UAE Court Orders Crypto Broker to Repay $124,000 After Risk Management Breach

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UAE Court ruling: Crypto broker ordered to repay $124K after breaching risk management agreements.

The Al Ain Civil, Commercial and Administrative Court ordered a crypto broker to repay USD 124,361 after finding a material breach of an agreed trading mandate.
The broker ignored an 8% stop-loss limit and used excessive leverage, wiping out the investor's account.
Over USD 46,000 in platform fees was incurred in just days, which the court-appointed expert described as aggressive churning.
The court awarded AED 10,000 in moral damages plus full legal costs, recognising emotional as well as financial harm.
UAE courts treated WhatsApp messages and chat logs as valid evidence of binding contractual terms.
Legal analysts highlight VARA and SCA licensing requirements as key safeguards investors must verify before granting discretionary trading authority.

Discretionary Trading Mandates Come Under UAE Legal Scrutiny

The UAE's framework for crypto investor protection is gaining teeth. This ruling from the Al Ain Civil, Commercial and Administrative Court reflects a broader shift: UAE civil courts are applying contract law principles to digital asset trading relationships with growing confidence. The case sits within a regulatory landscape shaped by Dubai's Virtual Assets Regulatory Authority (VARA) and the federal Securities and Commodities Authority (SCA), both of which set licensing standards for entities managing digital assets on behalf of clients.

The judgment is also a practical test of how discretionary trading mandates - arrangements where an investor grants a broker authority to trade on their behalf - are treated under UAE law when those mandates are breached. Legal and market analysts say the ruling sends a clear signal to brokers operating in the UAE's rapidly expanding crypto sector.

A Discretionary Mandate Goes Wrong

The Al Ain Civil, Commercial and Administrative Court has ordered a crypto trading broker to repay USD 124,361 to an investor after finding the broker materially breached their agreed trading arrangement. The ruling, reported by Gulf News and multiple regional outlets, also terminates the trading agreement and awards AED 10,000 in moral damages, plus legal costs and court fees.

The investor deposited approximately USD 135,501 in USDT - Tether, a US dollar-pegged stablecoin - into a trading platform and granted the broker authority to manage the portfolio on a discretionary basis. In return, the broker was to receive 30% of any profits generated. The terms of the arrangement were set out through electronic messaging, including chat logs and messaging apps, which the court accepted as binding contractual evidence.

The agreed parameters were specific. The broker and investor settled on a target daily return of between 1% and 5%, and a stop-loss limit - a pre-set threshold at which losing trades must be closed - of 8% per trade. The court found these risk controls constituted formal contractual obligations, not merely informal guidance.

The Expert's Findings: Three Key Breaches

The court appointed a forensic expert to review the trading history, communications, and platform records. The expert concluded that the broker had adopted a high-risk approach that directly contradicted the agreed strategy. Three specific categories of misconduct were identified.

Stop-Loss Violations

Rather than closing positions when they reached the agreed 8% loss threshold, the broker continued to hold and add to losing trades. This accelerated account drawdowns and ultimately wiped out the investor's capital.

Excessive Leverage

The broker used margin and leverage well beyond what the investor's capital base and the agreed mandate permitted. This amplified both risk and volatility in a way that was inconsistent with the parameters set out in the communications.

Churning for Fees

The broker's execution approach generated over USD 46,000 in platform fees within just a few days. The expert described this as aggressive churning - where trade frequency and fee generation appeared to take priority over capital preservation. This fee level was characterised as disproportionate to the portfolio size and wholly inconsistent with prudent account management.

According to reporting by FX Leaders and Lara on the Block, the expert concluded that the broker's incentives were misaligned with the investor's interests. The trading pattern suggested the broker was effectively managing the account for fee generation rather than investment returns.

The Court's Ruling and Awards

Based on the expert report and documentary evidence, the court found that the broker had violated express contractual terms documented in the messaging exchanges. It characterised the broker's conduct as unprofessional and reckless. Under UAE civil transactions principles, a party that breaches obligations causing financial loss can be held liable for both restitution and damages.

The court ordered full restitution of USD 124,361, terminated the trading agreement, and granted AED 10,000 in moral damages - recognising emotional distress as well as financial harm. The broker was also ordered to bear all court costs and legal fees, reinforcing the principle that clients should not absorb the legal expense of challenging reckless account management when a clear breach has been established.

Wider Implications for UAE Crypto Markets

Legal analysts and trading industry commentators describe the ruling as significant for broker accountability across the UAE's digital asset sector. Several key implications emerge from the judgment.

First, UAE courts are increasingly willing to treat WhatsApp messages, emails, and chat logs as valid evidence of binding contractual terms in trading mandate disputes. Second, courts are appointing forensic experts to analyse trading records and blockchain-linked transactions, reducing brokers' ability to obscure misconduct behind the complexity of crypto markets. Third, even where a broker does not hold legal title to a client's crypto assets, courts may find them liable where they exercise practical control over trading and breach agreed risk parameters.

Commentary on the case also references the UAE's evolving regulatory framework. Dubai's Virtual Assets Regulatory Authority (VARA) oversees crypto-related activities in the emirate. The federal Securities and Commodities Authority (SCA) regulates securities and commodity-linked digital assets at the national level. Both bodies maintain licensing requirements for firms managing digital assets on behalf of third parties. Under the 2025 UAE Crypto Law and related regulations, managing digital assets without appropriate authorisation can attract both civil liability and potential criminal charges - although those provisions were cited in commentary rather than directly applied in this civil ruling.

What Investors Should Do

Specialist law firm advisories referencing the Al Ain decision stress the importance of documenting all risk parameters - including leverage caps, daily return targets, and stop-loss rules - in writing before granting any discretionary authority. Electronic communication records, such as messaging app exchanges, can serve as enforceable contractual evidence in UAE courts.

Investors should also verify that any broker or account manager holds appropriate authorisation from VARA, SCA, or other applicable UAE regulatory bodies before granting discretionary control over a portfolio. As this case illustrates, the availability of civil recourse in UAE courts - particularly where trading records and communication logs support a clear breach - provides real protection. However, due diligence before entering any arrangement remains the more prudent course.