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Three Crypto Cases Worth Observing in 2020

Claudia Otto

The year 2020 promises to be a crypto year. Not in the sense of another hype-peak, but in terms of the merging of crypto business and law. The following three cases in particular have caught my attention:


I. UK crypto exchange Coinfloor bans alt-coins[1] and offers Bitcoin-only services as of 1 January 2020[2]

The London based crypto exchange will also delist Ether (ETH), the Ethereum “inhouse” coin. Clients currently depositing, buying and selling Ether on the exchange will not be able to continue from 3rd of January 2020 on. However, Ether custody and withdrawals will continue beyond this date, but will incur an increased administrative fee. The CEO, Mr Obi Nwosu, expects other exchanges to follow its lead.[3]

This decision is highly interesting, since

“The ecosystem of businesses and consumers using or holding bitcoins is growing every day as more people start to recognise its worth. Coinfloor has the opportunity to create financial services that not only meet the Bitcoin ecosystem’s needs, but also contribute to making this future form of money available to everyone. That being said, we continually look to identify other cryptocurrencies that provide a differentiated proven value proposition, have a strong capable community of supporters, and maintain a focus on decentralisation and censorship resistance.”[4]

At first sight, the legislators’ advances regarding AML do not seem to be the reason for the banning of alt-coins. However, the real reason seems to be unsaid.

With regard to the platform Ethereum, which can only be used with Ether,[5] this decision could have a serious impact on its existence as it is depending on a broad use. If Ether is hard to get, users might turn to exchange-supported competing platforms. If crypto exchanges are (jointly) able to put platforms at a disadvantage, anti-trust law could be relevant.

II. Crypto exchange Kraken faces lawsuit alleging significant compliance deficiencies[6]

The well-known crypto exchange Kraken is being sued by a former employee because he was dismissed, inter alia, for his whistleblowing efforts regarding alleged violations of the law.[7] The writ outlines that Kraken et al. expected its employees to ignore unethical behavior and illegal business tactics.[8] The plaintiff alleges, inter alia, that he has been asked if Kraken could use his home address for applications for banks and regulators.[9] Also, he alleges that Kraken received revenue from countries it was not allowed to operate, i.e. offer paid services in,[10] and that Kraken’s bank accounts (as well as token funds) were short worth of millions of dollars.[11]

As of today, i.e. shortly after submission, these are only allegations. Nevertheless, the case shows parallels and arouses interest in further pursuit.

III.  Savedroid: What kind of contract did the ICO-parties conclude?

Savedroid AG, a German start-up company that run “the first ICO made in Germany”, is being sued by consumers for reimbursement. The main focus of lawyer Claudia Otto (author) is to finally clarify what the legal object of this and the “regular” ICO is, what so-called tokens are in a legal sense and what kind of contract the parties have concluded – if a contract has been concluded at all.

To date, three consumers that I know of have filed suit. They will each obtain a court ruling in 2020, which will hopefully point the way to more legal certainty with regard to crypto assets.



[1]  Alt-coins are all other coins except Bitcoin.

[2]  https://blog.coinfloor.co.uk/post/189719817726/coinfloor-sets-eyes-on-bitcoin-only-services-from (last accessed on 22 December 2019).

[3]  https://cointelegraph.com/news/coinfloors-ceo-explains-decision-to-delist-all-crypto-but-bitcoin-to-cointelegraph (last accessed on 22 December 2019).

[4]  https://blog.coinfloor.co.uk/post/189719817726/coinfloor-sets-eyes-on-bitcoin-only-services-from (last accessed on 22 December 2019).

[5]  Without paying transaction fees called „gas“ a user can trigger no transactions. Gas is measured in Gwei, a denomination of Ether (last accessed on 22 December 2019).

[6]  https://blog.coinfloor.co.uk/post/189719817726/coinfloor-sets-eyes-on-bitcoin-only-services-from (last accessed on 22 December 2019).

[7]  Case No. CGC-19-581099 in the Superior Court of California for the County of San Francisco; lawsuit filed on 26 November 2019.

[8]  Page 6 of the lawsuit filed on 26 November 2019.

[9]  Page 6 of the lawsuit filed on 26 November 2019.

[10]  Page 8 of the lawsuit filed on 26 November 2019.

[11]  Page 9 of the lawsuit filed on 26 November 2019.

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