrote Master of the Rolls Sir Geoffrey Vos. “They cannot recover losses that they could reasonably have mitigated.”

The appeal also challenged the Tribunal’s application of the “market mitigation rule,” arguing that such issues should be left for trial.

The court dismissed that notion, stating the rule clearly applies to freely tradable assets like BSV, and that the damages must be measured shortly after the delisting.

An additional argument concerning the “loss of a chance” to benefit from future price gains was also struck down. The court ruled it “flawed as a matter of principle,” noting that “cryptocurrencies are, by their nature, volatile investments.”

Binance’s limited strike-out application ultimately succeeded, with the court stating that even if some holders were unaware of the delisting, “they could never claim more than the total value of their holding before the delisting events plus any quantifiable consequential losses.”