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20 Jun 2022 Mining of crypto currency goes wrong: directors liable?

This week, we discuss a directors’ liability case. It concerns an investment in a foreign company that was going to mine bitcoins. However, that did not turn out well. The investor therefore claims €250,000 back from the directors of the foreign company. See:


In June 2018, the defendants incorporated a company under the laws of the United Arab Emirates. Subsequently, the plaintiff party entered into an agreement with the defendants (who acted on behalf of the company) whereby the plaintiff party purchased from the company 422,675 so-called SRXIO tokens for an amount of €250,000. This is the 'Token Agreement', dated 29 August 2018. The tokens would give an entitlement to a percentage of the bitcoins to be mined.

Under the heading "When can I expect to my pay outs", the Token Agreement states, "“Following our roadmap we will start mining in January 2019. Every last day of the month, starting in January 2019, our smart contract will distribute Ether to our token holders. As long as you are the owner of the token, our smart contract will send out a portion of the mining revenue to your ERC-20 compatible wallet each month.”

As you may have guessed: things unfortunately go badly wrong and the company is deregistered from the UAE trade register in July 2020. The plaintiff does not leave it at that and claims € 250,000 from the Dutch directors of the company. The claim is primarily based on an unlawful act: the claimant alleges that the directors defrauded him by pretending to have founded a company that would produce crypto currency by means of mining equipment. In the alternative, according to the plaintiff, there is a case of breach of contract because contractual promises have not been kept and the promised progress and results have not been demonstrated.

What does the court rule?

First of all, it is interesting to discuss why this case was heard by the Dutch court, since it concerns a company in the United Arab Emirates. The answer to this question can be found in private international law. The European “Rome II” Regulation states (with some exceptions) that in case of claims based on tort, the law of the country where the damage occurs is applicable. In this case, that is the Netherlands.

Back to the subject of directors' liability. The Rotterdam District Court referred to established case law on this subject. It is discussed that in the context of prejudicing a creditor of a company by leaving his claim unpaid and unrecoverable, a director may be personally liable based on tort (article 6:162 DCC). In the opinion of the Court, however, plaintiff has not sufficiently put forward that the managing director of the company can be held liable because when he entered into obligations on behalf of the company he "knew or reasonably ought to have understood that the company would not be able to fulfil its obligations and would not be able to offer recourse" (the so-called Beklamel standard).

One of the directors promised the claimant on behalf of the company that he would be paid his investment as soon as bitcoins were 'mined', as stated under the heading 'When can I expect to receive my pay outs' in the Token Agreement. The plaintiff expected this to be the case as of the end of January 2019, but has not provided sufficient evidence to draw the conclusion that the director already knew in August 2018 that this would not be feasible.

The second possibility of directors' liability mentioned by the Supreme Court occurs if the director can be blamed for "personal serious culpability". For example, because the director knew or reasonably should have understood that the actions he brought about or allowed the company to take would result in the company failing to meet its obligations and also not offering recourse for the damage occurring as a result.

In the District Court's opinion, the claimant has also failed to meet his burden of proof in this respect. He has not refuted, or insufficiently refuted, that after August 2018 one of the directors was confronted with circumstances that made it extremely difficult to set up a successful company with the activity of 'mining' bitcoins, that other investors withdrew and that ultimately the actual start-up of the company was not successful, partly because of this.

The Court considered that, for answering the question of whether the directors can be blamed for "personally seriously culpable" actions, it may be of importance how the money raised by the company from investors (including the claimant) was spent. The Court will therefore give the directors the opportunity to further specify the financial documents brought into evidence, as far as the expenses are concerned, and to substantiate them with invoices or payment requests and proofs of payment. The claimant will then still be allowed to respond.

In short, the proceedings have not yet ended. Of course we will keep you informed about the final outcome.

You can read the interlocutory judgment here.


This judgment shows well how important it is in directors' liability cases to properly substantiate the positions taken, on the basis of documents. It must be demonstrated in concrete terms why a director can be blamed for a "personal serious culpability". Do you have questions about directors' liability? Or do you have any other questions about company law? The experienced lawyers at SPEE advocaten & mediation are ready to assist you.

SPEE advocaten & mediation Maastricht


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