This was the conclusion reached by the Supreme Court in its Judgment of June 20, rejecting a final appeal in cassation No. 998/2018.
As background to this Judgment, we can say that the defendant had been convicted by the Provincial Madrid Court, in its Judgment of March 7, 2018, for ongoing fraud, and had to compensate the injured parties for the value of the market price of the bitcoin at the time that each one of the respective contracts were concluded, declaring the secondary civil liability of the company through which he had acted.
This Judgement was appealed in cassation by the defendant, the secondary civil liability company and the private prosecution.
It was the private prosecution that provided the Supreme Court with the opportunity to declare on this matter when it indicated in its cassation appeal that, based on the provisions of articles 110 and 111 of the Criminal Code, the very same goods should be restored to their owner so that it would be appropriate for the Judgment to condemn the defendant to return the stolen bitcoins and that only in the execution phase of the Judgment, if those assets were not returned, then it should proceed to assess their value in terms of money and to sentence him to return that amount.
The Supreme Court Judgment in resolving this appeal understood that the injured parties were not purloined of bitcoins, but of money in euros that by means of the deceit of the fraud itself delivered bitcoins to the defendant to invest in assets of said type, i.e. in bitcoins.
In addition, adds the Judgment, the bitcoin is not something which is capable of being returned since it is not a material object, nor is it legal tender.
The Judgement states that "Bitcoin is nothing but a unit of account of the network of the same name. From a public ledger, where all transactions are stored permanently in a database called Blockchain."
It goes on to say: "In this way, the bitcoin is nothing other than an intangible asset, in the form of an account defined by computer and cryptographic technology called bitcoin, being its value what each unit of account, or part of a unit, achieves through the interplay of the supply and demand in the sale of these units via Bitcoin trading platforms."
It concludes: "This similar cost of the units of account at any given time allows bitcoin to be used as an intangible asset of monetary compensation or exchange in any bilateral transaction which the contracting parties accept, but in no way is it money, or may it be considered legal tender."
Not even, according to the Judgment, can it be considered as electronic money because it does not fall under the definition that is set out in Law 21/2011, on July 26, of electronic money.
Therefore, it concludes that, although bitcoins had been delivered for investment, the first instance court cannot agree to their restitution. Instead, it is appropriate to repair the damage by returning to the injured parties the amount of money which the damage has materialised in, "with an increase for the damage consisting of the return on or profitability that would have been offered by the price of the bitcoin units between the time of the investment and the expiry of the respective contracts."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.