Cryptocurrency Startup Sues Crypto.com Exchange After Falling Victim to Scam
Cryptocurrency startup Glow Token LLC filed a lawsuit in a US court against the Crypto.com exchange over a recent fraud, alleging negligence and breach of contract.
The startup sued the exchange for breach of contract, negligent infliction of emotional distress, fraudulent inducement, negligent misrepresentation, vicarious liability, and unjust enrichment.
Earlier this year, Glow Token CEO Bryan Lawrence discussed listing the startup's Glow Token (FLARE) on Crypto.com with certain individuals claiming to be the exchange's staff.
Lawrence transferred funds to what he thought was a Crypto.com account: $250,000 and BTC 1 (then worth $23,000).
In March, Crypto.com told the CEO that there was no agreement about listing the coin and that he had been scammed.
The individuals he had been talking to were imposters posing as Crypto.com employees.
Despite Crypto.com telling Lawrence to stop claiming a listing agreement existed, Lawrence's lawyers argued in an August 17 letter that the legal action resulted from the failed listing of FLARE.
The letter claimed that it was either Crypto.com's employees or bad actors compromising the exchange's internal communications who caused the loss of investor money and harm to Glow Token's reputation.
"These bad actors took advantage of a lack of security protocols and safeguards by the defendant to allow compromise of their internal communication, resulting in the loss of funds earmarked for the [FLARE launch], originally scheduled [for] April 1, 2023."
Glow Token wants the missing funds returned and compensation for the harm caused to the CEO and the business.
Lawrence insisted that, since February, when he applied for the listing, he had conducted "due diligence and verified every step with Crypto.com," including checking the listing link on the exchange's website, examining the listing contract, reviewing received emails, confirming all provided contact information - "and all the details was verified by multiple representatives from Crypto.com."
After Crypto.com informed him that this was a scam, said Lawrence,
"I immediately informed them that all steps were verified by their representatives throughout the entire process and suggested that they review the chat logs for confirmations."
The exchange then removed him from the chat logs for "investigation purposes", he said, soon sending a cease and desist letter.
Lawrence stated that he saved copies of all conversations as part of the verification process.
He also claimed to have suffered health issues due to stress and financial issues that forced him to sell his home.
The community, CEO added, has been very supportive.
Cryptonews.com has reached out to Crypto.com for comment.
At 10 am on Monday (UTC), CRO's price is unchanged in a day and down 8.5% in a week, trading at $0.052.
- Crypto.com Internal Trading Teams Prompt Concerns Over Conflicts of Interest
- Crypto.com Cuts 20% of Staff
- BitMEX CEO Suggests Crypto Exchanges Should Eliminate Internal Market Makers
- Is Crypto.com Safe? | Pros and Cons