B.C. man ordered to repay $1.2M bitcoin loan after 'modern twist' on old-fashioned contract dispute

An intricate cryptocurrency scheme trading on the name of the purported founder of bitcoin has resulted in a bitter B.C. legal battle between two men who

A B.C. man who borrowed 22 bitcoins from a friend in 2021, promising to pay them back within 48 hours, has been ordered by a B.C. Supreme Court judge to cough up $1.2 million — the cash equivalent of the crypto loan.

The two men are now at the centre of a bitter legal battle, with each claiming financial ruin.

In court documents, Hung Nguyen — a Kelowna real estate agent — said the 22 bitcoins he loaned to Daniel Tambosso represented the entirety of his personal savings, and that Tambosso's failure to reimburse him has had a devastating impact on my personal finances and on my mental health.

Meanwhile, Tambosso — who told the CBC he plans to appeal — claims he has also been left penniless, the victim of an elaborate scam that saw him borrow funds from Nguyen as he threw good money after bad in the hopes of unlocking a blockchain wallet worth billions.

'The creator of bitcoin'

The case may be mired in the complexities of cryptocurrency, but Justice Shelley Fitzpatrick said the underlying legal concept was a matter of simple contract law — calling the situation a modern twist on old-fashioned cause of action and remedy.

In his affidavit, Nguyen detailed the growth of his portfolio starting with small investments in bitcoin and ethereum in April 2017. He took out a line of credit and drew from personal savings to grow a $264,000 investment into $1.18 million worth of cryptocurrency by 2021.

Nguyen said friends introduced him to Tambosso, who explained that he had significant cryptocurrency holdings and that, in the past, he had encountered bad actors in the cryptocurrency market that scammed or attempted to scam him.

In his version of events, Tambosso claimed he went looking for a solution to track and recover the misappropriated bitcoin and came across security recovery software purportedly designed by Satoshi Nakamoto, the creator of bitcoin.

According to the court documents, the security software could only be accessed in stages, with each stage requiring a fresh payment of bitcoin. Tambosso needed Nguyen's money to make the payments.

"Mr. Tambosso told Mr. Nguyen that the payoff could be huge: if the ... procedure was successful, Mr. Nguyen would receive 1,750 bitcoins as compensation for the loan," Fitzpatrick said.

'Additional credibility'

In her judgment, Fitzpatrick said Satoshi Nakamoto denies being the inventor of bitcoin — but she drew no conclusions about the mysterious software developer, whose name is believed to be a pseudonym.

Still, the judge said the mere mention of a man with cult-like status in crypto circles gave Mr. Tambosso's proposition additional credibility.

So did a screenshot of a blockchain wallet (presumably that of Mr. Tambosso) showing a balance in excess of $5.2 billion in bitcoin.

Nguyen agreed to provide a short-term loan, and the two men signed a first contract for 18 bitcoins. A short time later — as the program demanded even more money — they drew up another deal for a further four bitcoins.

"By their clear terms, the contracts provided that Mr. Nguyen agreed to provide Mr. Tambosso with a total of 22 bitcoins (18 and 4) on the condition that Mr. Tambosso would repay these bitcoins within 48 hours," the judge wrote.

"In other words, regardless of whether or not the ... procedure succeeded, Mr. Tambosso was required by the terms of the contracts to return the original 22 bitcoins to Mr. Nguyen."

'It felt like being trapped in the movie SAW'

In his affidavit, Tambosso claimed mounting anxiety as the Satoshi program demanded more and more bitcoins — while any promised reward slipped further and further away.

He compared his plight to a popular horror film series in which victims are tested through torture: "It felt like being trapped in the movie SAW, where each step required more bitcoins to survive, leading us down the wrong path without knowing."

Tambosso claimed he sought cash from yet another investor, giving him a rose gold IPhone containing his bitcoin wallet as collateral for a $900,000 loan.

He claimed the other man refused to return the phone — trying to extort him instead for a portion of its contents.

"Deprived of my rose gold iPhone, I resorted to sending emails to Satoshi Nakamoto, detailing the situation and seeking clarification on why the program failed to complete," he claimed.

"Despite my efforts, I received minimal to no response."

But Fitzpatrick said none of that was Nguyen's concern.

“尽管事后看来，坦博索先生要么被骗了，要么参与了某种更广泛的邪恶计划，但这都不能免除他偿还阮先生的义务，”她写道。

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