As a seasoned crypto investor with over a decade of experience in this dynamic digital world, I can’t help but feel a sense of both amusement and frustration when reading about cases like Ali Sedaghatpour’s. The ruling by the Fourth Circuit Appeals Court is a reminder that while the crypto space is rapidly evolving, traditional legal frameworks often struggle to keep pace.
The effort of a homeowner to take legal action against his insurance company for not covering his $170,000 loss due to a cryptocurrency fraud scheme has been unsuccessful in an American appeals court. A panel of three judges decided that there was no mistake in throwing out the case.
As a crypto investor, I recently learned about a court case involving Lemonade Insurance and me (Ali Sedaghatpour). On October 24th, the Fourth Circuit Appeals Court upheld a District Court ruling in Virginia. The judge had decided that there was no breach of contract on Lemonade’s part because my homeowner’s policy only covered “direct physical loss” of property, and the incident in question did not meet this criteria. In simpler terms, they said that since the damage to my property wasn’t a direct physical loss, I had no valid claim against Lemonade Insurance.
In 2022, Sedaghatpour filed a lawsuit against Lemonade Insurance, asserting that they were obligated to provide coverage of approximately $170,000 for cryptocurrency that was fraudulently taken from him under the terms of their policy.
In simpler terms, the individual was trying to argue that cryptocurrency should be considered as personal property for home insurance purposes, and was seeking to compel the insurance company to reimburse losses from fraudulent transactions.
As a crypto investor, I’ve come to understand that, according to Virginia law, direct physical loss necessitates an immediate or imminent substantial damage or harm to the property.
They explained that since Sedaghatpour’s loss of cryptocurrency isn’t considered a ‘real-world, tangible loss,’ there’s no insurance coverage for this type of incident in that particular section.
In simpler terms, the appeals court ruled against Sedaghatpour’s claim because Lemonade Insurance had already fulfilled its promise from a specific part of the policy. This section promised up to $500 for losses due to theft or unauthorized use of an electronic card or device used for moving funds like deposits, withdrawals, or transfers.
Back in March 2022, I found myself in a rather unfortunate situation when I decided to invest $170,000 with APYHarvest, a supposed investment firm, as per my transfer in December 2021. However, it appears that this entity was nothing more than a scam, as the Central Bank of Ireland has pointed out. Now, I’m left dealing with legal issues against Lemonade Insurance due to this ordeal.
In his grievance, Sedaghatpour asserted that APYHarvest provided him an access code for a digital wallet storing the cryptocurrency he deposited, with this wallet being kept securely in a safe within his residence.
Later on, he discovered that the wallet provided by APYHarvest had been emptied, leading him to accuse them of theft and selling his cryptocurrency assets. Sedaghatpour stated that he submitted a claim with Lemonade Insurance due to this loss, arguing that it fell under a policy that covers personal property, up to $160,000 in value.
In February 2023, Judge Sedaghatpour’s lawsuit was dismissed by the federal court. However, he decided to file an appeal just a month after that.
Lemonade Insurance contended before the appellate court that although a cryptocurrency hardware cold wallet is a physical item, the information it holds doesn’t acquire any tangible characteristics. Therefore, they asserted that this digital data isn’t considered a “real, direct loss” of tangible property.
“Regardless of the matter of storage, cryptocurrency remains intangible, it added.
Sedaghatpour and Lemonade Insurace’s lawyer did not immediately respond to requests for comment.
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2024-10-25 09:24