A Plaintiff's Cryptonite: Charting a Path Forward for Minimum Contacts in the Cryptocurrency Era

【Author】 Mecklenburg, Mallory

【Source】GEORGE WASHINGTON LAW REVIEW

【影响因子】1.548

【Abstract】American interest in cryptocurrency has gone to the moon. As of November 2021, sixteen percent of American adults have invested in or traded cryptocurrency. But interest is not projected to stop there-continued use will more than triple the international cryptocurrency market by 2030. Indeed, new research has found that around forty-one percent of American adults who have never owned cryptocurrency are likely to purchase it by May of 2023. Despite the strong enthusiasm, approximately seventy-eight percent of cryptocurrency users admit to not understanding decentralized finance very well, with almost half of those respondents claiming to know little to nothing about the concept. A consequence of so many unsophisticated laypeople buying into the cryptocurrency frenzy is that a large portion of them are likely to be uninformed as to the legal ramifications of cryptocurrency use. Numerous cryptocurrency service providers, including many based overseas, have perpetuated scams, engaged in fraudulent behaviors, or gone defunct. The legal ramifications are ultimately realized when, as a result of corporate fraud or mismanagement, cryptocurrency is stolen, frozen, or lost at the hands of these companies.As cryptocurrency transactions and investments continue to grow, more lay users will file civil cases in federal court against cryptocurrency service providers. Inevitably, these individuals will face personal jurisdiction as an obstacle. Civil plaintiffs will find it difficult to establish personal jurisdiction over cryptocurrency companies for three reasons. First, personal jurisdiction doctrine formulated for the traditional internet context fails to consider essen-tial and unique features of cryptocurrency, such as the blockchain infrastruc-ture, the tendency of service providers to lack a physical presence, and its anonymity. Second, cryptocurrency companies are largely located outside of the United States, and establishing personal jurisdiction over foreign defend-ants is notoriously complicated. Third, although limited discovery is a useful tool in identifying business activities targeting the forum, it is unclear whether the remedy could have a substantial effect on personal jurisdiction analysis. This is because cryptocurrency companies are not currently rigorously regu-lated, fueled by anonymity, and have a propensity to engage in deceitful practices.Lower courts should apply a supplemental six-factor minimum contacts test specifically designed for civil cases against cryptocurrency companies to counteract these concerns. Though traditional internet doctrine should serve as the starting point for a court's minimum contacts analysis, a more accurate result can be reached by using factors specific to this novel technology. This Note asserts that cryptocurrency and its service providers' (1) reliance on blockchain technology, (2) lack of a physical presence, and (3) tendency to be subject to lax regulations abroad are unique and essential to the minimum contacts analysis, and therefore should be analyzed under a multifactor test.

【Keywords】

【发表时间】2023 JUN

【收录时间】2023-08-23

【文献类型】

【主题类别】

--