The DIFC Digital Economy Court has handed down an important judgment in Gate MENA DMCC (formerly Huobi OTC DMCC) and Huobi MENA FZE v Tabarak Investment Capital Limited, dismissing in full a claim arising from the loss of 300 Bitcoin during an over-the-counter cryptocurrency transaction. The Co-Head of Mishcon de Reya's dispute resolution practice in the UAE, Bushra Ahmed, represented the defendant as junior counsel throughout the proceedings including at the first trial, before the Court of Appeal and at the retrial in February 2026, shortly prior to joining the firm.
The judgment marks the latest chapter in litigation that has spanned almost six years, involving a trial, an appeal and a five-day retrial. More importantly, it provides valuable guidance on the application of traditional contractual principles to digital asset transactions.
The background
The dispute arose out of a proposed sale of 300 Bitcoin by Huobi to a buyer introduced through an intermediary. Neither side trusted the other sufficiently to transact directly and so Tabarak was engaged to play an intermediary role.
The original structure was straightforward. Tabarak would hold the Bitcoin until the purchase monies were received. Once payment arrived, the Bitcoin would be released to the buyer. If payment was not received, the Bitcoin would be returned.
However, during the transaction, the agreed structure changed. A new Trezor wallet introduced by the buyer was used instead of the wallet originally contemplated by the parties. Unknown to those involved, the wallet setup process contained a vulnerability that was subsequently exploited by fraudsters, resulting in the loss of the Bitcoin before payment was ever received.
The claim that followed sought to recover the value of those assets from Tabarak.
The trial and appeal
At first instance, the court held that no binding contract had come into existence because a condition precedent had not been satisfied. The account opening fee required under the account opening arrangements had never been paid.
The trial judge also found that Tabarak had acted reasonably in relation to its handling of the Bitcoin and was not under any separate duty to advise on the security or wisdom of the transaction structure adopted by the parties. The claim was therefore dismissed.
On appeal, however, the Court of Appeal identified an unresolved issue. Even if the original agreement never came into force, what was the legal effect of the parties proceeding with the transaction, altering its structure and agreeing an increased commission immediately before the Bitcoin was transferred? The Court of Appeal concluded that this question had not been determined and ordered a retrial.
The real issue before the retrial
The retrial was not simply about whether a contract existed. In reality, the more significant question concerned the nature of any obligations assumed by Tabarak.
The claimants argued that a fresh contract arose during the transaction itself. Under that contract, they contended, Tabarak effectively assumed a custodial role in relation to the Bitcoin.
The claimants’ case was that Tabarak’s obligation was absolute. If payment was not received, Tabarak was obliged to return the Bitcoin.
On that analysis, it was irrelevant whether Tabarak had acted carefully or negligently. The mere fact that the Bitcoin was not returned was said to establish liability.
This was a sophisticated argument. It sought to transform Tabarak’s role from that of an intermediary exercising reasonable care into a party bearing strict responsibility for the return of the assets.
Contract formation by conduct
One of the most interesting aspects of the judgment is the court’s analysis of contract formation. Justice Black accepted that, notwithstanding the failure of the original agreement, a new contract arose during the execution of the transaction itself.
The court found that the parties intended to create legal relations, that Tabarak was acting for reward and that the transaction proceeded on the basis of a newly agreed commercial arrangement. In that respect, the claimants succeeded on a major issue.
The court was prepared to recognise that legally binding obligations can arise through conduct and performance during the course of a digital asset transaction, even where the original contractual framework has fallen away. That conclusion alone is likely to be of considerable interest to those operating in the digital asset sector.
The limits of crypto custody obligations
The critical issue then became the content of the contract. Did Tabarak assume strict liability for the Bitcoin? Or was its obligation limited to exercising reasonable care in performing its intermediary role? The court accepted the latter analysis.
Justice Black held that the contract did not impose strict liability and that reasonable commercial parties would not have intended Tabarak to bear the risk of loss arising from fraud perpetrated without fault on its part.
The court recognised that Tabarak’s role was limited. It was not the architect of the transaction structure. It did not devise the system that was ultimately exploited. Nor was it under any obligation to advise the parties on the wisdom of the arrangements they had chosen. Instead, its obligation was to exercise reasonable care in maintaining control over the assets and performing the role it had agreed to undertake.
That distinction proved decisive. Because the earlier findings that Tabarak had acted reasonably were binding on the retrial, there was no breach and the claim failed.
Why the judgment matters
The significance of the decision extends well beyond the immediate dispute. The judgment demonstrates the willingness of the DIFC Courts to apply established principles of contract law to increasingly sophisticated digital asset transactions.
In particular, the court:
- recognised that contractual relationships may arise through conduct during the execution of digital asset transactions;
- treated crypto assets as property capable of forming the subject matter of custody-type arrangements;
- examined the legal nature of obligations assumed by intermediaries handling digital assets;
- distinguished between strict obligations to achieve a result and obligations requiring the exercise of reasonable care; and
- rejected attempts to impose absolute liability for losses caused by third-party fraud in circumstances where the intermediary itself was not at fault.
As digital asset markets continue to mature, disputes will increasingly concern familiar legal concepts: contract formation, risk allocation, custody, causation and loss. The technology may be new. The legal questions often are not.
What this judgment demonstrates is that courts remain willing to apply established legal principles to new forms of property and new methods of transacting, while resisting attempts to rewrite commercial bargains after the event.
For that reason alone, this decision is likely to remain an important reference point in future digital asset litigation.