BSV Claims Ltd v Bittylicious Ltd & Ors

Factual and Procedural Background

The representative initiated opt-out collective proceedings on behalf of approximately 243,000 holders of a cryptocurrency known as Bitcoin Satoshi Vision (BSV). The claim alleges that the defendants, operators of four cryptocurrency exchanges (Company A, Company B, Company C, and Company D), engaged in anti-competitive and collusive conduct by delisting BSV from their exchanges between 12 April and 5 June 2019, thereby reducing BSV's value.

One defendant, Company D, applied to strike out part of the claim brought on behalf of a sub-class of about 75,000 holders ("sub-class B") who held BSV on 11 April 2019 and continued to hold it on 29 July 2022. The Competition Appeal Tribunal (the Tribunal) declined to strike out these claims but issued a decision that effectively narrowed the claim on behalf of sub-class B. This decision was not formalised in an order, prompting the present appeal challenging parts of the Tribunal's reasoning.

The representative's claims comprise three sub-classes: sub-class A holders who sold BSV before proceedings began, claiming losses based on the immediate price drop; sub-class B holders who continued to hold BSV and claim both immediate losses and a "foregone growth effect" based on hypothetical future value; and sub-class C holders who lost access to BSV on certain exchanges, claiming immediate losses plus additional conversion fees where applicable.

The "foregone growth effect" theory, advanced by the representative's expert, posits that sub-class B holders were deprived of the opportunity for BSV to increase massively in value, akin to other top-tier cryptocurrencies. This claim amounts to damages many times the original value of the holdings. Company D challenged this on strike out grounds, focusing on the applicability of the market mitigation rule and the reasonableness of holding BSV after delisting.

The Tribunal applied established legal principles, including the "breach date rule" or "market mitigation rule," which generally requires claimants to mitigate losses by entering available markets to replace lost assets. It held that sub-class B holders who were or should have been aware of the delisting had an available market of substitutable cryptocurrencies and thus a duty to mitigate their losses by divesting their BSV holdings. Consequently, claims for damages beyond the immediate price difference were limited.

The Tribunal also rejected the representative's loss of a chance claim, reasoning that the claim depended on causation questions to be decided on the balance of probabilities rather than speculative third-party actions. The representative's appeal challenges these determinations.

Legal Issues Presented

1. Whether the Competition Appeal Tribunal was correct to apply the market mitigation rule to sub-class B holders, thereby limiting their damages to the immediate loss in value of BSV rather than the claimed "foregone growth effect".
2. Whether the Tribunal was correct to reject the representative's claim for damages based on the loss of a chance that BSV would have become a top-tier cryptocurrency.
3. Whether the Tribunal ought to have formalised its findings in a clear order following its decision.

Arguments of the Parties

Appellant's Arguments

• The representative argued that the Tribunal should not have limited the claims of sub-class B holders at the summary judgment stage, contending that evidence was needed on BSV's uniqueness, availability of substitutes, and the reasonableness of retaining BSV after delisting.
• The representative also advanced a new argument that sub-class B holders merely sought to argue at trial that damages should be assessed as at the trial date, reflecting the difference between BSV's hypothetical top-tier value and actual value at that time.
• They contended that BSV was a unique cryptocurrency without suitable substitutes, justifying claims for damages many times the original value of holdings.

Respondent's Arguments

• Company D contended that the market mitigation rule applied, requiring sub-class B holders to mitigate losses by divesting BSV once aware of the delisting.
• They argued that cryptocurrencies are tradeable assets akin to shares and that losses should be calculated based on market value at the time of awareness of the wrongful conduct, not speculative future values.
• They maintained that the loss of a chance claim was unsustainable as it did not depend on third-party actions and was contrary to established principles of causation and mitigation.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Aylwen v. Taylor Joynson Garrett [2001] EWCA Civ 1171	Explanation of the "breach date rule" or "market mitigation rule" requiring claimants to mitigate losses by entering available markets.	The Tribunal applied this rule to hold that sub-class B holders had a duty to mitigate losses by selling BSV once aware of delisting.
The Golden Victory [2007] 2 AC 353	Clarification of the market mitigation rule and the risk of future speculation borne by claimants who delay mitigation.	Supported the Tribunal's conclusion that sub-class B holders assumed risk by retaining BSV after delisting.
Stanford International Bank v. HSBC Bank [2022] UKSC 34, [2023] AC 761	Exception to the market mitigation rule where claimants are unaware of breach or no market exists.	The Tribunal found no applicable exception for sub-class B holders who were or should have been aware of delisting.
Secretary of Health v. Servier [2016] EWHC 2381 (Ch)	Requirement that claimants be aware or should have been aware of wrongful conduct for market mitigation to apply.	The Tribunal relied on this to conclude sub-class B holders had knowledge or constructive knowledge of delisting.
Maples v. Simmons & Simmons [1995] 1 WLR 1602	Principles governing loss of chance claims requiring a real or substantial chance.	The Tribunal considered this authority in evaluating the loss of a chance claim but ultimately rejected its applicability.
Equitable Life v. Ernst & Young [2003] EWCA Civ 114	Use of loss of chance analysis where outcome depends on hypothetical actions of third parties.	The Tribunal found the representative's claim did not depend on third-party actions and thus was unsuitable for loss of chance analysis.
Salford City Council v. Torkington [2004] EWCA Civ 1646	Support for loss of chance principles in causation and damages.	Referenced in relation to the loss of chance analysis but not found applicable.
Vasiliou v. HajiGeorgiou [2010] EWCA Civ 1475	Further elaboration on loss of chance principles.	Considered but loss of chance claim was rejected on the facts.
Crypto Open Patent Alliance v. Craig Steven Wright [2024] EWHC 1198 (Ch)	Discrediting of claims to be the inventor of Bitcoin relevant to factual background.	Referenced to contextualise the controversy leading to defendants' delisting decisions.

Court's Reasoning and Analysis

The court analysed the representative's claims in light of the market mitigation rule, which requires injured parties to mitigate losses by entering available markets to replace lost assets. The Tribunal concluded that sub-class B holders, who were or should have been aware of the delisting events, had access to substitutable cryptocurrencies and thus a duty to mitigate their losses by divesting BSV holdings. Holding onto BSV to speculate on foregone growth was not reasonable mitigation, and losses should be calculated based on market value at the time of awareness.

The court rejected the argument that BSV was a unique cryptocurrency without substitutes, noting that the representative's own expert used Bitcoin and Bitcoin Cash as comparators. The volatile nature of cryptocurrencies was emphasised, likening them to tradeable financial instruments rather than real property, reinforcing the applicability of the market mitigation rule.

Regarding the loss of a chance claim, the court agreed with the Tribunal that such analysis was inappropriate here because the claim did not depend on third-party actions but on a causation question to be resolved on the balance of probabilities. The speculative nature of the claim and the duty to mitigate precluded recovery based on lost chance.

The court also noted procedural shortcomings, including the absence of a formal order encapsulating the Tribunal's decision, which would have clarified the scope of claims for trial and reduced uncertainty.

Holding and Implications

The court DISMISSED the representative's appeal.

This decision confirms that sub-class B holders who were or should have been aware of the defendants' delisting conduct must mitigate their losses by selling BSV and cannot claim damages based on speculative future growth or loss of chance. Damages are limited to the immediate reduction in BSV's value attributable to the delisting events. The ruling reinforces the application of the market mitigation rule in the context of tradeable cryptocurrency assets and clarifies the inapplicability of loss of chance claims where causation can be assessed on a balance of probabilities. No new legal precedent was set beyond affirming established principles, but the case highlights the importance of formal orders following Tribunal decisions to delineate the scope of claims for trial.