Tag Archives: blockchain

Ninth Circuit won’t stop electricity cost increase for blockchain companies

Plaintiffs provide “verification and security services for blockchain-based cryptocurrencies.” Grant County, Washington decided to charge plaintiffs and others in “evolving industries” more for electricity. Plaintiffs sued and tried to get an injunction against the rate increase.

blockchain

The lower court denied the preliminary injunction. Plaintiffs sought review with the Ninth Circuit. On appeal, the court affirmed the denial of the preliminary injunction.

It held that simple monetary harm would not constitute an immediate threat of irreparable harm that would be appropriately remedied by an injunction. Although a legitimate threat that a company might face bankruptcy or be driven out of business may constitute irreparable harm, in this case, plaintiffs failed to introduce competent evidence that they would be driven out of business because of the increased rates.

Blocktree Propterties, LLC. v. Pub. Utility Dist. No. 2 of Grant County, 2019 WL 5704281 (9th Cir. November 5, 2019)

Court allows blockchain platform to send subpoena seeking info about hacker

Plaintiff provides a blockchain asset trading platform and claimed that a hacker broke in and transferred 330,000 Tether and 100 Ether to a Bittrex account. Though Bittrex told plaintiff it had identified the relevant Bittrex account holder, it would not disclose the identity to plaintiff without a court order.

So plaintiff filed suit against the John Doe hacker for conversion, violation of the federal Computer Fraud and Abuse Act, and under Washington state law. Since it could not serve the complaint on the Doe defendant without knowing his identity, plaintiff sought permission from the court to take early discovery from Bittrex. The court granted the motion.

The court permitted plaintiff to send a subpoena to Bittrex requesting the name of the Doe defendant. Federal Rule of Civil Procedure 26(d) bars parties from seeking “discovery from any source before the parties have conferred as required by Rule 26(f), except in a proceeding exempted from initial disclosure under Rule 26(a)(1)(B), or when authorized by these rules, by stipulation, or by court order.” Fed. R. Civ. P. 26(d)(1). In determining whether to permit expedited discovery, the court required plaintiff to demonstrate that “good cause” existed to deviate from the standard pretrial schedule.

In the Ninth Circuit, a court evaluating whether a plaintiff establishes good cause to learn the identity of Doe defendants through early discovery examines whether the plaintiff (1) identifies the Doe defendant with sufficient specificity that the Court can determine that the defendant is a real person who can be sued in federal court, (2) recounts the steps taken to locate and identify the defendant, (3) demonstrates that the action can withstand a motion to dismiss, and (4) proves that the discovery is likely to lead to identifying information that will permit service of process. This test is often associated with the case of Columbia Ins. Co. v. seescandy.com, 185 F.R.D. 573, 578–80 (N.D. Cal. 1999).

In this case, the court found that good cause supported plaintiff’s request for leave to take expedited discovery to ascertain sufficient identifying information about the Doe defendant. Plaintiff had provided evidence that appeared to trace the allegedly stolen funds to an account on Bittrex, and plaintiff’s conversation with Bittrex indicated that Doe’s identity as the account holder was likely already known or ascertainable. The court also found that plaintiff’s request seeking identifying information related to Doe was reasonably likely to lead to the production of information that would permit plaintiff to serve process.

ZG TOP Technology Co., Ltd. v. John Doe, 2019 WL 917418 (W.D. Wash., February 25, 2019)