When the defendant's identity is unknown, take the case to the exchange's location

Quick Take

  • ZG Top Technology Co., Lt. v. John Doe
  • Unknown defendant, John Doe, allegedly stole 100 ETH and 330,000 USDT
  • Plaintiff tracked the funds to a wallet address maintained by Bittrex and opened a case where the exchange is located, Seattle

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.

[As always, Rosario summaries are “NMR” and Palley summaries are “SDP”]

[related id=1]ZG Top Technology Co., Lt. v. John Doe, (D.W.D.Wash., 2:19-cv-00092, January 22, 2019) [SDP]

As we’ve discussed in prior posts, the way that you sue an unknown hacker who steals your crypto is to sue them as a John or Jane Doe defendant and then issue a bunch of subpoenas to get information about IP addresses, service providers and find out if they are dumb enough to move the stuff to a U.S. exchange by tracking Blockchain transaction history. That’s what this lawsuit is about — allegedly stolen crypto that made its way to an account on Bittrex.

The nutshell is this: Plaintiff operates a “global trading platform and has offices in Mongolia and China.” On November 25, 2018, John Doe “attacked” Plaintiff and stole 100 ETH and 330,000 USDT. Using immutable blockchain ledger wizardry, plaintiff was able to track the crypto to wallet addresses maintained by Bittrex.

The Complaint has four counts — Violation of the Computer Fraud and Abuse Act, Two violations of the Washington Cyber Crime Act, and a count for conversion. The prayer for relief asks for mostly standard stuff, including actual and punitive damages. One request jumped out at me as odd — for “forfeiture” of property used to commit the alleged acts. Private plaintiffs don’t usually get asset forfeiture as a remedy. Other than that last bit, pretty much what you would expect.

But … why is this in federal court in Seattle, and why should a U.S. Court have to deal with this dispute. I have to admit that I scratched my head the first time I read this lawsuit to figure out why it was filed in Federal Court in Seattle. The lawsuit alleges that the plaintiff is based in Ulan Bator, which is in Mongolia, not Washington state. And the defendant, well it’s a John Doe — we don’t actually know anything about the defendant.

Presumably, plaintiff chose to file this in Seattle because that’s where Bittrex is, which will make it easier to serve a subpoena on it. It might have slightly complicated matters to add Bittrex as a defendant in a declaratory judgement count but might also have made it marginally easier to enforce a judgment against it.

But here’s the thing — subject matter jurisdiction is a funny thing. Courts can raise it on their motion, which is what happened in the Smoak case, which Nelson covers today. I think there’s a chance that the Court will ask the Plaintiff to explain what this is doing in his courtroom.


The Block is pleased to bring you expert cryptocurrency legal analysis courtesy of Stephen Palley (@stephendpalley) and Nelson M. Rosario (@nelsonmrosario). They summarize three cryptocurrency-related cases on a weekly basis and have given The Block permission to republish their commentary and analysis in full. Part II of this week's analysis, Crypto Caselaw Minute, is above.


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