BSV investors have filed a £9.9 billion class action lawsuit against Binance, Bittylicious, Kraken, and Shapeshift over the collective delisting of the digital asset.
The four cryptocurrency exchanges are accused of conspiring to harm the prospects of BSV by delisting the asset without justification, in violation of the 1998 Competition Act, by reducing, preventing, or distorting competition in the United Kingdom. Kraken and Binance are also accused of causing additional losses to BSV investors by “forcibly converting BSV into other cryptocurrencies without the investors’ permission.”
Velitor Law brings the suit before the Competition Appeal Tribunal (CAT). Similar to class action lawsuits permitted in the United States, the claim is referred to as a collective proceedings order (CPO) in the United Kingdom. It is brought on behalf of an estimated BSV 240,000 investors on an opt-out basis, which means that all class members are automatically included unless they opt out.
Importantly, the claim is supported by several regulatory heavyweights. Though the action is formally brought by BSV Claims Limited, a company formed solely to bring the CPO, the director of that company (and the practical class representative) is Lord David Currie of Marylebone, the first Chair of the Competition and Markets Authority, the United Kingdom’s competition regulator. Lord Currie also served as the founding chairman of Ofcom and dean of the London Business School.
In his witness statement, Lord Currie stated, “I have accepted this role about the proposed collective proceedings because I believe that the class members deserve to be protected from anti-competitive conduct.”
“I also view this case as an opportunity to demonstrate that competition law applies equally to crypto assets as it does to other economic activities. A significant portion of my career as an economist and regulator has been devoted to consumer protection. Ensuring fair competition is essential to consumer protection. Consumers who invest in cryptocurrencies assume the risk of price volatility. They should not be required to risk having the value of their investments diminished by anticompetitive conduct. “
“The fact that the delisting activity described was coordinated and unchallenged by regulators raises serious consumer protection concerns in my opinion.”
Seamus Andrew, Velitor’s founder, and managing partner stated:
“Tens of thousands of people may have lost significant sums of money through no fault of their own as a result of the actions of these exchanges, and we are committed to helping them recoup those losses. This is a rare type of case that has only recently become possible in English courts due to 2015 legal changes. We intend to demonstrate that these exchanges harmed BSV and caused financial harm to numerous small investors.”
The following step is for the CAT to certify the claim. A certification hearing will likely be scheduled within a few weeks if the defendants do not object. The case will proceed to trial if certification results from the hearing. On bsvclaims.com, the claim and contact information for potential class members are listed.
The 2019 removals
Longstanding criticism has been directed at exchanges for the perceived arbitrariness of which assets are listed and which are not. A whenlained-about wave of delistings occurred in April 2019, exchanges provided no plausible explanation. Binance, for instance, referenced the process by which it evaluates assets for listing on its platform, but could not specify why BSV had been targeted.
EvidentlyThegs were the result of a concerted effort (or, in other words, collusion). All four defendants announced between April 15 and April 16 that they would delist BSV within 24 hours of one another. In addition, the social media posts of the exchanges and their leadership at the time of the delistings reveal a clear objective.
The CEO of Binance, Changpeng Zhao, tweeted on April 12, 2019, “Craig Wright is not Satoshi. We will de-list if we receive any more of this garbage!”
Soon thereafter, he remarked:
“Normally, I dislike participating in debates, taking sides, etc. However, this goes too far. I also didn’t like that the fork caused BTC to drop below $6,000, causing many in the industry pain.”
A few days later, Binance delisted the coin, and Zhao took to Twitter to urge other exchanges to do the same. When announcing that Shapeshift would also delist BSV, Erik Voorhees, CEO of the defendant exchange, made explicit reference to Zhao’s encouragement.
“We stand in solidarity with @binance and CZ. We’ve decided to delist #BSV from @ShapeShift io in 48 hours.”
Kraken also revealed its hand by conducting an unbalanced Twitter poll on the subject.
BSV was delisted from the exchange on April 16. According to the lawsuit, days later, co-founder Jesse Powell admitted in a deleted tweet that the decision had nothing to do with the merits of BSV.
“We were not delisted for technical reasons. BSV never satisfied our listing criteria, but we supported it because everyone wanted their “free money” from the fork. The frivolous lawsuits filed by leaders of the BSV community against us, our partners, and our clients prompted us to delist.
The absurdity of this statement is highlighted by the fact that Powell recently listed the re-launched Terra token on Kraken, just weeks after the original token exploded and drove away a large number of investors.
Roger Ver, an outspoken opponent of BSV, is shared by at least three of the defendants, which is a strikingly common thread. Ver is diametric to the mission of BSV due to his staunch opposition to the imposition of law and regulation within the digital asset industry. This is peculiar given that Ver was an early investor and advisor for Kraken, Binance, and Shapeshift.
Regardless of your stance on BSV, the ability of exchanges to collectively decide which projects should succeed and which should fail without regard to their technical merits is a heinous problem for the industry. BSV was able to survive the coordinated delistings, but it is undeniable that digital asset projects rely heavily on these exchanges to reach their target markets.
Competition law exists to combat precisely this scenario; with this CPO, it will be demonstrated for the first time that these laws are applicable to the digital asset industry just as they are everywhere else.