Cryptocurrency Exchange Can Recover Ethereum Tokens Wrongly Sent, Court Rules

A case pertaining to a dispute over ethereum cryptocurrency tokens mistakenly sent to an investor by a cryptocurrency exchange was found on the Canadian Legal Information Institute. In the case dated Sept. 12, the Supreme Court of British Columbia issued a major ruling where it said the rightful owner can track and recover the tokens.

The verdict issued by Justice Ronald A. Skolrood said the Singapore-based blockchain services company Copytrack could recover approximately 530 ethereum token (ETH) that were incorrectly transferred to Brian Wall, an investor.

According to the court order, when Copytrack made its initial coin offering in February, Wall participated to invest and had subscribed to buy 530 CPY Token — Copytrack's new token — worth $601. The ICO mistakenly transferred about 530 ETH instead of CRY tokens, and they were valued at $381,476 at the time (the current valuation is about $120,840).

Soon after Copytrack recognized the mistake, it requested Wall to return the ETH tokens. Wall initially refused to return them and transferred the tokens to another cryptocurrency trading account instead. After some more requests by the company, Wall agreed to return the tokens. However, it was found that the tokens from Wall's wallet were transferred onward to five different wallets. Wall claimed the transfers were made by an "unknown" third party unlawfully and that he was no longer in possession of those tokens.

The case became further complicated when Wall died in May, before the unlawful transactions could be traced and the court could reach a conclusion.

It was noted in the judgment summary that Wall had questioned the characterization of cryptocurrencies and whether the law — doctrines of conversion and detinue which is for goods and personal property — was applicable in this case.

This question was later ruled out and the summary said that whether cryptocurrency being classified a good or not "is in fact unnecessary."

"Regardless of the characterization of the Ether Tokens, it is undisputed that they were the property of Copytrack, they were sent to Wall in error, they were not returned when demand was made and Wall has no proprietary claim to them. While the evidence of what has happened to the Ether Tokens since is somewhat murky, this does not detract from the point that they should rightfully be returned to Copytrack," the court order read.

The court concluded its ruling by ordering "Copytrack be entitled to trace and recover the 529.8273791 Ether Tokens received by Wall from Copytrack on 15 February 2018 in whatsoever hands those Ether Tokens may currently be held."