Benthos Master Fund sees its latest motions denied in case of third-party bitcoin sale

Quick Take

  • Benthos Master Fund, a crypto investment firm based in California, sought to purchase bitcoin from a third party and reached out to New York based attorney Aaron Etra to act as escrow agent
  • Benthos entered into “the Bitcoin Agreement,” with Valkyrie Group LLC, and Etra was to use his trust account to facilitate the transactions, moving necessary funds through his account
  • After a series of mishaps on what money was to be transferred out of the trust account leading to a court case, Benthos filed a motion to hold Etra in contempt of court and have him sanctioned, both of which were denied

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".

[related id=1] Benthos Master Fund, Ltd. v. Etra, 2019 U.S. Dist. LEXIS 104492 (S.D.N.Y. decided June 20, 2019)[NMR]
Do you ever wonder how much over the counter trading in cryptocurrency occurs? Like, is there a giant shadow market out there beyond the reach of exchanges where deals are done via handshakes and escrow accounts? Well, if you’ve had those thoughts this case is further evidence.

This particular entry in our ongoing series of Escrow Gone Wild™ starts out simple enough. Benthos Master Fund is a crypto investment firm based in California. Seeking to secure a heavy bag they reached out to New York based attorney Aaron Etra who would act as the escrow agent for the purchase of bitcoin from a third party. Seems normal enough.

Benthos entered into an agreement, the Bitcoin Agreement, with a non-party to this arbitration proceeding named Valkyrie Group LLC for the purchase of 10,000 bitcoin. The new business relationship would begin with an initial purchase of $5,000,00