Written by Nicolas Tang and Lareina Chan
Cryptocurrency disputes often arise suddenly and can escalate quickly. Users may experience account freezes, forced liquidations, unauthorised transfers, or platform outages, often during periods of heightened market volatility. As crypto assets can move rapidly and losses can occur within a very short period of time, the consequences of a dispute can be both urgent and significant.
Unlike traditional financial disputes, cryptocurrency disputes are rarely confined to a single jurisdiction. A user may be based in one country, while the cryptocurrency exchange is incorporated in another. The relevant crypto assets may be held in custodial accounts, transferred on-chain to external wallets, or processed through systems operating across multiple jurisdictions. While blockchain transactions may be publicly visible, questions of control, authorisation, and responsibility often depend on off-chain arrangements governed by the cryptocurrency exchange’s user agreement.
When disputes arise in this context, court litigation can present practical difficulties. It may be unclear which country’s courts should hear the dispute, and even if a court does decide the case, its judgment may be difficult to enforce against a cryptocurrency exchange operating overseas. Engaging a legal firm with experience in cross-border cryptocurrency disputes at an early stage can be critical to navigating these challenges effectively.
Cryptocurrency exchanges also typically do not like their disputes with users to become public record, which is sometimes the case when parties litigate in domestic courts. Journalists and cryptocurrency websites can pick up the details of a dispute and circulate them on the internet. This can hurt the reputation and sustainability of the cryptocurrency exchange.
For these reasons, cryptocurrency exchanges generally do not rely on court litigation to resolve disputes. Instead, they require disputes with users to be resolved through domestic or international arbitration, where the dispute is decided by independent arbitrators, can be conducted through virtual conferencing (i.e. Zoom, Teams, Webex, etc.), and where the resulting decision can be enforced across borders.
This article explains how cryptocurrency disputes are resolved through arbitration. It focuses on:
A significant practical challenge in cryptocurrency disputes is the risk that assets may be transferred or dissipated before a dispute can be resolved. Crypto assets can be moved almost instantaneously, across borders, and through digital wallets that may be anonymous or difficult to trace. As a result, delays can mean that even a successful outcome may be difficult or impossible to enforce if the assets are no longer recoverable.
Singapore courts recognise that crypto assets present a heightened risk of dissipation because of their speed of transfer, cross-border nature, and the potential anonymity of wallets. In CLM v CLN and others [2022] SGHC 46 (“CLM”), the Singapore High Court observed that the risk of dissipation is “heightened by the nature of the cryptocurrency”, explaining that crypto assets are “susceptible to being transferred by the click of a button”, may be held in wallets that are “completely anonymous and untraceable”, and can be “easily dissipated and hidden in cyberspace”.
Where there is a real risk that crypto assets may be dissipated before a dispute is resolved, courts have been willing to intervene at an early stage to freeze or preserve those assets. In Janesh s/o Rajkumar v Unknown Person (“CHEFPIERRE”) [2022] SGHC 264, the Singapore High Court made an order preventing the non-fungible token (“NFT”) from being transferred, citing the “real risk of dissipation and disposal” of the asset if urgent court orders were not made.
Therefore, cryptocurrency disputes often require early court intervention to prevent assets from being moved while the arbitration proceeds. Without this, a successful arbitration award may be difficult or impossible to enforce.
A recurring difficulty in cryptocurrency arbitration is that a user may not know whom to bring a claim against. Cryptocurrency transactions are often conducted through pseudonymous wallet addresses, decentralised platforms, or layered intermediaries. As a result, it may be unclear who controls the relevant wallet or account, who holds the private keys authorising transactions, or which entity is legally responsible for what has occurred. In some cases, the responsible party may not be immediately identifiable as a named individual or company.
Singapore courts recognise that the inability to immediately identify the responsible party in a cryptocurrency dispute does not, in itself, prevent a claim from moving forward. In CLM, the alleged wrongdoers were described as “persons unknown”, and the Singapore High Court noted that “at the time of the hearing, the plaintiff was unable to identify specifically who the first defendants may be”. The Singapore High Court accepted that this lack of identification was a feature of cryptocurrency misuse and did not regard it as grounds for preventing the proceedings from continuing. Instead, the Singapore High Court was prepared to consider orders “to assist in the tracing of the stolen cryptocurrency assets and the identification of the first defendants”, so that the claim could move forward.
For users seeking to start arbitration against a cryptocurrency platform, this difficulty has direct contractual consequences. The platform’s user agreement, particularly which exchange entity you are contracting with and how notices must be given, often determines whether arbitration has been properly started against the right party. If a claim is brought against the wrong exchange entity or against an entity that does not control the relevant account, wallet, or crypto assets, significant time and cost may be spent resolving preliminary issues before the dispute itself can be addressed.
Accordingly, in cryptocurrency disputes, the initial challenge is often not establishing what went wrong, but identifying who the claim should be brought against. Careful attention to the cryptocurrency exchange’s user agreement is therefore critical at the outset.
In cryptocurrency disputes, working out the amount of loss can be difficult even after it has been established that a cryptocurrency exchange or party is legally responsible for what went wrong. This is because cryptocurrency prices can change sharply over short periods, and trading conditions can shift quickly depending on market liquidity. As a result, the value of a crypto asset at one point in time may differ significantly from its value only moments later. These difficulties were illustrated in Quoine Pte Ltd v B2C2 Ltd [2020] SGCA(I) 02, where the Singapore Court of Appeal observed that cryptocurrency trading “is not for the faint-hearted” and noted that the disputed trades were executed at prices “approximately 250 times the then going rate in the market”. The Singapore Court of Appeal further explained that these outcomes arose in conditions of extreme illiquidity, where normal price references were no longer available, and trades were executed at highly abnormal levels. The decision illustrates why disputes involving cryptocurrency losses often centre on how loss should be calculated, rather than whether loss has occurred. Parties may disagree on the appropriate valuation date, price reference, or valuation methodology, and relatively small differences in approach can result in materially different loss outcomes.
While arbitration can assist in managing these issues through specialist tribunals and tailored procedures for expert evidence and valuation, determining the amount of loss remains a significant source of complexity in cryptocurrency arbitration. You may require specialist input to ensure losses are assessed more accurately.
A further risk in cryptocurrency arbitration arises where the arbitration clause is not clearly presented to, or properly accepted by, the user when they sign up to the cryptocurrency exchange. Cryptocurrency exchanges typically rely on standard-form, online user agreements that users accept through a click-through process when creating an account. If the arbitration clause is difficult to find, not clearly highlighted, or presented in a way that does not clearly indicate that the user agreed to it, the dispute may end up being resolved in court instead of arbitration.
For an arbitration clause in a cryptocurrency exchange’s online user agreement to be enforceable, it must be clearly brought to the user’s attention and properly accepted at the point of contracting. This principle was applied by the Singapore High Court in Beltran, Julian Moreno and another v Terraform Labs Pte Ltd and others [2023] SGHC 340. The Singapore High Court made clear that “arbitration clauses must be expressly brought to the attention of the other contracting party”, and observed that where online terms are “tucked away at the bottom of the website such that [they lack] prominence”, a reasonably prudent user may not have notice of the arbitration clause at all.
If an arbitration clause is not clearly presented and accepted in the cryptocurrency exchange’s online user agreement, a court may find that no binding agreement to arbitrate exists. In that situation, the parties may be required to resolve their dispute in court, or to first litigate whether arbitration applies at all, before the dispute itself can be dealt with. This can result in delay, additional cost, and uncertainty.
Arbitration is often a faster way to resolve cryptocurrency disputes than going to court. Court cases typically involve multiple stages, including exchanging written arguments, handling interim applications, producing documents, attending trial, and sometimes going through appeals. In complex cryptocurrency disputes, especially those involving overseas exchanges, additional jurisdictional and enforcement issues can further slow the process.
In practice, this can mean significant delays. In Singapore, commercial disputes often take 12 to 18 months or more just to reach trial, and highly complex cases could take much longer to reach a final outcome. Where cryptocurrency disputes are cross-border, litigation timelines may be extended further, sometimes stretching into years.
Speed is particularly important in cryptocurrency disputes. Crypto asset prices can move quickly, and delays in resolving disputes involving account freezes, forced liquidations, margin calls, or disputed transfers can result in significant financial impact. Therefore, arbitration can offer a more direct and predictable way to resolve disputes within a shorter timeframe.
For arbitration to provide a timely and effective means of resolving disputes, parties must be held to their agreement to arbitrate and prevented from pursuing the same dispute in other forums. Singapore courts have consistently taken this approach. In Asiana Airlines, Inc v Gate Gourmet Korea Co, Ltd and others [2024] SGCA(I) 8, the Singapore Court of Appeal (International Division) reaffirmed that it is “well-established” that parties who agree to arbitrate are expected to honour that agreement, and explained that an arbitration agreement carries an implied obligation not to pursue the same dispute in another forum. The Singapore Court of Appeal further observed that the role of the courts is to “safeguard the parties’ agreement to arbitrate their disputes”.
A key advantage of arbitration is that it allows parties to choose who decides their dispute, including selecting arbitrators with subject-matter or technical expertise relevant to the issues. This is particularly valuable in cryptocurrency disputes, where outcomes may depend on how crypto assets are controlled or custodied (for example, who had access to a wallet, who could authorise transactions, or how an exchange’s systems processed those transactions), how losses arose (for example, whether losses resulted from market movements or actions taken by the cryptocurrency exchange), and what technical or transactional evidence is required to establish these issues.
Party autonomy is a fundamental feature of arbitration and includes parties’ ability to choose their arbitrators. Singapore courts have consistently recognised this principle. In CJD v CJE and another [2021] SGHC 61, the Singapore High Court emphasised that “[t]he principle of party autonomy lies at the very heart of arbitration and permeates practically all aspects of it”, and that “[p]arty autonomy allows parties a wide latitude to agree on almost all aspects of how a dispute is to be arbitrated”. The Singapore Court of Appeal reaffirmed this position in COT v COU and others and other appeals [2023] SGCA 31, stating that “an integral feature and consequence of party autonomy is that parties choose their arbitrators and are bound by the decisions of their chosen arbitrators”.
Where a dispute turns on specialised subject matter, the ability to select arbitrators with relevant experience allows the issues to be framed and assessed at an appropriate level of technical understanding from the outset. This can narrow the scope of evidence required, reduce the need for extensive explanatory expert testimony, and enable the tribunal to engage directly with competing technical explanations.
By contrast, in court litigation, the decision-maker is assigned, and parties do not select a judge with subject-matter expertise. In technically complex cryptocurrency disputes, this often means significant time and cost are spent introducing and explaining foundational technical concepts before the court can address the issues at hand.
Confidentiality is another important advantage of arbitration that is particularly relevant in the cryptocurrency sector. Disputes involving cryptocurrency exchanges or crypto asset platforms often require the disclosure of sensitive information, such as how user accounts are managed, wallets are secured, transactions are authorised, and internal risk or security systems operate. Public disclosure of this information can create security risks and undermine user trust.
Most cryptocurrency disputes arise under standard-form exchange user agreements that users accept when opening an account. These user agreements commonly include express confidentiality obligations requiring disputes to be kept private. This can be seen in the user agreements used by major cryptocurrency exchanges, including:
Under Singapore law, arbitration proceedings are confidential as a matter of law, not merely because the parties have agreed to keep them private. This principle was recognised by the Singapore High Court in AAY and others v AAZ [2009] SGHC 142, where confidentiality was held to apply “as a substantive rule of arbitration law… from the common law”. The Singapore High Court further recognised that “arbitrations are not only private but also confidential”.
Accordingly, where cryptocurrency disputes are resolved through arbitration seated in Singapore, sensitive information disclosed in the course of the dispute does not form part of the public record. This can include details of internal platform controls, security processes, custody arrangements, transaction data, and account-level information that may be necessary to determine issues of authorisation, control, or loss.
By contrast, court litigation is generally conducted in open court. Court documents such as written claims, evidence filed by the parties, and judgments may be publicly accessible, and sensitive technical or operational details disclosed in the course of proceedings may enter the public domain unless specific protective orders are obtained.
Therefore, in the cryptocurrency sector, where platform security, operational integrity, and user confidence are closely tied to commercial viability, the ability to resolve disputes without publicly exposing sensitive systems, processes, or transaction data is a practical and material advantage of arbitration.
The cross-border nature of cryptocurrency transactions makes enforcement a key issue. Users, cryptocurrency exchanges, and crypto assets are often located or controlled in different countries. As a result, even if you successfully resolve a cryptocurrency dispute in one jurisdiction, you may still need to take steps in another country to actually enforce the outcome and recover assets or obtain payment.
Arbitration awards made in Singapore benefit from an international enforcement framework under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (“New York Convention”), which applies in more than 170 jurisdictions. The New York Convention requires each contracting state to “recogni[s]e arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon”.
This means that if you obtain an arbitration award in Singapore, you can generally take that award to courts in many other countries and ask those courts to enforce it against an overseas cryptocurrency exchange. Crucially, the New York Convention further provides that enforcement may not be subjected to “substantially more onerous conditions or higher fees or charges” than those applicable to domestic arbitration awards. This creates a relatively predictable and consistent enforcement framework across jurisdictions.
By contrast, court judgments do not benefit from the same global enforcement framework. Enforcing a court judgment overseas often depends on whether there is a specific treaty, reciprocal arrangement, or favourable domestic law in the country where enforcement is sought. This can require separate legal proceedings and may involve additional jurisdictional challenges, delays, and uncertainty.
For disputes involving overseas cryptocurrency exchanges, offshore entities, or assets held outside Singapore, cryptocurrency exchange user agreements commonly require arbitration. This reflects the fact that arbitration awards are generally easier to enforce across borders, increasing the likelihood that a successful outcome can actually be enforced in practice.
Cryptocurrency disputes often move quickly and unfold in ways that differ from ordinary commercial disputes. Crypto assets can be transferred or lost in a short period of time, user accounts may be frozen or restricted without warning, and it may not be immediately clear which cryptocurrency exchange or platform entity is responsible. Market volatility can further complicate matters by making losses difficult to assess early on.
As this article has explained, disputes with cryptocurrency exchanges usually involve more than one issue. They often involve issues such as whether assets can be preserved, which exchange entity a claim should be brought against, how losses should be calculated, and whether the dispute can be resolved through arbitration at all. Time limits, notice requirements, and the specific wordings of the exchange’s user agreement can significantly affect what dispute options are available and how quickly a dispute can move forward.
These issues typically arise at the very beginning of a dispute. Delays or mistakes at this stage can have serious consequences. Crypto assets may become unrecoverable, claims may be brought against the wrong entity, or disputes may become tied up in preliminary court proceedings before the underlying issue of the case is even considered. In the cryptocurrency context, where speed, control over assets, and cross-border enforcement matter, early decisions can significantly affect the eventual outcome.
Farallon Law Corporation advises clients on disputes involving cryptocurrency exchanges and transactions, including cross-border disputes and arbitration. If you are facing a cryptocurrency dispute, obtaining early advice on dispute resolution strategy and procedural options from our cryptocurrency litigation lawyers can be critical. For further information, please contact Farallon Law Corporation by email or via our contact form.
Farallon Law Corporation
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Farallon Law Corporation
21 Collyer Quay #01-01
Singapore 049320
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