The Spanish Supreme Court has issued its first judgment on bitcoin (STS 326/2019, 20 June 2019) in a case involving a trader who failed to reinvest the crypto currency he had received from five investors in high frequency trading operations.
The trader was given a two year prison sentence and must return to each of the victims the equivalent in euros of the bitcoin’s value when the fraud took place in 2014, but not the bitcoin itself.
In its judgment, the Supreme Court stated:
‘Neither the so-called bitcoin is something susceptible to return, since it is not a material object, nor does it have the legal consideration of money.’
‘(…) Bitcoin is nothing more than an intangible asset, in the form of an account unit defined by computer and cryptographic technology called bitcoin, whose value is that each unit of account or its portion reaches through the offer and the demand in the sale of these units is done through bitcoin trading platforms.’
This is the first legal definition given to bitcoin in Spain, and the Supreme Court has followed the line of other institutions, such as the European Central Bank, which in 2015 defined virtual currencies as ‘a digital representation of value, not issued by a central bank, credit institution or e-money institution, which, in some circumstances, can be used as an alternative to money’.
The ruling means that bitcoin is defined as a patrimonial asset, which can be subject to negotiation and transaction, but cannot be considered as money for legal purposes. The court’s decision does not allow the loss to be compensated as the value of the 35.25 bitcoin in 2014 was €11,820.84, which has now risen to €353,816.22. Consequently the victims have suffered a considerable loss of profit, compounded by the fact that the bitcoin could still be in the possession of the fraudster.
Crypto currencies have become a reality that cannot be ignored and are an issue which all governments will have to address sooner or later. The Supreme Court has taken an important step that will undoubtedly guide the way of any future legislation on this matter, but a substantial amount of work still needs to be undertaken to find a legal framework that allows users to operate crypto currency safely.
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