Court of Appeal confirms crypto-investors cannot pursue bulk of £9 billion competition claim
The key points
The 'market mitigation rule' applies to cryptocurrencies, just as it does with any other freely tradeable asset.
In BSV Claims Limited v Bittylicious Limited & Ors [2025] EWCA Civ 661, the Court of Appeal ("CoA") has affirmed the Competition Appeal Tribunal's ("CAT's") decision, which effectively wipes out the lion's share of the £9 billion+ claimed against Binance and five other crypto-exchanges in these opt-out collective proceedings, brought on behalf of holders of Bitcoin Satoshi Vision ("BSV").
In addition, the 'loss of chance' element of the claim was struck-out entirely. The claimant class cannot pursue its claim that the alleged anticompetitive activity in mid-2019 deprived BSV investors of the chance for BSV to become as valuable as Bitcoin or other top-tier cryptocurrencies.
What are the practical implications?
The judgment, while brief, is useful for practitioners as an example of how English courts can and will apply established English law principles to new assets, such as cryptocurrencies. Lawyers should also take note of the CoA's comments on the importance of ensuring that pleadings are worded in line with orthodox legal principles. Getting swept-up in novel and decidedly non-legal terminology of the parties' crypto-experts is not recommended.
The surviving proceedings will be of interest in determining whether the CAT will accept that the defendants breached competition law by way of an alleged (and relatively novel) 'collective boycott of a crypto-asset' through tweets and public announcements.
The CAT may also be called upon to decide when the various investors within the claimant class (who could potentially range from the most amateur crypto-enthusiasts to fairly sophisticated investors) will be deemed to have reasonably known about the alleged collective boycott and the subsequent crash in value of BSV. This could be key in determining when they should have first taken steps to mitigate their losses by selling their holdings, and what those losses might be.
BSV's brief but interesting history
BSV was created in 2018 as an offshoot of Bitcoin Cash (itself an offshoot from Bitcoin). One of BSV's most vocal advocates was Dr Craig Wright who, since 2015, has made (now discredited) claims to be 'Satoshi Nakamoto', the pseudonymous inventor of Bitcoin.
The controversy surrounding Dr Wright's claims led to the defendant crypto exchanges announcing in April 2019, via a series of tweets, that they would de-list BSV from their platforms. BSV's crash in value promptly followed.
BSV Claims Limited ("BCL") brings these opt-out collective proceedings on behalf of UK residents who held BSV on 11 April 2019. BCL pleads two heads of loss, by reference to its expert's report:
- The "immediate and persistent effect" of the drop in value of BSV from £55 to £39 at the time of the de-listing; and
- The "foregone growth effect", being the lost opportunity for BSV to appreciate in value alongside other top-tier cryptocurrencies.
The Claimant class comprises three sub-classes. Binance's strike-out application took aim at Sub-Class B, who sought up to 352 times the value of their BSV holdings, by comparison to the value of Bitcoin.
|
Sub-Class |
Members |
|
Damages Comparators: |
|
|
Bitcoin |
Bitcoin Cash |
|||
|
A |
155,000 |
Claiming the "immediate and persistent effect". |
£18.2 million |
£17.2 million |
|
B |
75,000 |
Claiming both the "immediate and persistent effect" and the "foregone growth effect". |
£8,991.9 million |
£25.9 million |
|
C |
13,000 |
Those who lost all access to BSV on the Binance exchange and those whose BSV was converted to Bitcoin Cash (less a 10% fee) on the Kraken exchange. |
£925.5 million |
£5.7 million |
|
|
|
|
£9,935.6 million |
£48.7 million |
What did the Court of Appeal decide?
The CoA agreed with the CAT that the foregone growth effect was (for the most part) not recoverable in law and that the market mitigation rule applies to cryptocurrencies:
- BSV is not a unique cryptocurrency and, in calculating the "foregone growth effect" by comparison to Bitcoin and Bitcoin Cash, the claimant had highlighted its readily available comparators.
- Cryptocurrencies are freely tradeable assets, akin to shares and derivatives, and it was "unthinkable" for the CoA that a shareholder could have a claim for many multiples of the share price in similar circumstances.
- Sub-Class B had a decision to make on becoming aware of the de-listing events: to sell or retain BSV. Whichever option they chose, losses can only be calculated by reference to the maximum value obtainable at the point they knew or ought to have known of the alleged anticompetitive conduct (the "Relevant Date").
- It was irrelevant that BSV's value may have crashed further if all of Sub-Class B had opted to sell in mid-2019. The correct basis for calculating loss remained the value as at the Relevant Date. That a fire-sale of BSV may have increased those losses did not justify either the failure to mitigate or Sub-Class B's astronomical damages claim.
However, Sub-Class B narrowly survived a complete strike-out. There is an outstanding question (possibly to be determined in a preliminary issue trial) as to which BSV holders reasonably remained unaware of the de-listing and until what date. We may yet find out whether this question can be answered on the basis of the 'amateur' or 'sophisticated' nature of a crypto-investor, or otherwise.
Sub-Class B's alternative 'loss of chance' claim remains struck-out entirely. The CAT and CoA agreed that retaining BSV after the Relevant Date was not reasonable mitigation. Therefore, any loss of chance claim could not survive. However, the CoA disagreed with the necessity of the CAT's further analysis of whether BSV's future value depended on the actions of specified third parties, or the crypto market in general.
As an aside, the CoA made a point that litigants should always plead in terms of orthodox legal concepts. Use of non-legal terminology from expert reports is discouraged. Had BCL pleaded "loss of or reduction in value of the asset, with or without consequential loss" (as opposed to "immediate and persistent effect" and "foregone growth effect") the CoA considers it would have more easily got to grips with the claims.
While this may not have affected the outcome in this appeal, it is clearly in any litigant's interest that a claim can be fully and promptly understood by whichever court is tasked with deciding it.
