Crypto Dispute Resolution: An Empirical Study

70 Pages Posted: 6 Dec 2021

See all articles by Tamar Meshel

Tamar Meshel

University of Alberta - Faculty of Law

Moin A. Yahya

University of Alberta - Faculty of Law

Date Written: October 5, 2021

Abstract

Cryptocurrencies, such as Bitcoin and Dogecoin, are taking the financial world by storm. Like all financial instruments, these cryptocurrencies and the crypto exchanges they are traded on give rise to complex legal issues. This article concerns an understudied yet crucial aspect of crypto trading, namely crypto disputes and their resolution. The sheer number and growing popularity of cryptocurrencies means that disputes arising from their trading are likely to increase, yet it remains unclear how they are being, or will be, resolved. Novel issues surrounding the identity of traders, the jurisdictional limits of domestic courts, the applicable governing law(s), and complex technical evidence may mean that traditional non-binding mechanisms—such as negotiation and mediation, as well as binding legal mechanisms—such as litigation and arbitration, may be ill-equipped in the crypto context. At the same time, tailored crypto-specific dispute resolution mechanisms are only at nascent stages of development. In this article, we take a first empirical look at the mechanisms by which cryptocurrencies and crypto exchanges choose to resolve disputes with their users. We situate our results in the larger commercial dispute resolution literature and provide a preliminary account of how and why cryptocurrencies and exchanges are making these dispute resolution choices. We find that crypto platforms predominantly resort to domestic litigation and international arbitration to resolve future disputes. Moreover, we find that the ability to prohibit class proceedings seems to be the strongest explanatory factor in crypto platforms’ choice of international arbitration. In contrast, providing for the venue seems to be most strongly linked with choosing domestic litigation.

Keywords: Cryptocurrencies, crypto-exchanges, Bitcoin, dispute resolution, arbitration, litigation

JEL Classification: K22, K33, K41

Suggested Citation

Meshel, Tamar and Yahya, Moin A., Crypto Dispute Resolution: An Empirical Study (October 5, 2021). Journal of Law, Technology and Policy, Vol. 2021, No. 2, 2021, Available at SSRN: https://ssrn.com/abstract=3975500

Tamar Meshel (Contact Author)

University of Alberta - Faculty of Law ( email )

Law Centre (111 - 89 Ave)
University of Alberta
Edmonton, Alberta T6G 2H5
Canada

Moin A. Yahya

University of Alberta - Faculty of Law ( email )

Law Centre (111 - 89 Ave)
Edmonton, Alberta T6G 2H5
Canada
780-492-4445 (Phone)
780-492-4924 (Fax)

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