Court compares bitcoin to currency when dismissing lawsuit

Quick Take

  • Srinvasan v. Kenna et al.
  • The Court dismissed a lawsuit because it was filed directly against an individual on a corporate veil piercing theory, but didn’t plead any of the necessary elements to justify the move
  • The Court also rejected argument that bitcoin was too speculative in value for statute of limitations to begin running in 2013
  • According to the Court, “[c]urrency of any type fluctuates in value. And anticipating a given currency’s future value involves some level of speculation. But that alone does not mean that no harm occurred at the date of taking [in 2013]. Any ‘manifest and palpable’ injury commences the statutory period under California law.”

Disclaimer: These summaries are provided for educational purposes only by Nelson Rosario and Stephen Palley. They are not legal advice. These are our opinions only, aren’t authorized by any past, present or future client or employer. Also we might change our minds. We contain multitudes.

As always, Rosario summaries are “NMR” and Palley summaries are “SDP". This week’s guest post by Preston Byrne is “PJB”

[related id=1]Srinvasan v. Kenna et al., 2019 U.S. Dist. LEXIS 38834 (N.D. Cal., March 11, 2019) [SDP]

Time isn’t always on your side, as this case demonstrates, and the fact that bitcoin goes up and down in value isn’t going to toll a statute of limitations in the northern district of California apparently.

At issue here are two lawsuits that deal with bitcoin somehow acquired from the Defendant’s company in 2013 or otherwise in its custody. There aren’t a ton of facts in the opinion, which is a mostly clinical analysis of failings in the lawsuit that led to the court’s dismissal, with leave to amend (this means that the plaintiffs can try again).

The Court begins by dismissing the lawsuit because it was filed directly against an individual on a corporate veil piercing theory. Generally speaking, if you create a company and treat it like a real company, it’s viewed as a person in the eyes of the law. If the company breaches a contract or is negligent, the owners can’t be held personally liable in most cases … unless the plaintiff can pierce the corporate veil and (over-simplifying a lot) show the court that the company is a sham and that the defendant didn’t treat it as anything other than an extension of themselves. Ways