A cryptocurrency trader has called out several asset custodians for deliberately holding stolen Bitcoins. Yesterday, industry news source CoinDesk reported that Dennis Nowak, a German resident, had dragged Xapo and Indodax to court. The crypto investor is seeking up to 500 BTC from both companies, as he alleges that they knowingly held funds stolen from him.
Weak Security Infrastructure Exposed Created an Enabling Criminal Environment
Per the news medium, Nowak filed his case with the United States District Court for the Northern District of California. Aided by longtime crypto lawyer David Silver, he accused the two exchanges of having helped a thief in looting his account. In addition, the exchanges are now allegedly holding his assets on their platforms.
Expatiating, Nowak said that Indodax and Xapo were aware that they had inadequate know-your-customer (KYC) and anti-money laundering (AML) policies. Whether or not it was their intention, criminals could go on their platforms and conduct their activities with greater freedom. Describing the theft, Nowak’s suit confirmed that he had deposited the 500 BTC into his account on an unnamed exchange in November 2018. Three days after his deposit, a criminal successfully breached his wallet and emptied it.
Nowak added that his digital assets eventually found their way to both Xapo and Indodax. The criminal had been somewhat transparent in his transactions. The suit explains that both exchanges held flimsy security features, making them reliable nesting places for stolen assets.
Nowak is now seeking the return of his property, as well as some additional relief. The suit confirmed that the Bitcoins stolen were worth about $2.3 million. Xapo allegedly held 19.99 BTC of the Bitcoins, while another 479.69 BTC is on Indodax.
David Silver and the Flop Crypto Adoption Conference
Silver is one of the most popular attorneys in the crypto space. The securities fraud and investment loss attorney is the founder of Silver Miller law firm, and he has done some extensive work on behalf theft and fraud victims across the industry.
Before his time with Nowak and the two exchanges, he made waves last month after filing a class-action lawsuit on behalf of the ill-fated Massive Adoption crypto conference attendees.
As the filing for the case shows, the suit has over 2,000 plaintiffs, all led by Ashley Gentry. The plaintiffs are suing Jacob Kostecki, the creator of “Massive Adoption in Memphis: Blockchain and Digital Assets,” a crypto conference that was slated to hold in last year.
Kostecki and the conference team pushed the conference to February 2020, with attendees paying for tickets, airfare, and hotel reservations. The team eventually canceled the conference altogether on January 31. At the time, Kostecki explained that he had experienced “cash flow issues” in the days before. He also promised to refund all tickets and packages from the conference within six months.
However, none of the attendees got reimbursed, and the prospective attendees are now filing to get their money back. While Kostecki has claimed to have paid people, no one seems to have gotten anything.