29 June 2020
Robert Ong Thien Cheng v Luno Pte. Ltd. & Anor (Shah Alam High Court Civil Appeal No. 12BNCVC-91-10/2018)
In Robert Ong Thien Cheng v Luno Pte. Ltd. & Anor, the Malaysian High Court classified cryptocurrency as a form of “security” and ruled on appeal that bitcoins fall within the ambit of “anything” under section 73 of the Contracts Act 1950 (“CA”), which among others requires “anything” delivered by mistake to be returned.
In this case, the first respondent, a digital assets exchange platform, mistakenly transferred 11.3 bitcoins to the appellant’s e-wallet account registered with another cryptocurrency exchange platform following a technical glitch. The appellant offered to pay a sum equivalent to the value of 11.3 bitcoins as at the day of the erroneous transfer. However, the first respondent refused to accept the offer and sought to recover the 11.3 bitcoins or its equivalent fiat value as at the time of filing the legal action, which was more than double the former sum. The lower court ruled in favour of the first respondent.
On appeal, the High Court affirmed the decision and the interpretation of section 73 of the CA by the lower court. The High Court observed that cryptocurrency is legally provided for in Malaysia pursuant to the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019 (“Order”), and is defined under the Order as a form of “security”. The cryptocurrency is considered as a form of “commodity” as real money is used to purchase it and there is value attached to the cryptocurrency, the same way as value is attached to shares. The High Court further stated that the CA, drafted some seven decades ago, should be construed in a manner which reflects recent changes in modern technology and commerce. Accordingly, the court held that the term “anything” under section 73 of CA was sufficiently wide to cover bitcoins and ordered the 11.3 bitcoins to be returned to the first respondent.