$170 million 'lost' on Italian crypto exchange results in lawsuit

Quick Take

  • Fabian v. Nano f/k/a Raiblocks f/k/a Hieusys LLC et al.
  • Second plaintiff files complaint against Nano for alleged violation of federal securities laws
  •  The defendants allegedly used a “Nano Faucet” to maintain high “sell pressure.”

Government shutdown or not, plaintiffs' lawyers haven’t stopped filing new crypto lawsuits. This week we look at three new complaints, one involving lost crypto and a demand for a fork (the software kind), another that says that pre-sold mining hardware contracts were actually securities, and last but not least artificial intelligence on the blockchain (but not so much, it turns out). [As always, Rosario summaries are “NMR” and Palley summaries are “SDP”]

Disclaimer: These summaries are provided for educational purposes only by Nelson Rosario [twitter: @nelsonmrosario] and Stephen Palley [twitter: @stephendpalley]. 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. 

[related id=1]Fabian v. Nano f/k/a Raiblocks f/k/a Hieusys LLC et al., 4:19-cv-00054 (D.N.D.Cal., January 3, 2019) [SDP]

This is version two of a (putative) class action initially filed in federal court in Brooklyn in the fall of 2018 in the name of a different plaintiff (Alex Brola). That lawsuit was dismissed and was just refiled by the same lawyers against the same defendants, but with a different plaintiff. Why would the lawyers dismiss a lawsuit and then refile it somewhere else with a different plaintiff? Gather 'round children and I’ll tell you a tale.

The new lawsuit. The case involves a cryptocurrency called Nano, a whole bunch of which was stored on an Italian crypto-exchange called BitGrail. Both Nano and BitGrail are defendants, as are a bunch of natural persons. (That is lawyer speak for flesh and blood people, not corporations)

Per the complaint, on February 8, 2018 “over 15 million XRB, bearing a market value of approximately $170 million, supposedly safely stored on BitGrail were ‘lost’.” (Side note, 15 Million XRB are today worth $13,335,000, using a market price of $0.8893, which I found on coinmarketcap.com. The truth is it’s probably less than that, as trying to sell that much of this particular magic bean would probably collapse the market for it.)

Plaintiff says that he had 23,033 XRB worth $260,000 (on February 8) frozen by defendants and seeks to represent a class of people who used BitGrail to “purchase, invest in, or stake XRB” between January 1, 2015 to March 31, 2018.

The lawsui