Bitcoin Loans Upheld by the British Columbia Supreme Court

The core issue of the case was whether a loan agreement involving Bitcoin could be enforced in court. The plaintiff, Nguyen, had loaned 22 Bitcoins to the defendant, Tambosso, under two agreements. The loan was to be repaid within 48 hours, and in the event of a successful transaction, Tambosso promised to pay additional compensation in Bitcoin. When the loan was not repaid as agreed, Nguyen sought to recover the value of the 22 Bitcoins.

The court explicitly recognized that Bitcoin can be the subject of a legally binding loan agreement. Madam Justice Fitzpatrick emphasized that, despite Bitcoin’s technical complexity, the principles of contract law still apply. As she noted, “This case involves a modern twist, in that the ‘something’ said to have been loaned and which was to be repaid was cryptocurrency, namely, Bitcoin.” This statement confirmed the court’s view that cryptocurrency is not beyond the scope of enforceable legal agreements.

Tambosso’s defense centered on arguments that no binding contract had been formed and that the failure of the speculative Bypass Procedure absolved him of the obligation to return the Bitcoin. The court rejected both arguments. On the issue of contract formation, Tambosso claimed that minor changes to the contract were not signed by Nguyen, which he argued should invalidate the agreement. The court dismissed this, stating, “The two deletions in the First Contract only refer to minor matters and do not alter the substance of it.”

More importantly, the court held that Tambosso was obligated to repay the 22 Bitcoins, regardless of the outcome of the Bypass Procedure. The contracts clearly placed the risk of failure on Tambosso, and the court emphasized that “There is no merit in Mr. Tambosso’s suggestion that repayment to Mr. Nguyen of any Bitcoin was subject to the Bypass Procedure being successful.” By agreeing to the contract, Tambosso assumed the risk that the Bypass Procedure could fail, but his obligation to repay the loaned 22 Bitcoins remained intact.

The judgment is critical for its clear and unambiguous recognition of cryptocurrency loans as valid and enforceable under the law. The court treated Bitcoin as a form of property or currency, applying standard contractual principles to the dispute. It concluded that Bitcoin, despite its fluctuating value and decentralized nature, does not fall outside the scope of enforceable legal obligations. In fact, the court calculated the value of the 22 Bitcoins as of the date of the breach, determining the total damages at over $1.24 million CAD, reflecting the price of Bitcoin at the time.

This case serves as a pivotal moment in acknowledging cryptocurrency within the legal framework of contracts. It confirms that loans made in Bitcoin are subject to the same legal scrutiny and obligations as any other loan.