The case concerned a service contract. The claimant was to be compensated in “ID Tokens” – a token developed by the respondent. Compensation was to be paid out after the ICO and certain “Token Distrubtion Events” (TDEs) had taken place. Although the ICO and TDEs occurred, the respondent failed to transfer any ID Tokens to the claimant. The question of breach of contract was not in dispute before the Delaware court. It only had to rule on the amount of damages.
The court applied the Howey test and concluded that ID Tokens qualify as securities. In this context, the court also put some weight on the fact that the parties stipulated in their agreements that token distributions would be subject to Securities Act Rule 144.
In order to measure the damages due to the non-delivery of ID Tokens, the court relied on the highest market price of the security within a reasonable time of the claimant’s discovery of the breach. The court ruled that a three-month time period after discovery of the breach was reasonable. Referring to CoinMarketCap as a reliable source for the tokens’ value during this period (page 31 et seq.: “Against this backdrop, the Court is satisfied CoinMarketCap is a reliable cryptocurrency valuation tool. As such, the Court will rely on historical pricing data published by CoinMarketCap to determine the proper USD value of ID Tokens in calculating the Plaintiffs’ forthcoming judgment.”). Tthe court determined that the highest price for the tokens was USD 2.01.
As the claimant had been promised 12.5 million of ID Tokens, the court awarded USD 25,125,000 in damages, plus interest.
While the damages calculation is somewhat different under US law compared to Swiss law, the way in which the price of the tokens was established is nonetheless transferable. The reference to CoinMarketCap as a reliable source can also be used in Swiss court litigation for proving the price of a certain digital asset.