Bitcoin exchanges are going through a rough time right now. More specifically, the BTC-E exchange is seemingly seized by US law enforcement agencies. It also appears the Singapore-based Quoine is in some hot waters. The company is being sued for their alleged involvement in reversing Bitcoin trades. As a result, around US$3.78m worth of trading process were deducted from users illegally.
The story involving Quoine is a rather interesting one, to say the least. It is Singapore’s biggest Bitcoin exchange to date and they seemingly have a solid reputation. However, one electronic market maker is suing the company over their behavior. The company has apparently rolled back a lot of Bitcoin trades, which doesn’t sit well with users. More specifically, these trades are apparently wrongfully reversed. That is rather interesting, especially when considering how we are talking about US$3.78m worth of funds.
Quoine Rolls Back Trades due to Glitch
According to B2C2, their orders to sell Ethereum on Quoine were not honored properly. The market maker wanted to convert ETH to Bitcoin at the price of 10 BTC per Ether. Interestingly enough, those orders were filled successfully. According to The Straits TImes, the company paid 309.2518 ETH and received 3092.517116 BTC in return. That is quite the trade when pulling it off successfully, that much is evident.
It did not take long until the order was reversed, though. Quoine claims the funds were misappropriated without authorization. According to the exchanges, they can legally do so due to the huge mark-up involved in these traders. However, B2C2 is not planning to take that verdict lying down and feels the exchange acted fraudulently. Filled orders should not be reserved regardless of the high mark-up involved. As a result, Quoine is now facing a battle in court over the 3084.78582325 BTC still owned to B2C2.
The exchange’s defense is how the market maker tries to profit from a technical glitch. Granted, these trades should never have executed at that high price. Then again, if an order is completed, that is usually the end of the story. It will be very interesting to see how this story plays out, as both parties have solid arguments. Rest assured this is not the last we hear of this debacle involving Quoine.
Header image courtesy of Shutterstock