Atomic Wallet Seeks Dismissal of Negligence Claims from June 3 Crypto Hack

Twenty-one plaintiffs seek to hold cryptocurrency exchange platform Atomic Wallet responsible for the June 3 hack that resulted in the loss of more than $100 million in global crypto assets (see 2306220003). But they previously agreed to Atomic's terms of service that “expressly disclaim liability” for losses due to theft, said Atomic’s motion Thursday (docket 1:23-cv-01582) in U.S. District Court for Colorado in Denver to dismiss the plaintiffs’ Aug. 16 first amended complaint.

Estonia-based Atomic Wallet is the second among five defendants seeking dismissal of the plaintiffs’ class-action negligence claims. Co-defendant Evercode asked the court last month for a discovery stay, pending resolution of its “contemporaneously” filed motions to dismiss and strike the plaintiffs’ class allegations (see 2310300012).

When North Korean hackers allegedly attacked Atomic, the breach affected 5,500 user wallets, according to Atomic’s motion to dismiss. The cause of the hack, as the plaintiffs “themselves acknowledge, remains unknown,” it added.

The complaint must be dismissed “for procedural and substantive reasons,” said Atomic’s motion. As a “threshold matter,” the court lacks subject-matter jurisdiction over the action and personal jurisdiction over Estonian defendant Atomic, it said. The plaintiffs also fail to meet the Class Action Fairness Act’s $5 million damages requirement as a matter of law, “as they allege at most 5,500 class members,” each of whom is limited to recover $50 in damages under Section 8 of Atomic’s terms of service.

A single use of Atomic Wallet in Colorado doesn’t amount to “purposeful availment in the state” sufficient to generate personal jurisdiction over Estonia-based Atomic or for the nonresident plaintiffs, the motion to dismiss said. Even if the Colorado District Court had jurisdiction over Atomic, the plaintiffs’ claims “are brought in the wrong forum,” it said. The end-user license agreement (EULA) governing the plaintiffs’ use of Atomic “contains a mandatory forum-selection clause,” and all disputes related to Atomic’s software must be litigated in courts in Tallinn, Estonia.

Even if the plaintiffs’ “potpourri of state law claims” for negligence, gross negligence, fraudulent misrepresentation, fraudulent concealment and civil conspiracy were brought in the proper forum, those claims also fail under the EULA, according to the motion to dismiss. The plaintiffs’ claims also are “precluded in full” by Colorado’s economic loss rule and similar rules in other states, it said. “Interrelated contracts" govern the plaintiffs’ relationship with Atomic, precluding them “from asserting tort claims arising from that contractual relationship,” it said.