RIO CHRISTOFLE v MALCOLM TAN CHUN CHUEN

Facts

Mr Rio Christofle had set up GCXpress Commerce Pte Ltd (GCX) to trade cryptocurrency over the counter. Mr Malcolm Tan was managing director of Qrypt Technologies Pte Ltd, a cryptocurrency business that held an exemption under the Payment Services Act 2019 (PSA). On 1 December 2020 Mr Tan asked Mr Christofle whether he had about S$320,000.00 of Bitcoin to sell. They met at Mr Tan's office, agreed on 12.14 Bitcoin for S$320,000.00, and Mr Christofle transferred the Bitcoin to the wallet Mr Tan specified. Cash had been placed on the table, but three other men present said it was theirs and would not let anyone leave until a further transfer was confirmed. After about an hour, the person to whom Mr Tan had sent the Bitcoin deleted their Telegram chat, a quarrel broke out, and the police were called. Mr Christofle left with neither the cash nor the Bitcoin. Only 0.157557 Bitcoin was later returned.

Mr Christofle sued Mr Tan in Suit No 1247 of 2020 for S$315,846.93, or return of 11.982443 Bitcoin, in contract and alternatively in unjust enrichment. Mr Tan's case was that Qrypt was only a middleman between GCX and the buyers, that everyone had been scammed, and that the true contracting parties were GCX and Qrypt. At closing he also argued that the sale was illegal because neither Mr Christofle nor GCX was licensed under the PSA. The parties agreed to proceed on the assumption that Mr Tan had been scammed.

Issues

1. Whether the sale agreement was illegal and unenforceable under s 5 of the Payment Services Act 2019.
2. Whether the plaintiff and the defendant were the proper parties to the agreement.
3. Whether the plaintiff could succeed in contract or unjust enrichment.

Holding

Lee Seiu Kin J dismissed the claim. The agreement was not illegal, and it had been breached because the S$320,000.00 was never paid, but the contracting parties were GCX and Qrypt rather than the two individuals, so Mr Christofle had no standing to sue Mr Tan. The judge observed that GCX and Qrypt should have been joined. Mr Tan was awarded S$90,000.00 in costs plus GST, with interest at 5.33%.

Reasoning

The court held that whether Mr Tan was scammed was irrelevant to a claim for breach of contract or failure of consideration. Although illegality was not pleaded, the court may raise it itself where a contract is illegal on its face or the full facts clearly show an illegal object. Section 5 of the PSA does not expressly forbid contracts to buy or sell cryptocurrency, and its purpose of regulating service providers to counter money laundering does not imply such a ban. Nor did the sale have an illegal object: drawing on a Magistrate's Court case, the judge identified profit, the number of transactions and acting as an intermediary as signs of carrying on a payment service business. Simply selling Bitcoin one owned was bona fide trading, not providing a payment service.

On the parties, the test is objective: what a reasonable person with the relevant information would conclude from what was said and done. The deal was arranged through a GCX chat group, and messages showed that the chat was still being run in GCX's name after GCX had supposedly stopped trading in July 2020. The judge did not accept a staff member's message thanking a customer for trading with GCX as a mere slip, and nothing in the chat suggested Mr Christofle was acting personally. On the other side, Qrypt held the PSA exemption, Mr Tan gave Qrypt's bank details, and GCX had dealt with Qrypt before, so Mr Tan could not have intended to contract personally. A police report made after the deal carried little weight.

The judge also remarked, without making a finding, that a responsible exempt entity should be wary when a buyer refuses identity checks and puts forward someone else's identity card instead.

From the judgment