Can I use Cryptocurrency to Settle Debt? The current position in Malaysia pursuant to Court of Appeal decision in Ong Seow Lee v Lee Ee Foong

Authored by Pravin Rakawan

Introduction

The usage of cryptocurrency as a mode of payment has slowly become commonplace in various commercial transactions worldwide. One might ask whether cryptocurrency can be used as a mode of settlement of debt. There is no express legislation in Malaysia which recognises or governs the usage of cryptocurrency as a legal tender in Malaysia. Nevertheless, settlement of a debt can take various forms, including by transfer of securities, properties, or otherwise, depending on the agreement between the parties.

What if a lender who accepts cryptocurrency in settlement of a debt later demands cash instead? The High Court in Lee Ee Foong v Ong Seow Lee [2025] 10 MLJ 230 held that a party/lender who willingly accepts repayment of a debt cannot claim for cash thereafter. This decision was further affirmed by the Court of Appeal. Together, the two decisions give Malaysia its clearest authority yet on cryptocurrency as valid repayment of a debt.

Brief Facts

The Plaintiff and Defendant had jointly invested RM140,000 in Bitcoin mining machines, RM70,000 each. The Plaintiff's share was later converted into a Friendly Loan owed and payable by the Defendant. In 2020, the Defendant repaid the Friendly Loan sum by transferring 50 Litecoins (valued at RM87,134.04) to the plaintiff's Binance wallet.

The Plaintiff accepted the Litecoins without objection and asked the Defendant to teach her how to sell them. Nevertheless, the Plaintiff later sued anyway the Defendant claiming the RM70,000 was still owed. The Defendant counterclaimed for RM17,134.04, the amount by which the Litecoins' value exceeded the debt.

The Magistrate allowed the Plaintiff's claim, holding the Litecoins were of no value, and dismissed the counterclaim. The Defendant appealed to High Court.

Cryptocurrency as Valuable Consideration

On appeal, the High Court held that the Magistrate had erred in law and in fact. There was no evidence to show that the 50 Litecoins lacked market value. In fact, the Plaintiff had admitted during cross-examination that each Litecoin was worth USD 412.96. The High Court held that cryptocurrency, although not legal tender, is universally accepted as a form of money and therefore constitutes valuable consideration.

This position was supported by two earlier authorities. In Robert Ong Thien Cheng v Luno Pte Ltd & Anor [2019] 1 LNS 2194, the High Court held that cryptocurrency, while not money in the traditional sense, is recognised as a form of security under the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019, and is a commodity carrying real value comparable to shares.

In Lee Kuang Gen v Tan Sri Dato' Seri Dr M Mahadevan a/l Mahalingam and other appeals [2024] 1 MLJ 825, the Court of Appeal held that the definition of "money" is wide enough to encompass any asset readily convertible into cash, including gold and cryptocurrency.

Acceptance Without Objection Discharges the Debt

In the High Court, the decisive factor to allow Defendant’s appeal was the Plaintiff's own conduct. She had accepted the Litecoins without objection, and even asked the Defendant to teach her how to sell them. Had the Plaintiff genuinely regarded the transfer as inadequate, she would have rejected it at the outset.

In Pernec Corp Bhd v A & AT Advanced Power Systems Sdn Bhd [2013] 4 MLJ 719, the Court of Appeal permits appellate intervention where a trial court fails to properly appreciate the evidence. On that basis, the High Court held that the Friendly Loan had been fully discharged. The appeal was allowed. As the Defendant's counterclaim rested on an unproven assumption that the Litecoins would fetch their highest possible resale value, that counterclaim was likewise dismissed.

Affirmed by the Court of Appeal

The Plaintiff, unhappy with the High Court decision further appealed to the Court of Appeal. In July 2026, a three-member bench unanimously dismissed the appeal, affirming the High Court decision that the debt had been fully discharged upon the Plaintiff's acceptance of the Litecoins.

The Court of Appeal held that whether a debt has been discharged depends on the parties' agreement and conduct, and not on the form of the asset used as payment. A party who knowingly accepts cryptocurrency in settlement cannot subsequently reject it merely because it is not legal tender.

Practical Implications

1. Object immediately - A creditor who wishes to dispute a cryptocurrency payment as inadequate must raise that objection at the point of receipt, and not after the token's value has moved.

2. Record the valuation - Parties who intend to settle a debt in cryptocurrency should record, in writing, the exchange and time used to value the token, so as to avoid disputes over assumed "highest" prices.

3. Expect consistency – Recent trends shows Malaysian Courts now consistently treat digital assets as commodities capable of real and provable value, rather than treating them as worthless in the absence of evidence to the contrary.

4. Expect the principle to extend beyond loans - The reasoning is not confined to Friendly Loans between business partners. The same principle should apply to payment for goods, services, rent, or damages, provided the creditor knowingly accepts cryptocurrency without timely objection.

5. Keep the evidence trail - Cryptocurrency wallet records, exchange price data at the time of transfer, and correspondence between the parties will be central to any dispute that arises. Parties are advised to preserve such records rather than rely on recollection of value long after the event.

Conclusion

Hence, the answer to whether cryptocurrency can be used as a mode of settlement of debt was provided by Court of Appeal in Ong Seow Lee v Lee Ee Foong. In the absence of express legislation on the subject, the position is settled by ordinary principles of contract where cryptocurrency is considered a valid consideration which was accepted as settlement in that particular case. Although cryptocurrency remains unrecognised as legal tender or an official mode of payment in Malaysia, parties remain free to agree upon it as a mode of settlement, and once accepted, the debt is discharged accordingly. A lender who willingly accepts cryptocurrency in repayment cannot thereafter demand cash.

Bibliography

1. Lee Ee Foong v Ong Seow Lee [2025] 10 MLJ 230, HC

2. Robert Ong Thien Cheng v Luno Pte Ltd & Anor [2019] 1 LNS 2194, HC

3. Lee Kuang Gen v Tan Sri Dato' Seri Dr M Mahadevan a/l Mahalingam and other appeals [2024] 1 MLJ 825, CA

4. Pernec Corp Bhd v A & AT Advanced Power Systems Sdn Bhd [2013] 4 MLJ 719, CA

5. Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019

6. Free Malaysia Today, "Appeals court rules crypto is valid debt repayment if accepted by lender" (21 July 2026) <https://www.freemalaysiatoday.com/category/nation/2026/07/21/appeals-court-rules-crypto-is-valid-debt-repayment-if-accepted-by-lender>

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