The appeal focused on “sub-class B” – around 75,000 individuals who held BSV on 11 April 2019 and continued to do so when proceedings began in July 2022. The claim sought damages quantified by reference to a supposed “foregone growth effect”. This theory posited that the Respondents’ alleged wrongdoing had prevented BSV from becoming a top-tier cryptocurrency like Bitcoin, in which scenario its value would have massively increased.

The Applicant claimed that sub-class B holders were entitled to damages due to the Respondents’ preventing BSV from becoming a major cryptocurrency (and the associated increase in its value). Alternatively, the Applicant claimed that the Respondents’ actions had caused sub-class B to lose the chance of BSV becoming a major cryptocurrency. The total quantum claim for sub-class B was a staggering £8.99 billion – over 350 times the original value of their holdings.

The Applicant’s appeal concerned the first instance findings of the Competition Appeal Tribunal, which ruled that the Applicant’s loss was subject to the “market mitigation rule”. This rule states that a claimant seeking damages for lost or damaged goods should ordinarily mitigate its loss by buying or selling substitute goods, where there is an available market. Where the rule applies, recoverable losses will generally be limited to the difference between the value of the original goods and the value of the substitute goods.
In this case, the Court of Appeal confirmed that the market mitigation rule applied.

Since BSV remained tradeable and comparable cryptocurrencies were available on the open market, sub-class B holders who knew of the delisting could have sold their coins and reinvested in substitute crypto assets, thereby crystallising their losses. Their failure to do so meant they could only claim the immediate loss of BSV’s value caused by the Respondents’ alleged wrongdoing – not speculative future gains.

The Court of Appeal also rejected the Applicant’s ‘loss of a chance’ argument for similar reasons. The Court ruled that this principle was inapplicable on the facts. It was also disapplied by the market mitigation rule, which required that sub-class B ought to have crystallised, and thereby mitigated, their loss by selling their BSV holdings upon becoming aware of the Respondents’ alleged breach (which they failed to do).

This judgment is helpful for all crypto investors. In confirming the applicability of principles of mitigation to quantum in the crypto context, the Court of Appeal has limited the scope for claims seeking exaggerated damages based on hypothetical market outcomes. The judgment confirms that traditional common law rules are entirely applicable to disputes involving digital assets and sets a precedent for how courts may treat speculative claims in the volatile world of cryptocurrencies.

Although Harneys does not advise on the laws of England & Wales, this judgment is likely to be of strong persuasive value in the courts of our jurisdictions when adjudicating crypto-related disputes.