Bitcoin barney: Supreme Court backs short-changed investor in Tasmanian cryptocurrency dispute

A Tasmanian crypto entrepreneur, who was ordered by a magistrate to pay $50,000 in damages to a first-time Bitcoin investor, has failed to overturn the decision in the Supreme Court.

A Tasmanian cryptocurrency entrepreneur, who was ordered by a magistrate to pay $50,000 in damages to a first-time Bitcoin investor following a disputed business agreement, has failed to overturn the decision on appeal to the Supreme Court. Picture: AFP

A Tasmanian cryptocurrency entrepreneur, who was ordered by a magistrate to pay $50,000 in damages to a first-time Bitcoin investor following a disputed business agreement, has failed to overturn the decision on appeal to the Supreme Court.

The court heard that Adam Poulton was operating a fish-tank servicing business in 2013, when client Jeff Conrad raised his interest in purchasing the then-new digital currency.

After Mr Poulton indicated he was in the process of establishing his own Bitcoin-trading business, Mr Conrad transferred $10,000 to Mr Poulton to make a purchase on his behalf.

The pair agreed that Mr Conrad would pay an investment services fee at a later date, with Mr Poulton suggesting the amount be based on a percentage of the initial outlay.

In the months following the cash transfer, Mr Poulton continued to clean the fish tank at Mr Conrad’s business premises, where the latter would make regular enquiries about his investment.

After Mr Conrad eventually insisted on receiving his Bitcoin, Mr Poulton provided him with a digital wallet, saying it had “10.5 Bitcoins on it”.

“The respondent did nothing further until September 2017, when he contacted the appellant to ask how to access the Bitcoin,” Justice Michael Brett said.

“The appellant recommended an app, but the respondent was unable to use it.

“He then contacted a Bitcoin trader … who determined that the wallet only provided access to six Bitcoin.

“Prior to this, through a process known as ‘forking’, each Bitcoin had generated a right to two other forms of crypto currency known as Bitcoin cash and Bitcoin gold.

“The 10.5 Bitcoin had generated 4.5 of each. These currencies were not available through the wallet.”

After Mr Conrad contacted Mr Poulton as to the whereabouts of the missing crypto currency, the pair arranged a meeting, where Mr Poulton agreed to provide the remaining Bitcoin but raised the question of his fee.

Although Mr Poulton gave evidence to the Magistrates Court hearing that the parties had agreed for some of the outstanding Bitcoin to be used as a fee, Justice Brett said Magistrate Robert Webster had not accepted that any such deal had been reached.

Shortly after the meeting, Mr Poulton transferred three Bitcoin to Mr Conrad, leaving 1.5 Bitcoin outstanding, as well as 4.5 Bitcoin gold and 4.5 Bitcoin cash.

Mr Conrad launched legal action in February 2020, with the Magistrate Webster finding that Mr Poulton had acted inconsistently with Mr Conrad’s rights by only providing him with six Bitcoin in 2014 after a request for all of it, and by refusing to transfer the remaining entitlement of crypto currency in 2018 despite a demand that he do so.

After assessing the damages attributable to the Bitcoin assets, awarding exemplary damages, and then deducting a $1500 service fee, Magistrate Webster ordered Mr Poulton pay Mr Conrad the sum of $50,000.

Mr Poulton subsequently launched a Supreme Court appeal against the decision.

In his ruling, Justice Brett described Magistrate Webster’s calculation of Mr Poulton service fee as “unimpeachable”, and said he could detect no error on the lower court’s final determination.

“The sole ground of appeal has not been made out,” Justice Brett said.

“Accordingly, the appeal is dismissed.”

Originally published as Bitcoin barney: Supreme Court backs short-changed investor in Tasmanian cryptocurrency dispute