Xapo, Indodax Slapped with Lawsuit for Storing Stolen Bitcoins

The two exchanges allegedly ignored KYC and AML policies.

Two cryptocurrency exchanges – Xapo and Indodax – are facing a lawsuit for storing Bitcoins obtained from theft from a crypto trader.

Reported by Coindesk on Thursday, the lawsuit alleged that the two exchanges together are storing nearly 500 Bitcoins stolen from the plaintiff Dennis Nowak, a German resident.

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Xapo held 19.99 BTC while Indodax held 479.69 BTC from the total 500 Bitcoins of Nowak, the lawsuit alleged.

The court filing, however, did not specify the name of the exchange from where the funds were stolen. It only specified that the plaintiff was maintaining a crypto trading account with a Northern California-based exchange.

“On or about November 20, 2018, Plaintiff deposited into hisU.S.A. EXCHANGE account 500 bitcoin (500 BTC) in three separate deposits: (1) a200 BTC deposit, (2) a second 200 BTC deposit, and (3) a 100 BTC deposit,” the court filing noted.

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Ignorance or intentional?

According to the plaintiff, the exchanges were aware of their inadequate know-your-customer (KYC) and anti-money laundering (AML) policies, but ignored them anyway.

The lawsuit is accusing the exchanges of aiding and abetting the theft and pointed out the violation of both federal and state laws by allowing the perpetrators to access the exchange’s services.

Even the perpetrators did not even attempt to hide the track of the stolen digital currencies and still got access to the exchanges.

Filed in the US District Court for the Northern District of California, Nowak also hired David Silver, a longtime crypto lawyer, to fight his case in the court and they are also demanding a jury trial.

Nowak is now seeking a return of his “stolen personal property” along with additional relief. Notably, at the time of the theft, all the Bitcoins were worth $2.3 million.

“XAPO and INDODAX each know or should have known that the assets stolen from Plaintiff and stored within their custody were indeed stolen; however, XAPO and INDODAX have undertaken no efforts to return those stolen assets to Plaintiff,” the filing added.

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