Why You Should Read Terms Before You Click or Check the Box with "I Agree"
As Blondie sings:
One way, or another, I'm gonna find ya
I'm gonna get ya, get ya, get ya, get ya
One way, or another, I'm gonna win ya
I'm gonna get ya, get ya, get ya, get ya
Earlier this summer, the Bankruptcy Court for the Southern District of New York rejected a challenge to the Litigation Administrator, Moshin Y. Meghji, lawsuits against Celsius Network LLC customers. The challenge was based on, among other grounds, lack of personal jurisdiction over defendants who resided outside of the United States and undertook transactions with Celsius online. The litigation administrator asked the Bankruptcy Court to hold that the foreign defendants were subject to personal jurisdiction, and that the preferential transfers they received were domestic transfers for the purposes of the preference avoidance provisions of the Bankruptcy Code, or, in the alternative, that these provisions of the Code applied extraterritorially.
The foreign defendants argued that jurisdiction cannot be decided without a factual record, given questions about which entity owned the crypto, inconsistent Terms of Use provisions, potential fraudulent inducement, and the heavy burden on foreign defendants to litigate in the U.S.
In his July 29 decision, Judge Glenn held that a bankruptcy court may exercise jurisdiction over a foreign defendant if the defendant has minimum contacts with the United States as a whole. The court further found that, as to all customers, the transfers were domestic and involved a domestic application of the Bankruptcy Code. Because the transfers are domestic in nature, the court did not reach the issue of extraterritoriality1. The court held that the transfers were domestic in nature because they were made from a Delaware company via LLC-designated frictional wallets and...
