Atomic Wallet, a company that makes decentralized cryptocurrency wallets, was sued by a group of people who lost $100 million in a hack. They were able to protect themselves against the case. A US federal judge threw out the case because he or she didn’t have the power to judge the Estonian company and its leaders.
The hack and the court’s response
Attackers broke into Atomic Wallet in June 2023 and stole more than $100 million worth of cryptocurrency from its users. Because of this, a group of people who were harmed sued the company to get their money back. The claim said that Atomic Wallet’s security steps were not strong enough, which let the hack happen.
That being said, on September 10, 2024, the Colorado U.S. District Court said it did not have the power to hear the case. Judge Philip Brimmer said that Atomic Wallet’s ties to the state were not enough to give him formal control over the company or its leaders.
The defense of Atomic Wallet: No ties to the U.S.
Atomic Wallet said in its defense that it had no important ties to the United States, especially to Colorado, where the case was filed. The company said it is based in Estonia and works as a “non-custodial wallet,” which means it doesn’t hold users’ money or handle their secret keys.
The claimants said that Atomic Wallet’s ads could be seen in Colorado and that one user, Graham Dickinson, regularly talked to the company’s customer service from that state. Even so, the court didn’t think these reasons were strong enough to establish jurisdiction because software apps like Atomic Wallet’s can reach users anywhere in the world, even if the company isn’t trying to target certain places.
What decentralized wallets do in this case
Atomic Wallet’s position as a decentralized, non-custodial platform was a key problem in the case. Non-custodial wallets, like Atomic Wallet, let users fully control their digital assets. This is different from custodial wallets, where a company holds and handles users’ secret keys and funds. This setup gives people more power, but it also means they are mostly responsible for keeping their own money safe.
The court’s ruling drew attention to this difference and suggested that Atomic Wallet’s lack of a central authority limited its responsibility in the case. The judge made it clear that Atomic Wallet could not be fully blamed for the hack because it did not have direct access to the funds of its users.
What Users Who Are Affected Should Do Next
The users who lost money in the $100 million hack don’t have a clear legal way to get it back now that the court threw out their case. The jurisdictional decision hurts the overall case against the wallet provider. However, the claimants were given an extra 21 days to make a case against Ilia Brusov, who is a co-founder of Evercode Infinite, a software company that works with Atomic Wallet.
In conclusion: A victory in court, but worries still exist
The class-action case was thrown out, which is a big legal win for Atomic Wallet because it protects the company from responsibility in the US. However, the case shows how dangerous decentralized wallets can be because users are more responsible for keeping their funds safe. Atomic Wallet escaped legal trouble in this case, but the event brings up important issues about the safety of decentralized platforms and the need for better user rights in the cryptocurrency world, which is changing very quickly.
