While the class-action lawsuit has been dismissed, Atomic Wallet still faces ongoing challenges as users work to reclaim their lost funds and explore additional legal options.
A federal judge in the United States has dismissed a class-action lawsuit against Atomic Wallet, an Estonian-based crypto firm, citing insufficient grounds for jurisdiction.
The lawsuit was brought forward by a group of users following a $100 million hack that targeted the self-custody wallet provider in June 2023.
Insufficient Ties to Colorado
On September 10, Judge Philip Brimmer of the Colorado District Court determined that the plaintiffs failed to establish a strong enough link between Atomic Wallet and the state of Colorado to warrant the court’s jurisdiction over the case. The lawsuit was filed against Atomic Wallet, its CEO Konstantin Gladyshev, shareholder Pavel Sokolov, and Evercode Infinite, the company responsible for developing the wallet software.
The plaintiffs contended that the availability of Atomic Wallet’s app for download in Colorado, along with its advertisements on platforms such as X (formerly Twitter), should have been sufficient to establish jurisdiction. Graham Dickinson, a Colorado resident and one of the plaintiffs, argued that his regular interactions with Atomic Wallet’s customer support from his home in the state further demonstrated the company’s connection to Colorado.
However, Judge Brimmer rejected these arguments, stating that the digital nature of Atomic Wallet’s products did not imply that the company was specifically targeting residents of Colorado. He noted that because the products in question were software applications, it was even less likely that Atomic Wallet had intentionally focused on the Colorado market.
Atomic Wallet’s Defense
In November, Atomic Wallet filed a motion to dismiss the lawsuit, asserting that it lacked substantial connections to the United States. The company highlighted that only one of the 21 plaintiffs resided in Colorado, where the lawsuit was initiated. They also argued that merely making the app available for download in Colorado or displaying ads on social media did not provide adequate grounds for establishing jurisdiction.
Judge Brimmer agreed with Atomic Wallet’s defense, noting that the contact between the company and Colorado was too minimal to warrant the court’s involvement. The judge emphasized that unlike physical products that need to be shipped to customers in a specific state, digital products like Atomic Wallet’s software can reach users globally without the company knowing their exact locations.
Next Steps for the Plaintiffs
Despite the dismissal of most claims, the judge granted the plaintiffs an extra 21 days to strengthen their case against Ilia Brusov, a shareholder and founder of Evercode Infinite. Brusov, like Sokolov, owns a 12.8% share in Atomic Wallet, while CEO Konstantin Gladyshev holds the remaining 74.4%.
This decision represents a major legal victory for Atomic Wallet as it navigates the aftermath of the security breach that affected approximately 5,500 wallets. While the class-action lawsuit has been dismissed, Atomic Wallet still faces ongoing challenges as users work to reclaim their lost funds and explore additional legal options.
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