Atomic Wallet has achieved a major legal win with the dismissal of a $100 million class-action lawsuit linked to a hack, due to a lack of jurisdiction over the Estonian company.
Case Overview
On September 10, 2024, Judge Philip Brimmer of the Colorado district court dismissed a class-action lawsuit against Atomic Wallet, a crypto wallet provider based in Estonia, following a significant hack in June 2023. The lawsuit was brought by 21 plaintiffs who claimed that Atomic Wallet, along with its CEO Konstantin Gladyshev and shareholder Pavel Sokolov, failed to secure user assets during the breach.
The plaintiffs’ argument hinged on the visibility of Atomic Wallet’s advertisements in Colorado and the interaction of one plaintiff, Graham Dickinson, with the company’s customer support. However, the defense successfully argued that the company had no substantial connections to the U.S.
Court’s Decision
Judge Brimmer noted that while there was some evidence of interaction with Atomic Wallet, it was insufficient to establish jurisdiction. He pointed out the challenges in tracking user locations and responsibilities for a software-based service like Atomic Wallet.
Although most claims were dismissed, the judge allowed the possibility of continuing the lawsuit against Ilia Brusov, a co-founder of Evercode Infinite, the firm behind Atomic Wallet’s software. The plaintiffs were given 21 days to justify why Brusov should remain a defendant, considering his 12.8% stake in the company, comparable to Sokolov’s ownership.
Impact on the Crypto Sector
This ruling highlights the complexities of jurisdiction in the cryptocurrency space as companies operate internationally. It also raises questions about the responsibility of crypto wallet providers in protecting user assets amid increasing cyber threats.
The decision may influence how other crypto firms navigate legal and user-related matters, particularly in regions where they have limited physical presence. As the crypto industry expands, the need for clear regulations and robust security standards becomes more pressing.
Conclusion
The dismissal of the lawsuit against Atomic Wallet is a significant development in the debate over cybersecurity and legal accountability in the cryptocurrency field. As the sector evolves, both users and providers must address security issues and manage the complexities of international law. The case may set a precedent for future legal actions, emphasizing the importance of jurisdiction in digital finance.
