Court Issues Preliminary Injunction to Freeze Cryptocurrency Assets in Alleged Fraud Case

On Tuesday, April 23, 2024, the US District Court for the Northern District of Florida issued a preliminary injunction in the case of Salem v. Defendant 1 et al. The case involves allegations of theft of cryptocurrency assets totaling over $220,000.

Nabil Salem had filed a lawsuit on February 29th against an individual known only as “Anna Asfahany” and 20 other unnamed defendants, alleging that he had been deceived into transferring over $220,000 worth of cryptocurrency assets into accounts controlled by the defendants. According to court documents, Asfahany had misrepresented the accounts as being set up for Salem’s benefit. However, once the digital currencies were transferred via blockchain, the defendants allegedly converted them for their own personal gain.

Through tracing the blockchain transactions, Salem was able to identify several wallet addresses associated with major cryptocurrency exchanges that were allegedly used to launder the stolen assets. Addresses on Binance, OKX, and Crypto.com were frozen by the court in a temporary restraining order issued on April 8th.

On April 17th, Salem filed a proof of service demonstrating the defendants had been notified of the pending preliminary injunction hearing through notifications on the blockchain in the form of non-fungible tokens, or NFTs, sent to the wallet addresses in question. This method of service was authorized under the Federal Rules of Civil Procedure.

At the hearing on April 19th, during which the defendants did not appear, US District Judge T. Kent Wetherell found Salem had adequately shown the need for a preliminary injunction on the disputed digital assets. In a written order dated April 23rd, the judge formalized the injunction, finding Salem had established a strong likelihood of succeeding on claims of conversion, unjust enrichment, and constructive trust against the defendants.

The order bars the defendants from withdrawing or transferring any assets currently in the identified wallet addresses until the case is resolved. It also allows Salem to begin discovery immediately. While temporary, the preliminary injunction aims to preserve the status quo and prevent the allegedly ill-gotten gains from being transferred or dissipated during the legal proceedings.

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