The Issue
On January 17th, 2019 the court of Midden-Nederland ordered Koinz Trading BV to compensate the mining proceeds of 0.591 bitcoin to Mr. J.W. de Vries, or pay a ten,000 euro fine. Koinz Trading BV had two options: either pay up or declare insolvency.
About a fortnight later, the firm filed an insurance claim for bankruptcy. If granted, legal court would be incapable to enforce the 10,000 euro fine. From the claim in bitcoin is a only remaining option, which might only happen after recognizing bitcoin for a verifiable claim. A verifiable claim essentially means proving the delivery associated with the underlying asset (property, assets, wire transfer) is realistic.
The Ruling
According to a court document published March 20th, the court states that bitcoin appears carry the hallmarks of a property right:
“Bitcoin exists, based on the court, using a unique, digitally encrypted few numbers and letters stored relating to the hard drive from the right-holder’s computer. Bitcoin is ‘delivered’ by sending bitcoins from 1 wallet even to another wallet. Bitcoins are stand-alone value files, that are delivered right to the payee because of the payer in the event of a payment. It makes sense that a Bitcoin represents a value and is transferable. During the court’s view, it thus shows characteristics of one’s property right. Claims for payment in Bitcoin is therefore to be regarded as being a claim that qualifies for verification.”
The court saw that bitcoin’s characteristics morph it into a verifiable claim. Since the obligations with the contract between Mr. De Vries and Koinz Trading BV were in bitcoin, the unpaid amount have to be paid back concentrating on the same currency.
Conclusion
Koinz Trading BV owes 0.591 bitcoin to Mr. De Vries when being granted bankruptcy. As a consequence of volatility, each of the business and investor face increased fx risk if bitcoin-denominated contracts are enforced in bitcoin instead of the fiat-equivalent. This ruling could set precedence in common-law systems having significant impacts during the burgeoning cloud mining industry and beyond.