A B.C. man has been ordered by a B.C. Supreme Court judge to repay a Bitcoin loan – in the equivalent of $1.2 million – after a years-long dispute.
Judge Shelley Fitzpatrick, in her Aug. 26 decision, awarded Cao Hung Nguyen $1.2 million in damages against Daniel Tambosso, along with court-ordered interest from Sept. 24, 2021. Fitzpatrick said the case involved an "old-fashioned cause of action and remedy," but involved a "modern twist."
Nguyen alleged he loaned Tambosso 18 Bitcoin, and then a further four Bitcoin, which were to be repaid within 48 hours.
Nguyen said he became interested in crypto in 2017, making small investments in a variety of different crypotcurrencies. When the market declined between 2018 and 2020, he said he used that as an opportunity to invest more heavily in the market.
By September 2021, his portfolio had grown to more than $1.1 million as each Bitcoin at that time was worth more than $53,000.
Two contracts for loans
That same month, Nguyen was introduced to Tambosso, who needed to borrow some Bitcoin for an opportunity he was pursuing.
Tambosso said he had "substantial cryptocurrency holdings" and "hackers and other 'bad actors' had tried to scam him. He also said he was in the process of obtaining a security software to protect his digital wallet. That software, he was told, was designed by a man named Satoshi Nakamoto, "who is famously rumoured to have founded Bitcoin," but Nakamoto denies this.
However to get the software, customers had to go through a "rigorous security protocol," and each stage cost several Bitcoins.
Tambosso was in the last stage and needed 18 Bitcoins, and he needed the loan quickly because as time elapsed the cost of each stage increased.
He told Nguyen if the procedure was successful, he would receive 1,750 Bitcoins as compensation for his loan. The loan would also be repaid in 48 hours.
Nguyen said he gained some confidence in the proposed loan because Tambosso spoke "eloquently and competently about crypto" and he proposed a formal written agreement for the loan.
With counsel, the two arrived at an agreement and on Sept. 21, 2021 Nguyen loaned 18 Bitcoins to Tambosso. "Almost immediately after the transfer," Tambosso contacted Nguyen to say the procedure required another 7.5 Bitcoins. Nguyen instead agreed to a further four.
After the 48 hours had elapsed, Nguyen demanded several updates from Tambosso, who said the procedure was demanding more Bitcoins and he was trying to negotiate further loans. Nguyen continued to demand updates over the next few months.
A possible scam
Tambosso argued that no binding contract had been formed as there were changes in the contract that Nguyen didn't initial and Nguyen was "simply an investor in a high-risk venture that involved sending Bitcoin to others."
But Fitzpatrick said the changes only referred to minor matters and "did not alter the substance" of the contract.
Fitzpatrick added that in hindsight it appears Tambosso was "either scammed or has otherwise become involved in some kind of broader nefarious scheme," but that doesn't absolve him of having to repay Nguyen.
Nguyen provided historical data that the value of the Bitcoin on the day of the first contract breach was was $56,849.67 per Bitcoin. That's $1,023,294.06 for the initial 18 Bitcoins. The day of the second contract breach each of the four Bitcoins had a value of $54,203.04, translating to $216,812.16.
Tambosso said he doesn't have the funds to repay Nguyen.
A possible precedent
Bitcoin Well founder Adam O'Brien told Black Press Media that it's "very common knowledge" inside the Bitcoin space to not give the currency to others, "unless you expect it to get stolen."
"It's quite worrisome, I suppose, for Bitcoiners who have Bitcoin and when you lend it out, it's almost like you're freezing the Bitcoin value in time – based on a court decision – regardless of a future value of Bitcoin."
O'Brien said Bitcoin will "continue to appreciate" against the dollar.
"I feel like we're treating Bitcoin as if it's some some value that can be locked in a moment in time, which clearly isn't."
