Federal Court Awards Costs but Rejects Attorney’s Fees in Cryptocurrency Fraud Case
On Friday, September 6, 2024, the United States District Court for the Eastern District of New York issued a report and recommendation regarding the case of Yuanyuan Zhang v. Chuanrong Zhang et al. The case involves allegations of fraud and breach of contract linked to a cryptocurrency investment.
The plaintiff, Yuanyuan Zhang, initiated legal action against defendants Chuanrong Zhang, The Belt and Road Group, Inc., and Hui Chi Chang, claiming that she was defrauded out of $77,186.46 through the purchase of a cryptocurrency token named “BRCS.” The court noted that after the defendants failed to respond to the complaint, a default judgment was entered against them.
In June 2023, the court awarded damages to Zhang, including pre-judgment interest amounting to $38,211.49 and statutory post-judgment interest at a rate of 5.18 percent. Additionally, the court granted Zhang’s request for reasonable attorney’s fees, costs, and disbursements related to the case.
Following the judgment, Zhang filed a motion on October 20, 2023, requesting specific amounts for post-judgment interest, attorney’s fees, and costs. Initially, she sought $23,373.02 in attorney’s fees and $627 in costs. However, after further proceedings, she amended her request to $24,680.50 in attorney’s fees and $325 in costs.
The court required Zhang to provide detailed billing records and information regarding her counsel’s qualifications to support her request for attorney’s fees. In her supplemental motion, Zhang provided the necessary documentation, but the court ultimately found that she had not established a statutory or contractual basis to recover attorney’s fees. Under the “American rule,” which governs this jurisdiction, attorney’s fees are typically not recoverable unless stipulated by statute, contract, or court rule.
The court pointed out that Zhang’s claims under the Securities Act and the Securities Exchange Act did not allow for fee-shifting. Consequently, the court recommended denying her motion for attorney’s fees while granting her request for costs, awarding her a total of $225.
Zhang’s request for costs included $225 related to the service of process and $100 for investigative services, although the latter was not granted as such expenses are generally not considered recoverable costs. The court maintained that expenses like filing fees and process service fees are allowed under federal rules.
Regarding interest, the court acknowledged that it had already awarded Zhang pre-judgment interest and noted that statutory post-judgment interest would continue to accrue until the judgment is satisfied. However, the court did not recommend establishing a specific amount for post-judgment interest at this stage.
The report and recommendation concluded with instructions for Zhang’s counsel to serve all parties involved with a copy of the document, and it set a deadline for filing any objections to the recommendations by September 20, 2024. Failure to file timely objections may result in waiving the right to appeal the District Court’s order.
Please contact BlockTribune for access to a copy of this filing.
