Atomic Wallet Prevails in $100 Million Hack Lawsuit Dismissal

In
a
significant
legal
victory
for
Atomic
Wallet,
a
U.S.
federal
judge
has
dismissed
a
class-action
lawsuit
against
the
Estonia-based
crypto
wallet
provider,
stemming
from
a
$100
million
hack
that
occurred
in
June
2023.
The
ruling,
made
by
Judge
Philip
Brimmer
of
the
Colorado
district
court
on
September
10,
2024,
cited
a
lack
of
jurisdiction
over
the
company,
which
has
no
substantial
ties
to
the
United
States.

Background
of
the
Lawsuit

The
class-action
suit
was
initiated
by
a
group
of
21
plaintiffs
following
the
high-profile
breach
that
resulted
in
the
theft
of
significant
funds
from
Atomic
Wallet’s
platform.
The
plaintiffs
argued
that
the
company,
including
its
CEO
Konstantin
Gladyshev
and
shareholder
Pavel
Sokolov,
failed
to
adequately
protect
user
assets,
thereby
making
them
liable
for
the
losses
incurred
during
the
hack.

The
plaintiffs’
claims
were
primarily
based
on
the
assertion
that
Atomic
Wallet’s
advertisements
were
visible
in
Colorado,
and
that
one
of
the
plaintiffs,
Graham
Dickinson,
had
interacted
with
the
company’s
customer
support.
However,
the
defense
maintained
that
the
company
had
“no
U.S.
ties,”
a
position
that
ultimately
resonated
with
the
court.

Court’s
Findings

Judge
Brimmer
noted
that
while
the
plaintiffs
presented
some
evidence
of
interaction
with
the
company,
the
connection
was
insufficient
to
establish
jurisdiction.
He
emphasized
that
Atomic
Wallet
operates
as
a
software-based
service,
which
complicates
the
determination
of
user
locations
and
responsibilities.

Despite
dismissing
the
majority
of
the
claims,
Judge
Brimmer
allowed
for
a
potential
continuation
of
the
lawsuit
against
Ilia
Brusov,
a
co-founder
of
Evercode
Infinite—the
firm
behind
Atomic
Wallet’s
software.
The
judge
gave
plaintiffs
21
days
to
argue
why
Brusov
should
remain
in
the
case,
acknowledging
his
12.8%
ownership
in
Atomic
Wallet
alongside
Sokolov,
who
holds
a
similar
stake.

Implications
for
the
Crypto
Industry

This
ruling
underscores
the
ongoing
challenges
and
complexities
surrounding
jurisdiction
in
the
digital
currency
space.
As
more
companies
operate
across
borders,
legal
frameworks
often
struggle
to
keep
pace
with
technological
advancements.
The
dismissal
also
raises
important
questions
about
the
accountability
of
crypto
wallet
providers
in
safeguarding
user
assets,
particularly
in
light
of
rising
cyberattacks
targeting
the
industry.

The
outcome
may
influence
how
other
crypto
firms
approach
their
legal
strategies
and
user
interactions,
especially
in
jurisdictions
where
they
have
minimal
physical
presence.
As
the
crypto
market
continues
to
grow,
the
need
for
clear
regulations
and
standards
for
security
will
become
increasingly
critical.

Conclusion

Atomic
Wallet’s
successful
dismissal
of
the
lawsuit
marks
a
notable
moment
in
the
ongoing
discourse
around
cybersecurity
and
legal
accountability
in
the
cryptocurrency
sector.
As
the
crypto
landscape
evolves,
both
users
and
providers
must
remain
vigilant
in
addressing
security
concerns
and
navigating
the
complexities
of
international
law.

The
case’s
outcome
could
set
a
precedent
for
similar
legal
actions
in
the
future,
highlighting
the
importance
of
jurisdictional
considerations
in
the
rapidly
changing
world
of
digital
finance.

Image
source:
Shutterstock