Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
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BC Supreme Court Ends $1.2M Bitcoin Loan Dispute
Crypt0 Law | Sep 16, 2024
Image: Freepik/fabrikasimf
B.C. Supreme Court enforces $1.2M Bitcoin loan in a landmark crypto case
The British Columbia Supreme Court upheld a $1.2 million Bitcoin loan arrangement in "Nguyen v. Tambosso (2024 BCSC 1551)", ruling in favour of the lender, Hung Nguyen. Despite the speculative nature of the transaction, Justice Shelley Fitzpatrick upheld the enforceability of contracts using Bitcoin just like those involving traditional currencies.
- Daniel Tambosso received a loan of 22 Bitcoins from Hung Nguyen in 2021 and was expected to pay it back within 48 hours. Tambosso said that the Bitcoin (valued at approx $1.2M) was required for a "bypass procedure" linked to software supposedly designed by Satoshi Nakamoto to secure his digital wallet. He also said if the transaction was successful that Nguyen would be offered a hefty return of 1,750 Bitcoins. After five months without repayment, Nguyen took legal action.
See: UK Proposes Bill to Recognize Crypto as Personal Property
- It was argued by Tambosso that the loan was an investment risk but Justice Fitzpatrick rejected this claim noting that the agreement clearly outlined the obligation to return the borrowed Bitcoins regardless of the outcome of the bypass procedure. The judge further acknowledged the possibility that Tambosso might have been deceived or involved in a some type of scam but regardless this was not an excuse for him to evade his 22 bitcoin repayment obligation. Justice Fitzpatrick noted, “Any risk associated with the bypass procedure was assumed by Tambosso alone.”
- The decision strengthens the legality of bitcoin as collateral and recognizes Bitcoin loans as legally enforceable under Canadian contract law. It also demonstrates the increased legal scrutiny of cryptocurrency transactions, with the court awarding Nguyen more than $1.24 million in damages based on the value of Bitcoin at the time of the loan.
Justice Shelley Fitzpatrick:
“This case involves a modern twist…Bitcoin, despite its volatility, is not beyond the scope of enforceable legal agreements. Any risk associated with the bypass procedure was assumed by Tambosso alone."
Why It Matters
This ruling is a turning point for loans backed by cryptocurrency in Canada and possibly beyond.
See: Key Takeaways from Bitcoin 2024 Conference
It strengthens Bitcoin's legality as a collateralized asset and signals a growing acceptance of digital currencies in legal and financial frameworks. For lenders, borrowers, and the fintech sector, the ruling establishes a precedent that may influence future crypto-loan agreements in the future.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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