Court Dismisses Major Claims in Skycoin Cryptocurrency Extortion Lawsuit

News | March 14, 2024 By:

On Tuesday, March 5, 2024, the United States District Court for the Northern District of Illinois, Eastern Division dismissed several claims in the case of Smietana v. Stephens. This lawsuit involved allegations by Brandon Smietana, Skycoin Global Foundation Limited, and Symbolic Analytics Inc. (collectively, “Plaintiffs”) against Bradford Stephens, Ryan Eagle, Catherine Byerly, and other defendants related to cryptocurrency schemes and extortion.

The Plaintiffs had launched Skycoin Token in 2013, a cryptocurrency that was traded on exchanges. They also developed associated hardware and software technologies. In 2018, they hired Stephens and his company to provide marketing services but alleged he worked with others to defraud and extort the Plaintiffs through manipulation of the cryptocurrency’s value and direct threats.

Some key allegations included Stephens demanding large monthly payments under threat of spreading misinformation. He was also accused of working with assailants who kidnapped and tortured Smietana and stole cryptocurrency assets. The Plaintiffs further claimed Stephens lied to major exchanges Bittrex and Binance to get Skycoin removed from their platforms.

As legal claims, the Plaintiffs brought federal charges of violating the Racketeer Influenced and Corrupt Organizations Act and misappropriating trade secrets under the Defend Trade Secrets Act. They also alleged various state law claims. However, the court dismissed several of these claims.

For the RICO claim, the court found while an enterprise and racketeering activity was adequately pled, there was no demonstration of a continued pattern of criminal behavior as required. The goal of destroying Skycoin had a defined end point. The trade secrets claim was also dismissed for failure to sufficiently describe reasonable efforts taken to maintain the secrecy of the allegedly stolen hardware and software technologies.

With no valid federal causes of action remaining, the court opted not to maintain jurisdiction over the state law claims and dismissed them without prejudice. This allows the Plaintiffs to potentially pursue those claims in state court instead.

Please contact BlockTribune for access to a copy of this filing.