How to value stolen cryptocurrency in a California lawsuit
You're probably stuck with its value when stolen
Say your cryptocurrency was stolen. Maybe you were SIM swapped. Or maybe Celsius’ pause on withdrawals continues indefinitely.
In a lawsuit to get your money back, how much money will you get? And could you sue for your crypto back?
Here’s how California courts will look at it.
Determining the Amount of Damages for Stolen Crypto
In California, the amount of damages for stolen property (“conversion” in legalspeak) is generally “value of the property at the time of the conversion ….”
But not always. In theory, you could get more. You’ll need to show that:
the default damages measure (value at the time of theft) is “manifestly unjust”;
any price appreciations post-theft were obviously going to happen (that it was a “natural” and “reasonable” thing);
you would have kept the crypto through the price appreciations.
It’s going to be hard showing all three. Maybe you can. But fair warning: the Ninth Circuit has once rejected an attempt to capture post-theft appreciations. Granted, that case involved a somewhat sympathetic defendant, where the plaintiff lost the crypto through its own error.
But still. Some courts will probably gloss over that. And it may make all attempts to recover post-theft appreciations that much harder.
Recovering the Stolen Crypto
So you probably can’t recover the price appreciation as damages. But could you recover the coins themselves?
The Ninth Circuit has said no. Crypto is intangible property like shares of stock. You can’t recover stock shares. And the same goes for crypto.
But that comes with a caveat. This wasn’t the only reason for the Ninth Circuit’s conclusion. Another reason was that the defendant had already transferred the converted Bitcoin. So there was nothing left to recover.
This may make the earlier ruling (that crypto can’t be recovered) non-binding as dicta.
Usual Caveats Apply
The law is not settled on this. It’s going to depend on where you are and on what happened.
It’s also going to depend on your claims. Breach of contract claims may be valued differently.
So if you have any questions, contact Warren Terizan LLP’s Dan Terzian.