The Keelung District Court in Taiwan recently issued a civil judgment, ruling that the defendant, Mr. Su, violated the investment agreement with the plaintiffs and engaged in unauthorized trading of virtual currency LUNA, resulting in significant losses. The court ordered Mr. Su to fully compensate the plaintiffs for their losses.
Background:
Taiwan’s Cryptocurrency Special Act Draft Passed First Reading in the Legislative Yuan
Woman Defrauded of Millions in Cryptocurrency, Taiwan Court Rules “Original Account Holder is an Accomplice in Fraud”
Table of Contents:
Agreement on profit sharing, stop loss, and principal repayment
Mr. Su suffered heavy losses from purchasing LUNA
Court orders Mr. Su to fully compensate for the losses
The Keelung District Court in Taiwan recently issued a civil judgment involving a dispute over assisting others in trading virtual currency. In this case, the defendant, Mr. Su Yiming, violated the investment agreement with the plaintiffs, Ms. Wang Weirong and Mr. Zeng Xiangyu, by investing in virtual currency LUNA without their knowledge and concealing the facts, resulting in substantial losses. After discovering this, the plaintiffs filed a lawsuit against Mr. Su, seeking full compensation for their losses.
Agreement on profit sharing, stop loss, and principal repayment:
According to the judgment, Mr. Su and Ms. Wang were old acquaintances and classmates. Starting from November 27, 2019, Mr. Su, who claimed to have extensive experience and considerable profits from investing in virtual currency, persuaded Ms. Wang and Mr. Zeng to entrust their savings to him for virtual currency trading. The two parties reached the following agreements:
1. Mr. Su would handle the funds on behalf of the plaintiffs and invest in virtual currency. If there were any profits, the plaintiffs would give 40% as compensation for Mr. Su’s handling, and they would keep 60%.
2. If the entrusted funds incurred a 5% loss on the account, Mr. Su would immediately stop the investment and ensure the return of the principal.
3. The investment targets were limited to BTC (Bitcoin), XRP (Ripple), and EOS (Ethereum).
After reaching the agreement, Ms. Wang and Mr. Zeng transferred a total of NT$1,090,000 to Mr. Su in batches in 2019, 2020, and 2022.
Mr. Su suffered heavy losses from purchasing LUNA:
The judgment further stated that during the period when Mr. Su was handling the virtual currency trading on behalf of the plaintiffs, except for returning NT$110,000 of Mr. Zeng’s principal and NT$30,000 of investment profit due to urgent requests for repayment, Mr. Su held the remaining investment funds of NT$980,000.
However, starting from March 29, 2022, due to the plaintiffs’ need for funds, they requested Mr. Su to liquidate the virtual currency investments and withdraw the entire NT$980,000 from the investment. However, Mr. Su repeatedly used rhetoric to persuade the plaintiffs not to sell and to wait for the best opportunity, claiming that the prospects of the purchased targets were promising. Until May 9, 2022, Mr. Su still used excuses such as the potential of the original BTC, XRP, and EOS investments to delay the liquidation. However, on May 13, 2022, he suddenly changed his statement, admitting that he had sold the originally purchased virtual currency and suffered almost complete losses, including the LUNA that was accumulated before. This clearly violated the previous agreement between the parties.
Court orders Mr. Su to fully compensate for the losses:
In the lawsuit, Ms. Wang argued that Mr. Su, without informing her, misappropriated the investment funds to purchase LUNA, thus violating the contract between them, and she requested the court to order Mr. Su to compensate for all the losses.
We know that LUNA experienced a collapse and a drastic decline in May last year, resulting in global investors losing up to 99.9%.
Mr. Su argued before the judge that the two parties had not specifically agreed on investment details, guaranteed principal repayment and stop loss points, profit sharing, or preventing liquidation. He claimed that Ms. Wang only filed the lawsuit after witnessing the virtual currency investment collapse and requested the judge to dismiss the lawsuit filed by Ms. Wang and Mr. Zeng.
However, the judge believed that Ms. Wang and Mr. Zeng had transferred funds to Mr. Su, and Mr. Su had also returned profits and principal. It was evident that both parties agreed to the entrusted contract. At the same time, the conversations between the two parties on communication software showed that the investment targets were only Bitcoin and two other types. If Ms. Wang authorized Mr. Su to handle the investments, he should have informed her that the investment targets had been changed to include LUNA. However, Mr. Su only disclosed this after the collapse of the currency. Therefore, it can be inferred that the two parties had agreed that the investment targets were only Bitcoin and two other types. Otherwise, why would Mr. Su need to conceal the investment in LUNA?
In addition, Mr. Su’s failure to inform Ms. Wang about the investment in LUNA violated his reporting obligation in their entrusted relationship, leading to the near-total loss of the investment funds. Therefore, Ms. Wang and Mr. Zeng’s request for Mr. Su to return the investment funds is justified and should be allowed.