Singapore High Court Provides Assessment of Damages for Crypto-assets

Introduction

While claims involving crypto-assets are becoming more common, the nature of digital assets presents a unique challenge when it comes to the assessment of damages. This includes issues of price volatility, lack of a single market valuation, the decentralized nature of transactions, and uncertainties regarding the appropriate date for valuation.

These challenges were at the forefront of the Singapore High Court (“Court“) decision of Alexandru Kalen v World Exchange Services Pte Ltd [2026] SGHC 31, which involved claims against a cryptocurrency trading platform by its users. The Court had to assess the damages for breach of contract, considering issues including the appropriate valuation date – is it the date of breach, the date of the trial, or somewhere in between? The Court also considered what constitutes sufficient evidence of the quantity of crypto-assets held by the Claimants.

The Court’s decision provides guidance on the assessment of damages for claims involving crypto-assets. It sets out practical insights on issues such as valuation, mitigation, and evidence.

This Update highlights the key aspects of the Court’s decision.

Brief Facts

The Claimants were individuals who owned digital tokens and monies which were stored with the Defendant. The Claimants claimed that the Defendant operated an online trading platform for digital tokens, including cryptocurrencies, known as WEX, and that the relationship was subject to the following agreements:

1. The User Agreement, which set out the user relationship with the Defendant and the obligations of the Defendant; and
2. The Buyback Contract, which obliged the Defendant to purchase or redeem the WEX tokens it had previously issued to the users.

The Claimants succeeded in their claim that the Defendant breached the User Agreement by causing the Claimants to be unable to control, transfer or withdraw digital tokens and monies in their accounts on the WEX platform since 12 July 2018. The Claimants also succeeded in their claim that the Defendant had breached the Buyback Agreement as it had failed to purchase the WEX tokens from the Claimants.

In this decision, the Court had to assess the appropriate damages, including the following issues:

1. What was the quantity of digital tokens and monies that were held in the Claimants’ user accounts as of 12 July 2018;
2. What was the appropriate date of valuation for the Claimants’ losses; and
3. What was the value of the tokens and monies at the date of valuation?

Holding of the High Court

Quantity of Crypto-assets

The Court had to consider issues of evidence, including whether the Claimants had provided sufficient evidence of the quantity of the relevant crypto-assets held by them as of 12 July 2018.

The Court held that the Claimants had discharged their burden of proof by providing: (i) screenshots of their user accounts on various dates to establish the quantity of digital tokens and monies which they owned on the WEX platform; and (ii) statements confirming that these screenshots had not been altered or edited.

The evidentiary burden then shifted to the Defendant to rebut that evidence, and the Defendant failed to provide any evidence to do so. The Defendant’s expert merely challenged that it was “impossible to establish whether [the screenshots] were subject to editing or other modification“, failing to provide even an analysis of the screenshots.

Valuation Date

The Court set out the applicable principles on the valuation date for assessment of damages:

1. The date of valuation should be at the time when a claimant is reasonably expected to mitigate their losses.
2. This depends on, among other factors, when the claimant has knowledge of the breach and whether it is possible and reasonable to mitigate their losses.
3. The date of valuation for a breach of contract may be the date of the breach if the claimant has knowledge of the breach and it is possible and reasonable to mitigate their losses.
4. Alternatively, if valuing losses at the date of breach would not appropriately compensate the claimant and thereby cause injustice, then losses should be valued within a reasonable time after the date of breach. This is because even though the claimant knows of the breach, it may not be possible or reasonable to take steps to mitigate losses on the date of breach.

The Court rejected the approach adopted in the United States of America of assessing damages by the highest intermediate value of the asset between the time of breach and a reasonable time thereafter because it would give the claimant the benefit of perfect hindsight, and risks unfairly giving the claimant a windfall.

Here, the Court considered the appropriate date of valuation to be a reasonable time after 12 July 2018, around October or November 2018. The Court reasoned that:

1. Although the Claimants first discovered the Defendant’s breach on 12 July 2018, it was not reasonable to require the Claimants to take mitigating steps on the day itself or shortly thereafter, as the Claimants might reasonably have thought that their inability to operate on the WEX platform was temporary.
2. On the other hand, the Claimants’ position that the valuation date should be the date of trial (September 2023) was unsustainable. The Court was not convinced that there was nothing that the Claimants could have done in the interim, as they could have purchased at least some substitute digital tokens on other cryptocurrency exchanges, particularly given the falling market, to mitigate their losses. The Claimants could also have formally demanded the return of the tokens, initiated legal proceedings at an earlier point.

Value of Assets

The Court accepted the Claimants’ submission of historical market trading price data for the relevant digital tokens by taking the average of their daily closing prices provided on cryptocurrency data aggregators CoinMarketCap and CoinGecko. The aggregators calculated the prices of cryptocurrencies based on real-time prices from various websites, and had been referred to by a number of foreign and Singapore authorities.

Taking the average value of 12 July 2018, the highest value within three months thereafter and the value on 1 December 2018, the Court assessed the damages to be US$10,126,158.43.

Concluding Words

The Court’s decision demonstrates the challenges of valuation in claims involving crypto-assets, while providing helpful guidance for parties seeking to assess damages.

The decision also highlights the importance of mitigating losses on the part of claimants, particularly in crypto-asset cases. Claimants should note that they may not be able to recover the full extent of their losses if they do not take reasonable mitigation measures, such as pursuing alternative investment avenues or taking steps to enforce their legal rights expeditiously.

For digital assets exchange operators, there may be a temptation to frame platform disruptions as temporary to avoid erosion of users’ confidence while securing liquidity. But doing so may defer the time within which users are expected to mitigate their losses, which may be unfavourable to the operator depending on market movement.

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