£10 billion BSV investor class action lawsuit given green light in UK
A £10 billion BSV investor class action lawsuit against digital asset exchanges has been approved by the United Kingdom’s Competition Appeals Tribunal (CAT), making it one of the largest collective legal actions to be approved in U.K. history.
The lawsuit is BSV Claims Limited v Bittylicious Limited & Others . Brought on behalf of over 200,000 BSV investors, it accuses a group of prominent digital asset exchanges—Binance, Kraken, Shapeshift and Bittylicious—of colluding to delist BSV from their platforms without good reason, which allegedly had the effect of “distorting, preventing or restricting” competition within the United Kingdom in violation of the Competition Act 1998.
Last week, the CAT granted certification to the claim, meaning it will now proceed to trial.
Case background
The four defendant exchanges decided to delist BSV in April 2019. At the time, their founders and/or the exchanges’ official twitter accounts indicated that they were doing so as retaliation against Craig Wright’s claim to be Bitcoin inventor Satoshi Nakamoto; at the time, Wright was a leading technical figure within the BSV community.
For example, Changpeng Zhao, the disgraced founder and former CEO of Binance, tweeted a that “Craig Wright is not Satoshi. Anymore of this sh#t, we delist!” and then, later:
“I normally don’t’ like to get involved in debates, pick sides, etc. But this is going too far. I also didn’t’ like the fact that the fork caused BTC to drop below $6k, which caused pain to many in the industry.”
When Binance formally delisted BSV, Zhao then retweeted the announcement and urged his audience to “do the right thing.”
Erik Voorhees, CEO of Shapeshift, tweeted an announcement that his exchange would be following Binance’s lead, saying that the platform “stand[s] with @binance and CZ’s sentiments.”
Kraken put up a Twitter poll on April 15, 2019, asking if they should delist BSV, and Zhao responded by assuring his followers that Kraken CEO Jesse Powell would do it and that the ‘industry is tighter and stronger than you think.’
Kraken confirmed it was delisting BSV a day later. Bittylicious piled on that same day, saying it was delisting BSV “to show solidarity against the toxic litigious environment in the BSV space.”
Provisional expert reports submitted in the case estimate that if the allegations are true, the class of BSV investors suffered almost £10 billion in damage due to both the immediate effect that the delistings had on the price of BSV and the ‘forgone growth’ resulting from BSV losing the opportunity to develop into a ‘top tier’ digital asset.
Section 2 of the U.K.’s Competition Act 1998 prohibits any agreements which are made that has “as their object or effect the prevention, restriction or distortion of competition within the United Kingdom.” It is under that provision that the collective proceedings had been brought to the CAT.
BSV investor suit given green light
In the United Kingdom, class actions (known as ‘collective proceedings orders’ or CPOs) brought in the Competition Appeal Tribunal must first be ‘certified’ by the Tribunal. This involves an assessment of the suitability of proposed class representative and the class itself, together with the consideration of any application made by the defendants to strike out the claim.
In this case, at the certification hearing in June 2024 Binance had resisted certification and alternatively sought to strike out a large part of the claim. In particular, it argued that the BSV investor class should not be able to claim damage beyond the point at which they were aware of the delistings because under law they were required to take reasonable steps to mitigate their losses—in other words, they should have sold their BSV at that point and purchased an equivalent digital currency on the market. If it had been accepted by the CAT, this would have effectively fixed the amount of damages able to be claimed by the affected BSV holders to the date of delisting, ignoring the subsequent effect on BSV’s price.
In Friday’s judgment granting certification, the CAT had no difficulty in finding that the standard for approving the claim had been met. It also rejected Binance’s strike-out attempt, finding that this determination involves findings of fact that must be made at trial and as such was not appropriate for a pre-trial strike-out.
However, the CAT also wrote that the question of whether BSV holders should have mitigated their losses in the manner argued by Binance would likely benefit from a preliminary issue trial, meaning the question may get its own trial before the core trial begins. That is likely to be the next episode in BSV Claims Ltd v Bittylicious and others.
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