Atomic Wallet Company Seeks Dismissal of Class Action Suit Over $100 Million Hack

Atomic Wallet, the company at the center of a $100 million hack, has submitted a motion to dismiss a class action suit filed in a United States court due to jurisdiction complexities.

The Estonian-based firm Atomic Wallet argues that the claims should have been filed in Estonia, its home country, as specified in the end-user license agreement, and emphasized its lack of U.S. ties.

In a dismissal motion presented to the Colorado District Court on November 16, Atomic Wallet highlighted that it has “no U.S. ties” and emphasized that the end-user license agreement mandates all litigation against the company to be filed in Estonia. The motion contends that only one user in Colorado was allegedly affected by the hack.

Atomic Wallet further pointed out that the approximately 5,500 allegedly affected users had agreed to its terms of service, which explicitly disclaim liability for losses due to theft and limit damages to $50 per user.

The dismissal motion challenges the legal merit of the negligence claims, asserting that there was no legal duty created for the company to maintain the wallet’s security and protect against hacking. The company argued that Colorado law recognizes no such duty.

The class action was initiated in August following a $100 million exploit on Atomic Wallet, affecting up to 5,500 users. The hack was attributed to both North Korean and Ukrainian groups. The court’s decision on the motion to dismiss will shed light on the jurisdictional complexities and contractual obligations surrounding cross-border cryptocurrency-related legal actions.

Investors Launched Class Action Against Atomic Wallet Following $100 Million Hack in June

In response to the breach of Atomic Wallet that resulted in $100 million in losses in June, a group of cryptocurrency investors, predominantly from Russia and the Commonwealth of Independent States, initiated a class action against the crypto firm.

German lawyer Max Gutbrod and Boris Feldman, a co-founder of Moscow-based legal tech firm Destra Legal, coordinating the lawsuit, represent about 50 clients who reportedly lost a total of $12 million due to the Atomic Wallet breach.

The class action alleges that Atomic Wallet failed to provide information about the hack to affected clients and did not report the incident to the police. The breach impacted at least 5,500 crypto accounts on the noncustodial cryptocurrency wallet platform.

Initially attributed to the North Korean cybercriminal group Lazarus Group, subsequent claims by Feldman suggest the involvement of a Ukrainian hacker group. Notably, Destra Legal collaborated with blockchain analytics firm Match Systems on its investigation on behalf of the investors.

The cryptocurrency wallet, which did not clarify the exact conditions leading to the exploit in June, outlined four “probable” causes, including a virus on user devices, an infrastructure breach, a man-in-the-middle attack, or malware code injection. Atomic Wallet reiterated that less than 0.1% of app users were affected and continued to operate normally following the hack.