A £9.9 billion class action lawsuit has been filed against Binance, Bittylicious, Kraken and Shapeshift on behalf of BSV investors over the exchanges’ collective delisting of the digital asset.
The four cryptocurrency exchanges are accused of colluding to damage the prospects of BSV by delisting the asset without good reason, thereby reducing, preventing or distorting competition in the United Kingdom in breach of the Competition Act 1998. Kraken and Binance are also accused of causing further losses to BSV investors by “forcibly converting BSV to other cryptocurrencies without investors’ consent.”
The suit is brought in the Competition Appeal Tribunal (CAT) by law firm Velitor Law. Known in the U.K. as a collective proceedings order (CPO), the claim is similar to class action lawsuits allowed in the United States. It is brought on behalf of an estimated BSV 240,000 investors on an opt-out basis, meaning that anyone who falls into the class is included automatically unless they specifically opt-out.
Most significantly, the claim is being led by some serious regulatory heavyweights. Though the action is formally brought by BSV Claims Limited, an entity formed solely for the purpose of bringing the CPO, the director of that company (and the practical class representative) is Lord David Currie of Marylebone, who was the inaugural Chair of the Competition and Markets Authority, the U.K.’s competition regulator. Lord Currie was also the inaugural chair of Ofcom and was the Dean of the London Business School.
“I have agreed to take this role in relation to the Proposed Collective Proceedings because I believe that the class members deserve to be protected from anti-competitive behaviour,” said Lord Currie in his witness statement.
“I also regard this case as an opportunity to demonstrate that competition law applies in the sphere of crypto assets in the same way that it does to other economic activities. Much of my professional life as an economist and a regulator has been concerned with consumer protection. Ensuring fair competition is an essential part of protecting consumers. Consumers investing in cryptocurrencies take the risk of volatile prices. They should not have to take the risk of the value of their investment being affected by anti-competitive practices.”
“The fact that the delisting activity described… was concerted and has gone unchallenged by regulators raises, to my mind, serious consumer protection issues.”
Seamus Andrew, founder and managing partner at Velitor, said:
“Thousands and thousands of people have potentially lost significant amounts of money, through no fault of their own, due to the actions of these exchanges and we are determined to help them win that money back. This is a rare type of case, which has only been recently made possible in the English courts due to changes in the law in 2015. We aim to show that these exchanges harmed BSV and caused financial hurt to many small, individual investors.”
The next step is for the claim to be certified by the CAT. A certification hearing is likely to be scheduled in a matter of weeks absent any challenge by the defendants. Should that hearing lead to a certification, the case will then proceed to trial. The claim and contact details for potential class members are set out at bsvclaims.com.
The 2019 delistings
Exchanges have long drawn criticism for the perceived arbitrary nature of which assets are listed and which are not. Indeed, when the complained-of wave of delistings took place in April 2019, the exchanges offered no credible explanation. Binance, for example, cited the process by which it reviews assets to be listed on its platform—but couldn’t point to any specific reasons why BSV had been targeted.
That the delistings were a collective decision (collusion, in other words) is seemingly beyond doubt. All four defendants announced that they would be delisting BSV within 24 hours of one another between April 15 and April 16, 2019. Additionally, the social media postings from the exchanges and their leadership from the time of the delistings reveal an obvious agenda.
Changpeng Zhao, CEO of Binance, tweeted on April 12, 2019, that “Craig Wright is not Satoshi. Anymore of this sh#t, we delist!”
Shortly thereafter, he said:
“I normally don’t like 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.”
Binance delisted the coin days later, and Zhao took to Twitter to encourage other exchanges to do the same. Erik Voorhees, CEO of defendant exchange Shapeshift, explicitly referred to Zhao’s encouragement when announcing that they too would be delisting BSV:
“We stand with @binance and CZ’s sentiments. We’ve decided to delist Bitcoin SV #BSV from @ShapeShift_io within 48 hrs.”
Kraken also tipped its hand by putting the question to a not-so-balanced Twitter poll:
Should Kraken delist Bitcoin SV (BSV)? #delistbsv
— Kraken Exchange (@krakenfx) April 15, 2019
The exchange delisted BSV on April 16. Days later, co-founder Jesse Powell went as far as admitting that the decision had nothing to do with the merits of BSV in a now-deleted tweet, according to the lawsuit:
“We didn’t delist on technical merits. BSV never met our listing requirements but we supported it because everyone wanted their ‘free money’ from the fork. What pushed us to delist was the frivolous lawsuits from leaders in the BSV community against us, our partners and clients.”
The absurdity of this statement is brought into sharp relief by the fact that Powell recently listed the re-launched Terra token on Kraken just weeks after the original exploded and took many investors with it.
There’s another conspicuously common thread which runs through at least three of the defendants is outspoken BSV opponent Roger Ver. Ver has been firmly against the intrusion of law and regulation into the digital asset industry and is therefore diametrically opposed to the mission of BSV. This is curious, because Ver just so happens to be an early investor in and advisor to Kraken, Binance and Shapeshift.
Regardless of how you feel about BSV, the ability of exchanges to collectively decide which projects should succeed and which should fail without any reference to their technical merits is an ugly problem for the industry. BSV managed to survive the coordinated delistings, but it can’t be denied that digital asset projects largely rely on these exchanges to reach their markets.
Competition law exists to combat exactly this scenario—with this CPO, it will be the first demonstration that these laws apply to the digital asset industry just as much as they do anywhere else.
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