$16.5 Million Lawsuit Filed Against Bitget Exchange For Account Mishandling
Sebaztian Barns
Singapore -- July 17, 2023 -- The case is brought forward by a leading Web3 legal firm, Slam Legal, on behalf of Evan Luthra, Doe the plaintiffs, joining REEL CRYPTO PTD, for Bitget’s delisting of REELT token. Due to Bitget’s manipulation and mishandling of REELT, Bitget breached its contractual duties and laws of its jurisdiction. A filed lawsuit against the Bitget exchange could pose questions about how centralized exchanges deal with customer accounts.
A 67-page summons and complaint listing 20 causes of action was sent to Bitget on June 26, 2023. The causes of action relate to breach of contract, breach of fiduciary duty, financial and regulatory violations, violation of privacy and consumer protection laws, defamation, conversion, co-mingling of funds, loss of earnings, gross negligence, and more. Previously, a litigation hold was already placed against the exchange.
The named defendants include BIGET, BITGET LIMITED, BG LIMITED, BITGET.COM, BITGETX HONG KONG, and SINGAPORE BITGET PTE. LTD. The plaintiff states that the funds were frozen without warning and with no explanation given in the aftermath. These were substantial amounts.
The lawsuit follows Bitget’s delisting of REELT. Allegedly, due to Bitget’s mishandling of REELT, Bitget breached its duty directly causing Mr. Luthra’s position and stored assets with Bitget to be decimated. His accounts were subsequently frozen.
The legal question is that crypto exchanges have a duty to users beyond just questions of custody - due to gross negligence and recklessness, business owners can lose money without any recourse. The case also brings the BCB token into the limelight, as it requires the court to adjudicate whether or not the token is an unregistered financial instrument. This could place hundreds of millions of dollars in Bitgets operations into jeopardy.
Bitget is a large exchange by trade volume, serving 8 million customers internationally. The case could have powerful implications for the exchange industry which is already under heavy scrutiny, with the SEC launching cases against both Binance and Coinbase.
The entire premise of cryptocurrency is that a centralized actor cannot arbitrarily seize account funds - yet this seems to be happening on large exchanges. Binance is also under investigation for misusing client funds, by the SEC.
For more info contact Charles at Charles@slamlegal.com
