Court appeal divides Dutch bitcoin community
The atmosphere is heating up in the Netherlands, as a court appeal has created a divide in the Dutch bitcoin community. At stake: the legal status of bitcoin.
The Dutch bitcoin community is in a state of disarray. Over the past couple of months, two of the three board members of the Dutch Bitcoin Foundation have stepped down as an indirect result of communal discord. Simultaneously, one of the biggest bitcoin related companies operating in the area has antagonized a significant portion of Dutch bitcoin users. Some believe the very future of cryptographic currencies in this European bitcoin hub might be determined by a court appeal in the next couple of months, and the desired outcome has split Dutch bitcoiners into two camps.
The Court Case
At the heart of this story is a court case which deals with events that occurred almost three years ago. In August of 2012, a user bought 2,750 bitcoins worth 8.05 each for a grand total of 22,137.50 from another user – both of whose identities are not known. The buyer paid up his part of the deal soon after this deal was agreed upon. The seller, however, did not send all 2,750 bitcoins, but instead transferred only 990 of them.
After having urged the seller to transfer the rest of the funds several times in the weeks that followed, this proved to be to no avail: the remaining 1,760 bitcoins were never sent. The buyer therefore disbanded the remainder of the deal two months later, in October of 2012. He then asked the seller to reimburse him with the rest of the money that he had paid him instead, which added up to 14,168. But once again, the seller ignored all attempts to close the deal.
As a result, the buyer saw no other option than to take the case to court. The seller was summoned almost a year after the original trade should have taken place, in June of 2013. But by now, of course, the bitcoin exchange rate had skyrocketed to almost 70, a rise of more than 800%. Consequently – and this is the core of the controversy – the buyer did not only demand to be paid back the 14,168 that was defrauded from him, but also wanted the profit he would have made if he had gotten all of the bitcoins within a reasonable time. On top of the original 14,168, he asked for an additional compensation of a whopping 132,792.
As it turns out, the legitimacy of the claim might in part depend on the legal status of bitcoin. According to civil law in the Netherlands, if the seller is indebted to the buyer in something that is regarded as money, then the seller will have to cough up the exact amount of money in whichever currency the debt is stated. So if bitcoin is money legally regarded as a currency, as the buyer claims, he has a right to 1,760 bitcoins, or the equivalent in euros (132,792 currently).
The judge however, disagreed. Not only was the debt not stated in bitcoin anymore, as the deal was officially canceled in October of 2012, but – more importantly for this story – he also decided that bitcoin is not money under Dutch civil law. The judge did, however, rule that the rise in exchange rate up until the official cancellation of the deal in October of 2012 should be included in the reimbursement. This was one euro per bitcoin, hence adding 1,760 to the original amount of 14,168 for a total of 15,928. The claim to an additional 132,792 was denied.
This post was published at Coin Telegraph on 2015-03-01.