On January 17th, 2018 the court of Midden-Nederland ordered Koinz Trading BV to pay the mining proceeds of 0.591 bitcoin to Mr. J.W. de Vries, or pay a 10,000 euro fine. Koinz Trading BV had two options: either pay up or declare insolvency.
About two weeks later, the company filed a claim for bankruptcy. If granted, the court would be unable to enforce the 10,000 euro fine. Paying the claim in bitcoin is the only remaining option, which can only happen after recognizing bitcoin as a verifiable claim. A verifiable claim essentially means proving the delivery of an underlying asset (property, assets, wire transfer) is possible.
According to a court document published March 20th, the court states that bitcoin seems to carry the hallmarks of a property right:
“Bitcoin exists, according to the court, from a unique, digitally encrypted series of numbers and letters stored on the hard drive of the right-holder’s computer. Bitcoin is ‘delivered’ by sending bitcoins from one wallet to another wallet. Bitcoins are stand-alone value files, which are delivered directly to the payee by the payer in the event of a payment. It follows that a Bitcoin represents a value and is transferable. In the court’s view, it thus shows characteristics of a property right. A claim for payment in Bitcoin is therefore to be regarded as a claim that qualifies for verification.”
The court found that bitcoin’s characteristics make it a verifiable claim. Since the obligations of the contract between Mr. De Vries and Koinz Trading BV were in bitcoin, the unpaid amount should be paid back with the same currency.
Koinz Trading BV owes 0.591 bitcoin to Mr. De Vries even after being granted bankruptcy. Due to volatility, both the business and investor face increased foreign exchange risk if bitcoin-denominated contracts are enforced in bitcoin rather than the fiat-equivalent. This ruling could set precedence in common-law systems having significant impacts in the burgeoning cloud mining industry and beyond.