The valuation trap: why crypto disputes break conventional methods

Economics, evidence and the limits of conventional methods

Digital assets have pushed valuation disagreements to the centre of commercial disputes, regulatory investigations and shareholder actions. Crypto businesses, whether exchanges, token issuers, infrastructure providers or trading platforms, operate in markets where prices form in volatile conditions, data quality is uneven and business models evolve faster than the frameworks used to assess them. When parties fall out, these traits become fault lines. Valuation disputes are no longer a niche concern. They are becoming routine.

There is now a measurable litigation footprint behind these disputes. CMS has identified 158 High Court claims in England and Wales between 2017 and 2024 that materially relate to cryptoassets, while Solomonic reports that active crypto-related claims peaked at 59 in 2024 and that amounts sought have reached into the billions of pounds. That remains modest compared with mature categories of commercial litigation, but it is enough to show that crypto disputes have moved beyond occasional fraud recovery applications into a recurring feature of the disputes landscape.

The nature of the valuation problem

Crypto assets do not sit comfortably within traditional valuation categories. They are not commodities in the classical sense. Nor are they equity claims on future cash flows. Some tokens carry utility features. Others resemble a perpetual claim on network activity. Many have no clear economic anchor at all. That ambiguity leaves plenty of room for disagreement.

Three features drive most of these disputes. The first is extreme price volatility. Moves of twenty to thirty per cent in a single day are not unusual, and in a dispute that raises hard questions about the correct valuation date, the appropriate averaging window, and whether the observed price reflects genuine market conditions or a passing dislocation. The second is fragmented and inconsistent market data. Prices differ across exchanges, liquidity varies sharply and wash trading or thin order books can distort the signal, so the parties frequently disagree on which data source deserves to be trusted. The third is uncertain economic rights. Tokens often combine governance rights, access rights and speculative value in a single instrument, and the dispute can turn on exactly what the token entitles its holder to, which in turn decides what is actually being valued.

None of this is theoretical. These issues shape damages claims, shareholder disputes and disagreements between founders and investors. They also bear on regulatory enforcement, where valuation is often central to establishing harm or benefit.

Valuing crypto assets: where disputes arise

Market-based valuation

Market-based approaches rely on observable prices, which in crypto is a deceptively simple idea. The real question is never what the price was. It is which price should be treated as reliable. Parties routinely contest whether the chosen exchange was sufficiently liquid, whether prices were distorted by manipulation, whether the valuation date happened to coincide with abnormal volatility, and whether off-exchange transactions belong in the analysis at all. In practice, experts often arrive with competing datasets. One side relies on a consolidated feed; the other insists that only regulated exchanges should count. The disagreement is rarely about the arithmetic. It is about market integrity.

Income-based valuation

Income-based approaches suit crypto businesses, particularly exchanges, custodians and infrastructure providers, and they depend on assumptions about future volumes, fee structures, regulatory constraints and competitive dynamics. The disputes that follow tend to focus on whether the forecasting methodology and its growth assumptions are credible, on how stable the revenue base really is where fees track trading volumes, on the discount rate, and on how regulatory risk, including licensing, capital requirements and enforcement exposure, should be reflected in the numbers.

Crypto exchanges illustrate the problem well. Their revenues depend on trading activity, and trading activity is itself driven by sentiment, macro conditions and the performance of the underlying assets. When markets turn, volumes collapse. The parties then disagree on whether the downturn is cyclical or structural, and so whether the valuation should reflect a temporary dip or a lasting shift in the business.

Cost-based valuation

Cost-based approaches are rare, though they surface in disputes over infrastructure projects, mining operations or token development. The difficulty is that development cost bears little relationship to market value. In litigation, a cost-based valuation is usually deployed defensively, to argue that a claimant's expectations were unrealistic or that damages should be confined to actual expenditure.

By way of example, imagine a dispute between a token issuer and an early strategic investor, who invested £5 million in exchange for a future allocation of tokens once the network launched. The relationship later deteriorates: the token launch is delayed, market conditions worsen, and the investor argues that the issuer breached its obligations and seeks damages equal to the “market value” the tokens would have had if they launched on time.

Valuing crypto companies: the business model challenge

Crypto companies raise a different set of valuation issues. Their economics are tied to network effects, regulatory positioning and technology adoption, and many compete in markets where any advantage is transient. Revenue attribution is a frequent source of dispute, since exchanges often run several business lines at once, spanning spot trading, derivatives, staking, lending and custody, and the parties can disagree sharply on how costs and revenues should be allocated across them. Token-linked economics add another layer, because a native token that shapes user behaviour or provides fee discounts requires the valuer to understand how those incentives feed through into volumes and profitability. Regulatory uncertainty matters too. An enforcement action can reshape a business model overnight, and disputes often turn on whether the valuation should have reflected regulatory headwinds that were already foreseeable at the time. Customer concentration adds a final complication, since many exchanges depend on a small number of high-volume traders, and if those traders withdraw, revenue falls sharply, leaving the parties to argue over whether that churn should have been foreseen.

The economics of valuation disputes

Beneath the specifics, crypto valuation disputes tend to hinge on the same handful of deeper questions. What counts as a fair market in a market that is prone to manipulation. How should experts treat periods of extreme volatility. What benchmark is appropriate for a discount rate when the industry lacks long-term data. And how regulatory risk should be quantified when the regulatory perimeter itself is still taking shape. None of these questions resolves easily. They call for judgement, experience and a genuine understanding of how crypto markets function, and they call for transparency as well, since tribunals increasingly expect an expert to show how sensitive their conclusions are to alternative assumptions.

Typical dispute scenarios

A handful of patterns recur across cases. Founders and investors clash when investors argue that fundraising valuations were inflated and founders argue that market conditions shifted unexpectedly. Acquirers and sellers clash in M&A disputes when the acquirer claims the seller misrepresented user numbers, liquidity conditions or token economics. Minority shareholders bring actions challenging the valuations used in buyouts or restructurings. Contractual disputes arise where a valuation clause is tied to token prices but the contract never specifies which exchange or index should govern. And regulators step in where the question is whether the valuations used in disclosures were misleading.

Towards more robust valuation practice

The industry is slowly building better tools. Consolidated price feeds, improved market surveillance and more transparent exchange reporting all help. But disputes will keep coming, because the underlying economics remain volatile and uncertain rather than because the tools are inadequate.

Three principles do the most to improve the defensibility of a valuation. The first is a clear articulation of assumptions, since an expert should explain not only what has been assumed but why that assumption is reasonable. The second is sensitivity analysis, because crypto valuations respond sharply to their inputs, and showing how the result changes under alternative scenarios is essential rather than optional. The third is independent data verification, since relying on a single exchange or dataset is risky and cross-checking against other sources does more than anything else to build credibility.

Closing thoughts

Crypto valuation disputes are not simply technical disagreements. They reflect the tension between fast-moving markets and valuation frameworks built for calmer environments. As the industry matures, the disputes will grow more sophisticated rather than fade away, and the task for practitioners is to combine rigorous economic analysis with a realistic feel for how crypto markets actually behave.

That combination is harder to fake than it sounds, and it is what separates a defensible valuation from a merely plausible one. The economics of these disputes places a premium on practical market understanding: knowing how to interrogate the data, how to test a discount rate in a market with limited history, and how to explain why one exchange’s price may be more reliable than another’s. Dispute economics in crypto is not a subset of conventional valuation work with a few extra caveats attached. It is its own discipline, built on markets that behave differently from the ones valuation theory was written for, and it rewards those who have done the work of understanding that difference rather than assuming it away. If parties treat crypto valuation like ordinary valuation work, they risk producing opinions that look technically plausible but are vulnerable under challenge 

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Dr Mark Bamber is a Senior Advisor at DT Economics LLP and specialises in economic analysis. He holds a PhD in Economics, an MSc in Financial Economics and an MBA, and is a chartered management accountant. He has worked in economics and finance for around thirty-five years. His experience extends beyond advisory work into practice: he has been directly involved in setting up a crypto exchange and securing its MiCA licence. He has published widely on the economics of crypto markets. DT Economics is a boutique economics consultancy specialising in expert witness, competition economics and regulatory advice.