throbber
Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 1 of 33
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`
`
`Vincent Wu; Dylan Arana; Griffin
`Branham; Keith Dezmin; Phil May;
`Daniel Mcbride; Jeff O’Toole; Adam
`Patacchiola; Seong-youp Suh; John
`Twigg; Thomas Wieland; and Kelly
`Williams Schell,
`
`
`Plaintiffs,
`
`v.
`
`
`
`Bitfloor Inc.; and Roman Shtylman,
`
`
`
`
`
`Case No.: 19cv238(RA)
`_____
`
`
`
`Plaintiffs demands trial by
`jury.
`
`
`Defendants.
`
`
`FIRST AMENDED COMPLAINT WITH
`REQUEST FOR INJUNCTIVE RELIEF
`
`Vincent Wu, Dylan Arana, Griffin Branham, Keith Dezmin, Phill
`
`May, Daniel Mcbride, Jeff O’Toole, Adam Patacchiola, Seong-youp Suh,
`
`John Twigg, Thomas Wieland, and Kelly Williams Schell (“Plaintiffs”
`
`refers to each Plaintiff and to “Plaintiffs” as a group) by and through
`
`counsel, for their complaint (“Complaint”) against Bitfloor, Inc.
`
`(“Bitfloor”), and Roman Shtylman (“Shtylman”), (Bitfloor and Shtylman,
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`collectively referred to herein as the “Defendants”), hereby allege as
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`follows:
`
`
`
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`1
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 2 of 33
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`I. PARTIES
`
`The Plaintiffs
`
`1.
`
`Vincent Wu is and was at all times relevant to this Complaint
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`a resident of the County and State of New York. Mr. Wu holds
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`approximately 88 bitcoin which he is not able to access or sell.
`
`2.
`
`Dylan Arana is and was at all times relevant to this Complaint
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`a resident of the state of Ohio. Mr. Arana holds approximately 8 bitcoin
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`which he is not able to access or sell.
`
`3.
`
`Griffin Branham is and was at all times relevant to this
`
`Complaint a resident of the state of Idaho. Mr. Branham holds
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`approximately .79 bitcoin which he is not able to access or sell.
`
`4.
`
`Keith Dezmin is and was at all times relevant to this
`
`Complaint a resident of the state of New Hampshire. Mr. Dezmin holds
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`approximately 19 bitcoin which he is not able to access or sell.
`
`5.
`
`Phil May is and was at all times relevant to this Complaint a
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`resident of the United Kingdom. Mr. May holds approximately 50 bitcoin
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`which he is not able to access or sell.
`
`6.
`
`Daniel Mcbride is and was at all times relevant to this
`
`Complaint a resident of the state of Massachusetts. Mr. Mcbride holds
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`approximately 15.7 bitcoin which he is not able to access or sell.
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`2
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 3 of 33
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`7.
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`Jeff O’Toole is and was at all times relevant to this Complaint
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`a resident of the state of California. Mr. O’Toole holds approximately
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`5.5201 bitcoin which he is not able to access or sell.
`
`8.
`
`Kelly Williams Schell is and was at all times relevant to this
`
`Complaint a resident of the state of California. Ms. Williams holds
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`approximately 19 bitcoin which she is not able to access or sell.
`
`9.
`
`Thomas Wieland is and was at all times relevant to this
`
`Complaint a resident of the state of California. Mr. Wieland holds
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`approximately 15 bitcoin which he is not able to access or sell.
`
`10. Adam Patacchiola is and was at all times relevant to this
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`Complaint a resident of the state of Colorado. Mr. Patacchiola holds
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`approximately 20.944 bitcoin which he is not able to access or sell.
`
`11. Seong-youp Suh is and was at all times relevant to this
`
`Complaint a resident of the state of Oregon. Mr. Suh holds approximately
`
`55.21321 bitcoin which he is not able to access or sell.
`
`12.
`
`John Twigg is and was at all times relevant to this Complaint
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`a resident of Vancouver Canada. Mr. Twigg holds approximately 24
`
`bitcoin which he is not able to access or sell.
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`
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`3
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 4 of 33
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`The Defendants
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`13. Bitfloor is a corporation organized and existing under the laws of
`
`New York, registered as New York County, with its principal place of
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`business in, and which conducted its business from, the County of New York,
`
`NY.
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`14. At all times mentioned herein, Roman Shtylman (“Shtylman”)
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`was a resident of the State of New York and upon information and belief, was
`
`resident in New York County. He owns, operates, and controls Bitfloor and
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`identified himself as its chief executive officer.
`
`II.
`
`JURISDICTION AND VENUE
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`15. The Court has jurisdiction under 28 U.S.C. §1331 since this action
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`is brought under a U.S. statute, namely 7 U.S.C. 9(1) (2012) (the Commodity
`
`Exchange Act or the “Act”) and Regulation 180.1(a), 17 C.F.R. 180.1(a)
`
`thereunder.
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`16. Venue is proper in this District under 28 U.S.C. section §1391(b)
`
`since a substantial part of the events or omissions giving rise to the claims
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`asserted in this action occurred in this District and Defendants’ principal
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`office and residences were all located within this District at the time of the
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`events which are the subject matter of this complaint.
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`
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`4
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 5 of 33
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`III. PRELIMINARY STATEMENT
`
`
`17. The heart of this case is that the Defendants took Plaintiffs’
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`money and refuses to return it or the Bitcoin purchased with it. They will not
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`communicate and have effectively stolen Plaintiffs’ property. (“property” and
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`“properties” refer to money, Bitcoin and other properties of Plaintiffs.)
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`18. From 2011, the year of Bitfloor’s incorporation, to the present
`
`(the “Relevant Period”), the Defendants operated a deceptive and fraudulent
`
`virtual currency scheme, which induced Plaintiffs to deliver money and virtual
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`currencies to the Defendants in exchange for purported virtual currency
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`purchases and trading services. The Defendants’ solicitations were deceptive
`
`and fraudulent. Although demand was made by each Plaintiff for the
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`transmission to Plaintiffs of their bitcoin and/or funds pursuant to their orders,
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`the Defendants stopped communicating with Plaintiff and simply converted
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`Plaintiffs’ property to their own use.
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`IV. FACTUAL ALLEGATIONS
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`19.
`
` Bitfloor was organized for the purpose of trading virtual
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`currencies, also known as “cryptocurrency” or “virtual currency.” For a short
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`explanation of virtual currency see:
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`https://en.wikipedia.org/wiki/Virtual_currency. Bitcoin is one of the earliest
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`forms of virtual currency having been proposed in a “proof of concept,”
`5
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 6 of 33
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`published in about December 2008. See (https://bitcoin.org/en/faq#who-
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`created-bitcoin). It has since become one of the most well-known virtual
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`currencies.
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`20. Bitfloor held itself out as a virtual currency exchange for bitcoin.
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`Generally, a virtual currency exchange is an internet location upon which one
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`can buy, store, and sell a virtual currency such as bitcoin. Much like a bank,
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`Bitfloor stored or held bitcoin for Plaintiffs (and others) in accounts called
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`“wallets”.
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`21. Plaintiffs bought, sold, and held bitcoin at Bitfloor from time to
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`time, and at all times herein mentioned Plaintiffs maintained accounts
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`(“wallets”) at Bitfloor from the date each opened its account until the date of
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`this complaint. Plaintiffs paid Bitfloor certain fees for its services. Until the
`
`events noted herein. Plaintiffs performed all conditions, covenants, and
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`promises on Plaintiffs' part to be performed in accordance with the terms and
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`conditions of the agreement. Along with virtual currency, Bitfloor also held
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`traditional fiat funds belonging to Plaintiffs.
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`22. Defendants solicited customers in several of the United States as
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`well as foreign countries to purchase, sell and entrust them with their Bitcoin
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`and attendant fiat money.
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`6
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 7 of 33
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`23. Among other things and as an example, until at least January 15,
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`2013, the Defendants website induced users to sign onto the Bitfloor
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`exchange by stating: “user friendly bitcoin trading,” “sign up for free with just
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`an email address,” and “[w]e run a marketplace for Bitcoin buyers and sellers.
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`We also focus on … helping people purchase and use their coins with ease.”
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`Implicit in these statements is that Bitfloor users could access, transfer, and
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`withdraw Bitcoin using Bitfloor at any time.
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`24. By virtue of its solicitation, acceptance and retention of
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`Plaintiffs’ Bitcoin and fiat currency, and payment of fees to Defendants,
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`Defendants entered into a contract containing the following provisions:
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`a. To accept monies from Plaintiffs, in the form of Bitcoins or fiat
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`currency, which plaintiffs might deposit from time to time;
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`b. To keep that Bitcoin and fiat currency in a safe and secure
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`manner, consistent with fiduciary obligations commonly imposed
`
`upon financial services providers;
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`c. To comply with instructions that Plaintiffs might provide from
`
`time to time concerning transfer, investment, and disposition of
`
`their respective property,
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`7
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 8 of 33
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`d. To permit Plaintiffs to withdraw their property at any time,
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`without any restrictions or limitations upon the manner or amount
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`of said withdrawals.
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`25. The Defendants operated a Money Service Business (“MSB”), 31
`
`C.F.R. §103.11(uu), and was required to register as such with FinCEN.
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`Defendants maintain they registered with FinCEN during the relevant period.
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`Whether or not they registered, by virtue of their activities and relationship
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`with the Plaintiffs they undertook to:
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`a. Retain such property in accounts and otherwise separate from the
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`accounts of the Defendants;
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`b. Maintain complete records of all money, Bitcoin, and other
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`property of each Plaintiff showing its acquisition, deposit and
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`disposition,
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`c. Account to each depositor, account holder, or other person with
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`an interest in such property regarding the property,
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`d. Transmit and otherwise deal with such property at the direction
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`of such persons.
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`e. To carry out its functions regarding that property as a fiduciary.
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`26.
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`In or about April 19, 2013, Bitcoin Magazine reported on the
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`impending closure of Bitfloor by Defendant Shtylman.
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`8
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 9 of 33
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`27. Bitfloor’s alleged announcement, Exhibit 1, states:
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`“I am sorry to announce that due to circumstances outside of our
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`control BitFloor must cease all trading operations indefinitely.
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`Unfortunately, our US bank account is scheduled to be closed and we
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`can no longer provide the same level of USD deposits and withdrawals
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`as we have in the past. As such, I have made the decision to halt
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`operations and return all funds. Over the next days we will be working
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`with all clients to ensure that everyone receives their funds. Please be
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`patient as we process your request.”
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`28. Plaintiffs did not receive the notice from Bitfloor although at the
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`time the alleged notice was disseminated, Plaintiffs were customers of
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`Bitfloor and Defendants held their respective properties. Nor are Plaintiffs
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`aware of any other customer having received the aforementioned notice
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`directly.
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`A.
`
` Certain Fraudulent Acts
`
`29.
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`In addition to the above, in the course of doing business in order
`
`to induce Plaintiffs to entrust its property to Bitfloor, and trade through it,
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`Bitfloor made the following misrepresentations and committed the following
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`fraudulent acts:
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`9
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 10 of 33
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`30. Bitlfoor has made the quoted public announcement that it was
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`going out of business. It did not send its announcement to the Plaintiffs.
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`31. The Defendants did not return the phone calls from the Plaintiffs.
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`32. On January 18, 2018, Defendants, through their counsel, made
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`the following statement to the State of New York.
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`This money was on deposit with the Internet Archive Federal Credit
`Union in 2016, until that bank closed operations and the money in
`Bitfloor’s account there was forfeited to the US government.
`Following this forfeiture, and the return of bitcoins to Bitfloor’s
`customers, Bitfloor was dissolved.
`
`
`
`The report was false in that it stated Defendants had “forfeited” money to the
`
`US Treasury although in fact the Treasury took that money to hold for its true
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`owners. In addition, Defendants, stated that Bitfloor’s registration as a New
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`York corporation was “dissolved” by proclamation of the state when in fact
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`that happened because Defendants voluntarily failed to pay franchise taxes for
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`several years and thus New York declared its registration as a New York
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`corporation to be “inactive” (meaning dissolved). Upon information and
`
`belief, Defendants failed to account to the US Treasury for its holdings of
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`Bitcoin for customers such as the Plaintiffs. Bitfloor stated it was no longer in
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`business. However, on or about January 25, 2018, Defendants renewed their
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`ownership of “bitfloor.com” with Namecheap.com, an ICANN-accredited
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`internet name registrar. Exhibit 3.
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`10
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 11 of 33
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`33. Defendants’ solicitation of customers made Bitfloor the 4th
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`largest bitcoin exchange by June 1012.
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`34. By their statements Defendants intentionally lulled the Plaintiffs
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`into failing to apply to Defendants for a return of their property until the
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`Defendants, by their own admissions, deliberately closed their site making it
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`impossible for Plaintiffs to contact Defendants and/or recover their property.
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`35. Defendants ignored the rights of Plaintiff to their property, failed
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`and continue to refuse to return that property to Plaintiffs or transmit it to
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`locations designated by Plaintiffs.
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`36. By their actions, inactions, statements, omissions Defendants
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`carried out, and continue to carry out, a scheme or device to carry out a
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`manipulative, scheme, contrivance, and/or artifice to defraud.
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`37. Defendants continue to hold property which they know is not
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`their property and have failed to escheat it to the State of New York or any
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`other jurisdiction in which the Plaintiffs reside as required by law.
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`38. Among the properties of Plaintiffs that Defendants obtained,
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`failed to hold for and continue to retain for the Plaintiffs were and are certain
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`soft and hard forks of Bitcoin.
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`39. Plaintiffs faces an imminent threat of irreparable harm if this
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`Court does not prevent the selling, transferring, converting, or otherwise
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`11
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 12 of 33
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`disposing of any assets collected or derived from its dealings with the
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`Defendants.
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`40. Plaintiffs also face an imminent threat of irreparable harm if
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`defendants are not ordered to retain all records, key numbers and other
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`documents in any way related to this case until further ordered by this court.
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`
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`V. CAUSES OF ACTION
`
`Count 1
` Fraud by Deceptive Device or Contrivance
`Violations of Section 6(c)(1) of the Act and Regulation 180.1(a)
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`41. Plaintiffs incorporate every paragraph of the complaint as if
`
`set forth herein.
`
`42. Section 6(c)(1) of the Act, 7 U.S.C. § 9(1) (2012), makes it
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`unlawful for any person, directly or indirectly, to:
`
`use or employ, or attempt to use or employ, in connection with
`any swap, or a contract of sale of any commodity in interstate
`commerce, or for future delivery on or subject to the rules of any
`registered entity, any manipulative or deceptive device or
`contrivance, in contravention of such rules and regulations as the
`Commission shall promulgate by not later than 1 year after [July
`21, 2010, the date of enactment of the Dodd-Frank Wall Street
`Reform and Consumer Protection Act] . . . .
`
`43. Regulation 180.1(a), 17 C.F.R. § 180.1(a) (2017), provides:
`
`It shall be unlawful for any person, directly or indirectly, in
`connection with any swap, or contract of sale of any commodity
`in interstate commerce, or contract for future delivery on or
`subject to the rules of any registered entity, to intentionally or
`recklessly:
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 13 of 33
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`(1) Use or employ, or attempt to use or employ, any manipulative
`device, scheme, or artifice to defraud;
`(2) Make, or attempt to make, any untrue or misleading statement
`of a material fact or to omit to state a material fact necessary in
`order to make the statements made not untrue or misleading;
`(3) Engage, or attempt to engage, in any act, practice, or course
`of business, which operates or would operate as a fraud or deceit
`upon any person . . .
`
`44. During the Relevant Period, as described above, the Defendants
`
`violated Section 6(c)(1) of the Act and Regulation 180.1(a) by, among other
`
`things, in connection with contracts of sale of commodities in interstate
`
`commerce, making or attempting to make untrue or misleading statements of
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`material fact or omitting to state or attempting to omit material facts necessary
`
`in order to make statements made not untrue or misleading, such as the
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`following failing to disclose, and omitting, that the Defendants were
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`misappropriating customer funds.
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`45. As described above, the Defendants violated Section 6(c)(1) of
`
`the Act and Regulation 180.1(a) by, among other things, in connection with
`
`contracts of sale of a commodity in interstate commerce, soliciting customers
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`with false and misleading performance statements; misrepresenting and
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`omitting material facts on Defendants’ website and in other communications
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`with customers regarding the quality, duration, and nature of Bitfloor’s trading
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`platform; misrepresenting and omitting material facts on Bitfloor’s website
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`and in other communications with customers concerning virtual currency
`13
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 14 of 33
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`trading of customer funds managed by the Defendants; and misappropriating
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`Plaintiffs’ funds.
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`46. The Defendants engaged in the acts and practices described
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`above willfully, intentionally, and/or recklessly.
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`47. By this conduct, the Defendants violated Section 6(c)(1) of the
`
`Act and Regulation 180.1(a).
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`48. The acts, omissions, and failures of Shtylman described in this
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`Complaint occurred within the scope of his agency, and management over
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`Bitfloor. Accordingly, Bitfloor is liable under Section 2(a)(1)(B) of the Act, 7
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`U.S.C. § 2(a)(1)(B) (2012), and Regulation 1.2, 17 C.F.R. § 1.2 (2017), as
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`principal for its agent’s acts, omissions, or failures in violation of Section
`
`6(c)(1) of the Act and Regulation 180.1(a).
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`49. At all times relevant to this Complaint, Shtylman controlled
`
`Bitfloor, directly or indirectly, and did not act in good faith or knowingly
`
`induced, directly or indirectly, Bitfloor’s conduct constituting the violations of
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`Bitfloor described in this Count. Accordingly, pursuant to Section 13(b) of the
`
`Act, 7 U.S.C. § 13c(b) (2012), Shtylman is liable for Bitfloor’s violations of
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`Section 6(c)(1) of the Act and Regulation 180.1(a).
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`50. Each act of: (1) using or employing, or attempting to use or
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`employ, a manipulative device, scheme, or artifice to defraud; (2) making, or
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`14
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 15 of 33
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`attempting to make, untrue or misleading statements of material fact, or
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`omitting to state material facts necessary to make the statements not untrue or
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`misleading; and (3) engaging, or attempting to engage, in any act, practice, or
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`course of business, which operated or would operate as a fraud or deceit upon
`
`any person, including but not limited to those specifically alleged herein, is
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`alleged as a separate and distinct violation of section 6(c)(1) of the Act and
`
`regulation 180.1, for which Plaintiffs suffered damages in an amount to be
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`proven.
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`COUNT 2
`Breach of Contract
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`51. Plaintiffs reallege all the allegations pleaded.
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`52. By virtue of soliciting customers, charging fees for holding their
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`bitcoin and cash, and for buying, selling and otherwise trading in bitcoin,
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`Defendants entered into contracts with Plaintiffs containing the terms alleged.
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`53. Plaintiffs carried out all their obligations under those contracts.
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`54. Defendants failed to keep those promises and thus breached their
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`contracts to Plaintiffs’ detriment.
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`
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`55. As a direct and proximate result thereof, Plaintiffs have been
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`damaged.
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`
`COUNT 3
`Conversion
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`15
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 16 of 33
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`56. Plaintiffs incorporate every paragraph of the complaint as if set
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`forth herein.
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`57. Defendants stole (and continue to steal) Plaintiffs’ property and
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`commits larceny when, with intent to deprive Plaintiffs of their property or to
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`appropriate the same to themselves or to a third person, they wrongfully took,
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`obtained, and withheld such property, obtains or withheld such property from
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`Plaintiffs.
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`58. The Defendants have refused to respond to Plaintiffs’ request for
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`the return of Plaintiff’s property, thereby converting Plaintiffs’ property, and
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`have failed to return said properties to Plaintiffs. The lack of communication
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`demonstrates the willful nature of the conduct. Defendants are liable to
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`Plaintiffs for the conversion in an amount to be proven.
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`
`
`COUNT 4
`Fraud
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`59. Plaintiffs incorporate every paragraph of the complaint as if set
`
`forth herein.
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`60. The Defendants knew at the time that they made the false
`
`representations and concealed material facts alleged above that such
`
`representations were untrue and that the Defendants were concealing material
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`16
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 17 of 33
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`facts from Plaintiffs. Plaintiffs relied on these false representations to its
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`detriment.
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`61. Defendants advertised their website as a bitcoin exchange and by
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`the time they closed it down, it had become the fourth largest bitcoin
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`exchange. The statements made by Defendants were material to decisions of
`
`the Plaintiffs to entrust their property to the Defendants, and to buy, sell, and
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`otherwise deal with their property on Defendants’ exchange. In their positions
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`as alleged, Defendants had superior access to the facts and superior
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`knowledge of those facts.
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`62. Plaintiffs relied upon those representations having a right at the
`
`time they were made to believe them and to believe that those statements did
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`not omit facts necessary to make the statements made, not untrue or
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`misleading. Plaintiffs relied to their detriment in that Defendants have
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`secreted Plaintiffs’ property, failed to communicate with Plaintiffs although
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`having undertaken to do so by virtue of holding Plaintiffs’ property, and
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`failing to return Plaintiffs’ property although duly demanded.
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`63. Upon information and belief, Defendants have used Plaintiffs’
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`property as their own and profited thereby.
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`64. As a direct and proximate result thereof, Plaintiff have been
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`damaged.
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`17
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 18 of 33
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`COUNT 5
`(Violation of NY GBS §349)
`
`
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`65. Plaintiffs incorporate every paragraph of the complaint as if set
`
`forth herein.
`
`66. Defendants violated NY GBS §349 in that their conduct
`
`constitutes “deceptive acts or practice in the conduct of” their business in the
`
`State of New York.
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`67. As a direct and proximate cause of their acts and failures to act,
`
`the Plaintiffs have been damages.
`
`COUNT 6
`Breach of Fiduciary Duty
`
`68. Plaintiffs incorporate every paragraph of the complaint as if set
`
`forth herein.
`
`69. Defendants had a fiduciary duty to preserve the property of the
`
`Plaintiffs, to deal with Plaintiffs in the utmost good faith and otherwise act as
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`described above.
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`70. As a direct and proximate cause of their acts and failures to act in
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`such capacity the Plaintiffs have been damages.
`
`COUNT 7
`Loss of Opportunity
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`18
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`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 19 of 33
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`71. Plaintiffs incorporate every paragraph of the complaint as if set
`
`forth herein.
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`72. As a result of Defendants’ continuing acts and omissions,
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`Plaintiffs have lost the opportunity to utilize their property and more
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`particularly to trade in Bitcoin on the market.
`
`COUNT 8
`Negligent Misrepresentation
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`73. Plaintiffs incorporate every paragraph of the complaint as if set
`
`forth herein.
`
`74. At the time that the Defendants made the foregoing false
`
`representations and material omissions to Plaintiffs, the Defendants had no
`
`reasonable grounds for believing them to be true.
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`75. The Defendants made these false representations and omissions
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`in a reckless and negligent manner not warranted by the information they had
`
`concerning the subject matter of the representations and without regard to
`
`whether or not they were true. Plaintiff reasonably relied on these
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`representations to its detriment.
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`76. As a direct and proximate result thereof, Plaintiff was damaged in
`
`an amount to be proven.
`
`COUNT 9
`Unjust Enrichment
`
`
`19
`
`
`
`
`

`

`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 20 of 33
`
`77. Plaintiffs incorporate every paragraph of the complaint as if set
`
`forth herein.
`
`78. As a result of the conduct described above, the Defendants have
`
`been unjustly enriched at the expense of the Plaintiffs.
`
`79. The Defendants should be required to disgorge all monies,
`
`profits, and gains, which they have obtained at the expense of Plaintiffs.
`
`COUNT 10
`Bailment and/or Constructive Trust
`
`
`
`80. Plaintiffs incorporate every paragraph of the complaint as if set
`
`forth herein.
`
`81. Defendants are bailees at common law, or constructive trustees,
`
`in that they were given the property of Plaintiffs to hold for the benefit and
`
`disposition of Plaintiffs, failed to do so, and failed to transfer it as directed
`
`Plaintiffs on their demand.
`
`82. The Defendants should be required to disgorge all monies,
`
`profits, and gains, which they have obtained at the expense of Plaintiffs.
`
`VI. PRAYER FOR RELIEF
`
`WHEREFORE, Plaintiffs respectfully prays for a judgment against
`
`Defendants for:
`
`
`
`
`20
`
`

`

`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 21 of 33
`
`A. Injunctive and equitable relief as the Court deems appropriate
`
`including:
`
`i. Restraining, enjoining, and prohibiting Defendants, their officers,
`
`agents, servants, employees, successors, assigns, and/or attorneys,
`
`and all persons in active concert or participation with Defendants
`
`who receive actual notice of the order by personal service or
`
`otherwise, until further order of the Court, from directly or
`
`indirectly destroying, mutilating, erasing, altering, concealing or
`
`disposing of, in any manner, directly or indirectly, any documents
`
`that relate to the business practices or business or personal finances
`
`of the Defendants.
`
`ii. Restraining, enjoining, and prohibiting Defendants, their officers,
`
`agents, servants, employees, successors, assigns, and/or attorneys,
`
`and all persons in active concert or participation with Defendants
`
`who receive actual notice of the or by personal service or
`
`otherwise, until further order of the Court, from directly or
`
`indirectly from selling, transferring, converting, or otherwise
`
`disposing of any assets collected or derived from its dealings with
`
`Plaintiffs;
`
`
`
`
`21
`
`

`

`Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 22 of 33
`
`B. On each count, compensatory and punitive damages to be paid by
`
`Defendants jointly and severally, according to proof at trial;
`
`C. Costs and attorneys’ fees of this lawsuit, with interest; and
`
`D. Such other relief as the court may deem just and proper.
`
`
`Respectfully submitted this 27th day of June, 2019.
`
`
`
`
`
`Attorneys for Plaintiffs
`Law Office of Martin Mushkin, LLC
`Attorneys for Plaintiffs
`
` ____________
`By
`Martin Mushkin, Member
`
`1100 Summer St.
`Stamford, CT 06905
`Tel: 203-252-2357
`Fax: 203-547-7540
`Email: mmushkin@mushkinlaw.com
`
`
`
`
`22
`
`

`

`
`
`Case 1:19-cv-00238 Document 1-1 Filed 01/09/19 Page 1 of 4Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 23 of 33
`
`
`
`
`
`
`
`
`
`
`
`
`EXHIBIT 1
`
`

`

`5/11/2018
`
`BitFloor Shuts Down - Bitcoin Magazine
`
`Case 1:19-cv-00238 Document 1-1 Filed 01/09/19 Page 2 of 4Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 24 of 33
`
`SUBSCRIBE
`
`OP-
`ED
`
`BitFloor Shuts Downby Vitalik Buterin
`
`The fourth largest Bitcoin exchange in the world, BitFloor, has announced that it is
`closing its doors, and will soon be refunding deposits to customers. The
`announcement has nothing to do with recent technical problems that all exchanges
`have been facing for the past week to due the sudden massive increase in trade
`volume; rather, the root cause behind the shutdown is the closure of BitFloor’s US
`bank account. Founder Roman Shtylman writes:
`
`https://bitcoinmagazine.com/articles/bitfloor-shuts-down-1366351632/
`
`1/6
`
`

`

`5/11/2018
`
`BitFloor Shuts Down - Bitcoin Magazine
`
`Case 1:19-cv-00238 Document 1-1 Filed 01/09/19 Page 3 of 4Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 25 of 33
`
`“ I
`
` am sorry to announce that due to circumstances outside of our
`control BitFloor must cease all trading operations indefinitely.
`Unfortunately, our US bank account is scheduled to be closed and
`we can no longer provide the same level of USD deposits and
`withdrawals as we have in the past. As such, I have made the
`decision to halt operations and return all funds. Over the next
`days we will be working with all clients to ensure that everyone
`receives their funds. Please be patient as we process your request.
`
`– Roman
`
`founder – bitfloor.com
`
`Trading has been suspended, and BitFloor founder Roman Shtylman assures users
`that they will get all of their current deposits back over the next few days, including
`USD holdings which will be refunded directly to depositors’ bank accounts by ACH
`transfer. International users are asked to await further instructions.
`
`The exchange was a very popular way of buying bitcoins in the United States, so
`BitFloor customers will now have to look for alternatives. Some BitFloor users will
`undoubtedly be picked up by the dominant exchange MtGox through its North
`American partner Coinlab, although other options include Coinbase, CampBX and
`BTC-e.
`
`Particularly aected by the shutdown are those users who had lost their deposits
`when the exchange was hacked in September. BitFloor lost $250,000 from the hack,
`normally a fatal loss for an exchange of its size, but BitFloor soon came back online
`with the promise that it would eventually pay back its depositors over time. The
`exchange even started fulfilling its promise, paying back 1.7% of the money owed in
`
`https://bitcoinmagazine.com/articles/bitfloor-shuts-down-1366351632/
`
`2/6
`
`

`

`5/11/2018
`
`BitFloor Shuts Down - Bitcoin Magazine
`
`Case 1:19-cv-00238 Document 1-1 Filed 01/09/19 Page 4 of 4Case 1:19-cv-00238-RA Document 45 Filed 06/28/19 Page 26 of 33
`
`November and another 1% in March, but the remainder of the debt remains unpaid,
`and although most people had already written o the loss in September, there is now
`no longer any hope at all that the money will ever be recovered.
`
`The announcement is also an unfortunate one because it represents a step
`backwards in the progress of the exchange industry as a whole. BitFloor is far from
`the first Bitcoin exchange to fall victim to this kind of shutdown; many Bitcoin
`exchanges around the world, including several times even MtGox, have had their
`bank accounts shut down, although in MtGox’s case the exchange’s main bank
`account in Japan has remained unscathed. The number of shutdowns has waned in
`recent months, but the risk has remained as risk for every exchange in the industry
`since exchanges first began to appear en masse in 2011. Now, when the need for more
`exchanges is clearer than ever, a reinforced precedent of banks shutting down
`smaller exchanges may instead push more users to larger and generally more resilient
`exchanges like MtGox out of fear for the safety of their funds. Fortunately, today
`exchanges do place much more emphasis on maintaining a healthy relationship with
`their banks and ensuring legality, and new alternatives are constantly appearing.
`Tradehill intends to launch a new, high-quality Bitcoin exchange soon, the cash-based
`Bitcoin ATM continues to be under development as a completely fresh alternative,
`and we can be sure that there are other projects now under development. Although
`Bitfloor will certainly be missed, hopefully

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