17.8.2020 | 05:47
A federal judge has ruled that a New York attorney is responsible for compensating a crypto currency investment company after it prematurely released the escrow funds set aside to buy $5 million in Bitcoin.
According to an Aug. 13 Law360 report, U.S. District Judge Alison J. Nathan confirmed that attorney Aaron Etra must pay $4.6 million to the San Francisco-based investment company Benthos Master Fund. The total judgment was $5.255 million, plus accrued interest.
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The ruling comes after Etra failed to appear for an April date in the New York court confirming an arbitration session and the session itself at the International Court of Arbitration of the International Chamber of Commerce at The Hague. These actions were decisive for the judge to rule in favor of the crypto investment company.
„He alone is to blame,“ said Judge Nathan. „The defendant did not appear or submit evidence despite receiving the notice of arbitration and despite being clearly obliged to arbitrate any dispute under the escrow agreement.
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The case of lost Bitcoin
The agreement in question dates from 2018, when Benthos approached Etra to act as an escrow agent for the company’s Bitcoin (BTC) purchases. The two signed an agreement, called the ‚Bitcoin Agreement‘, through the Valkyrie Group, a team charged with finding third parties interested in selling their crypto currency holdings.
Initially, Benthos intended to buy $5 million from BTC – approximately 10,000 coins at the time – and deposited that amount in the escrow fund. Without seeing Benthos‘ approval, Etra transferred $4.6 million of Bitcoin’s total escrow fund in two transactions in August 2018, which resulted in cryptoactives never being sent to the company.
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After multiple motions by Benthos that essentially asked Ethereum Code to stop taking money out of the fund and explain what happened to the $4.6 million, a court ruled that the attorney had to submit all documents and information related to the missing funds. Etra returned the remaining $400,000 and produced records of her communications with the Bitcoin vendors, so Benthos‘ earlier motions to sanction the lawyer and find him in contempt of court were denied.
The judgment is for a total of $5.2 million plus interest. This may be a blessing in disguise for Etra, who could have been potentially liable for $108 million, which is the current value of the BTC in fiat currency, if the sale had taken place at that time.