Crypto.com sued by founder who lost his house to scam

Crypto.com has found itself embroiled in a lawsuit, as a crypto startup founder sues them for more than US$250 thousand in damages.

The plaintiff, Glow Token LLC, filed the lawsuit in a Florida court against Crypto.com, claiming that Crypto.com owes them over US$250 thousand in damages.

In an industry where high profile cases often involve billions of dollars, as in the FTX and Three Arrows Capital cases, US$250 thousand hardly seems to be important.

Yet, what makes this case interesting is that Glow Token LLC is filing the lawsuit while acknowledging that Crypto.com itself may not have been involved in the fraud.

The facts of the case

According to Glow Token LLC, their CEO Bryan Lawrence was approached earlier this year by individuals claiming to be from Crypto.com, and offering to list the company’s Glow Token on Crypto.com’s exchange.

Lawrence claims that he conducted his due diligence and verified every step with Crypto.com, before transferring funds to an account he believed belonged to Crypto.com.

The ‘deal’, however, turned sour when Crypto.com officials informed Lawrence in March that he had been scammed by impostors, and that Crypto.com had no record of a listing agreement with Glow. Crypto.com also told Lawrence to stop asserting as much.

Now, Glow is taking legal action against Crypto.com, alleging negligence.

Glow claims that Crypto.com’s internal communications was compromised, and that the scammers took advantage of the lack of security protocols to scam Glow. Additionally, even if third parties conducted the scam, Crypto.com’s negligence in security measures allowed the fraud to occur.

Lawrence also asserts that he has been profoundly impacted by the scam. According to Lawrence, the stress from these events has caused significant stomach issues, and that in order to cover court costs, he has had to sell his home.

The case thus far is unusual because while scammers often impersonate major platforms to gain trust, this represents an effort to hold the platform itself responsible for the scam, even though the scammers may not have any affiliation with the platform.

Online security has also been somewhat of a recurring theme in the crypto space over the past year, with major companies having suffered data breaches and found to have insufficient security protocols in place.