FTI Technology Provides Investigations Expertise and Testimony in Digital Assets Dispute
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December 07, 2022
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A leading cryptocurrency exchange was defending a dispute, which involved customer claims regarding unsupported tokens mistakenly loaded to the exchange’s platform. FTI Technology’s Blockchain & Digital Assets team was engaged to provide digital forensics expertise, investigatory support and digital assets advising.
Situation
The client’s customer had mistakenly loaded unsupported tokens into its platform. Due to anti-theft mitigation protocols built into the client’s proprietary technology, the company was unable to access or return the unsupported tokens. The customer ultimately took legal action against the exchange. Deep technical expertise was needed to determine the facts of the case, provide expert reporting and support the client’s defense in the dispute.
Our Role
FTI Technology’s Blockchain & Digital Assets practice was retained due to the team’s extensive work in cryptocurrency disputes. The team provided:
- Expert report for the court outlining technical expertise of how cryptocurrency exchanges function, the ways exchanges interact with tokens and how the technical process differs for cryptocurrencies. This insight demonstrated that the case facts were supported by expected outcomes.
- Analysis of the opposing side’s expert witness testimony arguing that if a party has access to the seed phrase of a token, they also have the ability to transfer and interact with funds. Using this logic, the opposing side argued that the customer’s tokens could and should be returned.
- Testimony detailing the development of functionality of the client’s exchange. This included in-depth technical demonstration of the underlying infrastructure and its design to restrict access to customer seed phrases, as a means to mitigate risk of theft. FTI Technology’s experts provided extensive evidence that the client did not have any means to return unsupported tokens until the technology was coded to recognize the token.
Our Impact
- FTI Technology’s engagement resulted in successful defense of the client’s operational protocol and proof that the system worked as claimed and intended.
- The team’s expert assessment also provided sufficient evidence and documentation that the client had appropriate customer education in place to prevent such issues with unsupported tokens.
Published
December 07, 2022
Key Contacts
Senior Managing Director, Global Leader of Blockchain & Digital Assets