The report of a dispute between market maker B2C2 and Singaporean exchange Quoine over a reversed trade that took place in April has been published.
According to the report, on April 19, 2017, B2C2 executed trades on the Quoine exchange, taking advantage of an erroneous exchange value which allowed 309.2518 Ether (ETH) to be traded for 3,092.517 bitcoin (BTC). Quoine stated that the actual market price was less than .04 BTC for one ETH and reversed the order, citing the pricing glitch as reasoning.
"15.3 If the Company has presented an abnormal rate (‘Bug Rate’) due to a system failure, etc., then prices that the Company judges are due to a Bug Rate will all be treated as invalid. The Company shall cancel, or correct the contract price to the market price for, orders formed at a Bug Rate."
B2C2 challenged the exchange's decision to reverse the transaction, maintaining that Quoine "acted fraudulently" and seeks to recover 3084.78582325 BTC (at time of press equal to approximately $8.5 million USD) in a lawsuit against the exchange before the Singaporean High Court.
On the defensive, Quoine called out B2C2 for "being opportunistic and seeking to profit from a technical glitch." As per the report, the exchange stated that the trades were "inadvertently" executed at a rate of "10 bitcoins for one ethereum which was approximately 125 times higher than the actual market price of ethereum on April 19."
Quoine said the glitch that interfered with the exchange's capability to maintain an accurate repository was the result of an internal password reconfiguration – an effort to stave off the hacking attempts.
The above graph displays the BTC to ETH trading pair as reported by ETHNews, and it is well documented on other exchanges that the price reflected on Quoine during the time the glitch occurred was inaccurate. Quoine identified B2C2 as a "sophisticated" investor, well versed in the cryptocurrency trading market, who should have seen the "abnormal rate" as an error, noting that B2C2 had engaged in prior BTC trades on the exchange at normal rates.
It remains to be seen how the High Court will react to this ongoing case.