Coinbase UK Settles Lawsuit After Being Forced to Freeze Stolen Bitcoins Settles Lawsuit

Coinbase UK has settled a lawsuit with the CEO of Alphabit regarding Coinbase’s alleged handling of Bitcoins worth almost $1 million USD that were allegedly stolen from Alphabit by hackers in July, Law 360 reports.

Alphabit is UK-based “crypto-asset investment company” that claims to manage $195 million USD in cryptocurrencies and tokens.

In an interview with Decrypt in August, Alphabit CEO Liam Robertson said he agreed in July to purchase algorithmic trading services from an unnamed fund in exchange for 100 Bitcoins. (Bitcoins are currently trading for around $10 ooo USD.)

Decrypt says Robertson told them in an interview that the negotiation was conducted with an executive from the algorithmic trading fund on a phone line that Robertson later concluded was bugged.

Decrypt says a hacker then, “used complex spyware to clone the (unnamed) CIO’s email address,” impersonated the CIO and advised Robertson in an email to send negotiated bitcoins to a digital wallet controlled by the hacker.

When the CIO of the algorithmic trading company figured out he had been hacked, he promptly contacted Robertson to warn him.

But by then it was too late: Robertson had already sent 100 Bitcoins to the hacker’s address.

The hacker quickly moved 80 of the stolen Bitcoins to a Coinbase UK account, 15 Bitcoins to LocalBitcoins.com and 5 Bitcoins to a “cold wallet” (hardware storage device).

The case is being reported as historic in the UK, in that Robertson’s lawyers successfully convinced London’s Commercial Court to issue an Asset Preservation Order compelling CoinBase UK to freeze stolen funds while the dispute was underway.

The instance is being described as unique in British legal history because it establishes Bitcoin as legal property in the UK for the first time.

Robertson’s lawyers also managed to successfully argue that, “Since the theft of (Robertson’s) Bitcoin didn’t entail a transfer of the property title, Robertson still ‘owned’ the stolen Bitcoins…”

Bitcoins have in fact been seized as proceeds of crime in Britain in another recent case involving hacks on more than 1000 UK, US, and European companies.

Notably, crypto investor Michael Terpin is listed as an advisor to Alphabit on the company’s website.

Terpin is currently suing AT&T Mobility for $224 million USD for allegedly allowing hackers to “SIM-swap” his cellphone and use credentials on the phone to steal $24 million USD of his crypto holdings.

In a SIM-swap attack, hackers impersonate victims or use collaborators inside telcos to arrange the transfer a victim’s cellphone SIM data to a cellphone controlled by the hacker.

Controlling a victim’s phone can then allow hackers to access victims’ crypto wallets and any funds therein.

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