GBM Global Holding Company Limited v. The Unidentified Individuals Listed on…

Background

GBM Global Holding Company Limited operates the Bitmart cryptocurrency exchange. The 91 respondents registered Bitmart accounts in July 2021 and accepted a user agreement requiring individual binding arbitration for disputes involving the agreement or Bitmart’s services.

GBM Global alleged that the respondents carried out a malicious “51% attack” on the Bitcoin Satoshi Vision blockchain. According to the opinion, the attack created sham transactions that made it appear the respondents possessed 91,000 authentic Bitcoin Satoshi Vision tokens. Bitmart then credited authentic tokens to digital wallets linked to the respondents’ accounts. The respondents traded the tokens for other cryptocurrencies. GBM Global froze some accounts, but approximately $5,027,000 in cryptocurrency was transferred to other exchanges.

GBM Global initiated arbitration before the American Arbitration Association, asserting breach of contract and fraud. The respondents received notice but did not appear. Based on affidavits and documentary evidence submitted by GBM Global, the arbitrator issued a May 2, 2022 award requiring joint and several payment of damages totaling $5,231,549.42, with payment due within 45 days.

Federal-court proceedings

GBM Global asked the federal court to confirm the award under the Federal Arbitration Act and the New York Convention, an international agreement governing recognition and enforcement of certain arbitration awards. The respondents did not appear or respond to the petition or the motion.

Because the respondents failed to respond, the court treated the petition as an unopposed motion for summary judgment. The court explained that, under the Federal Arbitration Act, it must confirm an award covered by the New York Convention unless one of the Convention’s specified grounds for refusing or postponing enforcement applies.

The court stated that review of a foreign arbitration award is highly deferential. Confirmation requires only a “barely colorable justification” for the arbitrator’s result. The court found that the award was covered by the New York Convention, had been issued less than three years earlier, and arose from a commercial relationship. It also found no ground for refusing or postponing enforcement.

Ruling

The court granted GBM Global’s petition to confirm the arbitration award. It confirmed the $5,231,549.42 award, ordered postjudgment interest from the date of judgment, directed the clerk to enter judgment, and terminated the case.