With the proliferation of cryptocurrency investment and transactions, the courts are increasingly faced with novel issues relating to cryptocurrency. The Singapore High Court case of Rio Christofle v Malcolm Tan Chun Chuen [2023] SGHC 66 involved a contract for the sale of Bitcoin. The Court had to determine if the contract was unenforceable for illegality, as well as who the proper parties to the contract were.
The Plaintiff (through his company GCX) and the Defendant (through his company Qrypt) entered into a peer-to-peer agreement (“Agreement“) for the sale of Bitcoin from the Plaintiff to the Defendant (or his company as an intermediary). The intermediary would in turn on-sell the acquired Bitcoin to an ultimate buyer via a separate agreement and receive an administration fee for facilitating the transaction.
To resist enforcement of the Agreement, the Defendant argued that the Agreement was void for illegality as the Plaintiff and GCX were not licenced to operate as a payment service provider under section 5 of the Payment Services Act (“PSA“), which prohibits the carrying on of the business of providing payment services in Singapore without a licence. However, the Court found that the Agreement itself was not illegal as contracts for the sale and purchase of Bitcoin or cryptocurrency are not in and or themselves prohibited by section 5 of the PSA. The Court also found that the Agreement did not have an illegal object as the Plaintiff was not carrying on a business of providing digital payment services – he was merely selling Bitcoin in its possession to the Defendant and was not acting as an intermediary himself.
The Court further found GCX and Qrypt were the proper parties to the Agreement, rather than the Plaintiff and the Defendant. From the facts, the Court found the Plaintiff and the Defendant were not acting in their personal capacities. An important factor was the fact that Qrypt held an exemption from holding a licence under the PSA for the provision of a digital payment token service, and not the Defendant.
In the circumstances, the Court dismissed the Plaintiff’s claim, as he ought to have included GCX as a second plaintiff, and Qrypt as second defendant.
