U.S. District Judge Donald Middlebrooks of the Southern District of Florida has ruled against blockchain start-up Monkey Capital after hearing its victims had been defrauded out of an estimated $1m in various cryptocurrencies including bitcoin, waves, mobilego and ethereum.
Judge Middlebrooks’ final default judgment (the type of judgment entered in the US when a party has failed to plead or defend an action brought against them) was based on the fact Monkey Capital Inc. had neither delivered the product they’d promised during their ICO nor made any effort to return the money they’d raised to their investors despite being told to do so.
And the judge pulled no punches as he delivered his ruling:
“The defendants have utilized the plaintiffs' cryptocurrency to cover their own business expenses and enrich themselves. As a result of the defendants' conversion of the plaintiffs' cryptocurrency to their own corporate and personal use, the plaintiffs have suffered damage."
However, the ruling wasn’t all one-way. According to their action the plaintiffs wanted approximately $1.2million in damages between them but Judge Middlebrooks demanded to know how that total had been calculated. The plaintiffs’ said they had multiplied the number of tokens they’d lost against the market value of the respective cryptocurrencies as of July 13th 2018. Accepting that explanation, the court said they would revisit their final award at a hearing on August 24th but at this time a final figure has not been made public.
After the decision David Silver, attorney for the plaintiffs, described the judgement as “a new mark on an old law”. Mr Silver felt the ruling was a positive step forward for those investors who lose money in fraudulent ICOs before especially as, yet again, the Court had followed an increasingly well-trodden path, determining the products sold via the ICO were securities and therefore the fraud violated federal securities laws.
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