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ARTICLE · 12 DECEMBER 2024

Cryptocurrency And Novation By Conduct: Always In Your Coincorner

A&O Shearman
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The English High Court recently confirmed that the novation of customer contracts in connection with the sale of a cryptocurrency exchange business could be inferred...

United StatesTechnology
A&O Shearman
A&O Shearman
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The English High Court recently confirmed that the novation of customer contracts in connection with the sale of a cryptocurrency exchange business could be inferred even when customers did not provide their explicit consent.

The transaction

Coinfloor sold its business to Coincorner, another cryptocurrency exchange. Coincorner assumed Coinfloor's liabilities under its customer contracts. Coinfloor dutifully informed its customers about the proposed novation "by conduct" of their contracts and the transfer of their funds to Coincorner.

Coinfloor also took a very cautious approach in agreeing and signing off on directions from the Financial Conduct Authority under the relevant anti-money laundering regulations which permit the FCA at the request of a cryptoasset business to impose a new direction on the company to assist with regulatory compliance. The transfer of assets and liabilities took place and Coinfloor entered members' voluntary liquidation.

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