Ready-Made Motion to Dismiss for Non-US Celsius Crypto Retail Victims Facing Clawback Lawsuits
The cryptocurrency world had been rocked by the collapse of major platforms like FTX and Celsius. As a survivor of the FTX debacle, I want to share my experience and insights, especially for those now facing potential clawbacks from Celsius.
When I managed to withdraw most of my funds from FTX before its collapse, I felt a wave of relief wash over me. But that relief was short-lived. Soon after, whispers of potential clawback risks started circulating, and my anxiety kicked into high gear. How could I, from the comfort of my home in Singapore, defend myself against a clawback lawsuit in the United States? The thought of astronomical US legal fees made my head spin.
Determined to be prepared, I dove headfirst into research. I tried to gain some knowledge in bankruptcy law, explored possible defenses, and crafted a plan of action. Fortunately, recent news from FTX has put my fears to rest. With the company stating they have retrieved more than enough assets to repay victims, the risk of clawbacks from FTX has essentially vanished.
But not everyone has been so lucky. This week, news broke that a Celsius retail victim was sued. My heart goes out to all Celsius retail victims, as I can easily imagine myself in their shoes. If FTX had hit me with a clawback lawsuit, here is the legal strategy I would have considered:
File a motion to dismiss the lawsuit due to lack of US jurisdiction.
Don’t ignore the lawsuit as it will result in default judgment. A default judgment means the court decides in favor of the plaintiff without the defendant’s input. You lose the court case by default.
Force the plaintiffs to file the lawsuit in Singapore, my home turf.
The plaintiffs may decide not to pursue the case due to extra legal cost involved in litigating internationally. Furthermore, I believe hiring a Singapore lawyer would be cheaper than a New York lawyer and it is easier to communicate with him as we are operating within the same country.
Fight the lawsuit based on Singapore law (similar to English law).
Use the "good faith" defense which I am confident of winning as I did withdraw my funds in good faith, as allowed by the business contract.
While I dodged the FTX bullet, I believe my preparation could be valuable for Celsius victims. If I were facing a clawback lawsuit, my first action to take would be to challenge the court's jurisdiction, so that I do not have to fight in US courts. However, it is crucial to remember that I am not a lawyer, and this is not legal advice. Each case is unique, and consulting with a qualified legal professional is essential. My situation is more relevant for a Singaporean and to a lesser extent, non-US victim.
To contribute to the community's knowledge base, I have drafted a sample motion with the assistance of AI chatbots, which Celsius victims might find interesting as a starting point for their own legal research. Feel free to use it as a reference, but please remember: I have no formal legal training. I have taken care to ensure the motion does not contain AI hallucinations, carefully reviewing each paragraph for sound legal reasoning and made modifications accordingly. However, any legal strategy should be developed and implemented under the guidance of a professional lawyer.
Below is the motion to dismiss for lack of personal jurisdiction. Modify it to suit your personal situation. As I am a Singaporean, the motion was written for Singaporeans.
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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK
In re: CELSIUS NETWORK LLC, et al., Debtors.
Chapter 11 Case No. 22-10964 (MG) (Jointly Administered)
MOHSIN Y. MEGHJI, LITIGATION ADMINISTRATOR, AS REPRESENTATIVE FOR THE POST-EFFECTIVE DATE DEBTORS, Plaintiff, v. [Defendant's Name], Defendant.
Adv. Proc. No. [Case Number]
MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
Defendant [Defendant's Name], through undersigned counsel, hereby moves to dismiss the complaint filed by Mohsin Y. Meghji, Litigation Administrator, pursuant to Federal Rule of Civil Procedure 12(b)(2), made applicable to this proceeding by Federal Rule of Bankruptcy Procedure 7012(b), on the following grounds:
Lack of Personal Jurisdiction (Rule 12(b)(2)):
This Court lacks personal jurisdiction over the defendant, [Defendant's Name], as the defendant is not a resident of the United States and does not have sufficient minimum contacts with the United States to establish personal jurisdiction.
The defendant is a resident of Singapore and has no substantial, continuous, and systematic contacts with the United States that would justify the exercise of general jurisdiction.
While the defendant's interactions were with Celsius Network LLC, a U.S. company, these interactions were conducted entirely from Singapore, and any transfers in question were initiated from outside of the United States.
The defendant has negligible assets within the United States, further demonstrating the lack of substantial connections to the forum.
Insufficient Nexus to the United States:
The complaint fails to establish a sufficient nexus between the defendant's activities and the United States to justify the exercise of specific jurisdiction.
While Celsius Network LLC is a U.S. company, the mere fact that it filed for bankruptcy in the United States does not automatically confer personal jurisdiction over foreign defendants who conducted business with Celsius from outside the United States.
Due Process Considerations:
Exercising personal jurisdiction over the defendant would violate traditional notions of fair play and substantial justice, as articulated by the United States Supreme Court in International Shoe Co. v. Washington, 326 U.S. 310 (1945) and its progeny.
The burden on the defendant to litigate in a foreign jurisdiction where they have no substantial presence would be extreme and unreasonable.
Forum Non Conveniens:
Even if the Court were to find a basis for personal jurisdiction, the doctrine of forum non conveniens supports dismissal of this action.
While the transactions were with Celsius Network LLC, a U.S. company, the defendant resides in Singapore and conducted all interactions from there. Singapore would be a more appropriate and convenient forum for adjudicating any disputes related to the defendant's interactions with Celsius Network LLC for the following reasons:
The defendant's assets, which are the subject of the potential clawback, are primarily located in Singapore.
Any potential witnesses or evidence related to the defendant's actions would likely be in Singapore.
Enforcing any judgment would be more feasible if the case were heard in Singapore courts.
Practical Considerations for Asset Recovery:
While the defendant engaged in transactions with a U.S. company, the defendant's assets are primarily located in Singapore.
If the plaintiff seeks to recover these assets, it may be more appropriate to pursue legal action in Singapore courts, where the assets are located and where enforcement of any judgment would be more feasible.
Conclusion: The complaint should be dismissed for lack of personal jurisdiction over the defendant. The defendant's residence in Singapore, coupled with the lack of substantial contacts with the United States and negligible U.S. assets, renders this Court's exercise of personal jurisdiction improper and inconsistent with due process requirements under U.S. law. Furthermore, practical considerations regarding asset recovery suggest that Singapore would be a more appropriate forum for any potential litigation.
WHEREFORE, the defendant respectfully requests that the Court dismiss the complaint for lack of personal jurisdiction and grant such other and further relief as the Court deems just and proper.
Dated: [Date] [City], New York
Respectfully submitted,
[Attorney Name] [Law Firm] [Address] [Telephone Number] [Email Address] Attorney for Defendant [Defendant's Name]