Estonian Crypto Trading Bot Firm Files Motion to Dismiss California Lawsuit Over Jurisdiction

News | May 28, 2024 By:

On Wednesday, May 15, 2024, crypto trading bot provider 3Commas Technologies OÜ filed a motion to dismiss a lawsuit against the company in the US District Court for the Northern District of California, arguing that the court lacks jurisdiction over the Estonian company.

3Commas, which develops automated trading software that allows users to trade cryptocurrencies like bitcoin and other digital assets on exchanges, is being sued by individuals who allege they lost money after an unknown hacker accessed their exchange accounts using stolen API keys obtained from a breach of 3Commas’ database.

In its motion, 3Commas argues that as a private company based in Tallinn, Estonia with no offices or employees in the US, the court does not have general jurisdiction over the company. 3Commas further asserts that the plaintiffs cannot establish specific jurisdiction either, as the company has not purposefully availed itself to California or deliberately targeted the state for business.

While 3Commas’ software does have some California-based users, the motion states there is no evidence the company specifically solicited customers in the state. The motion also argues that including a California-specific section in 3Commas’ privacy policy and obtaining investments from California funds are insufficient to confer jurisdiction, as are allegations revenues were used to maintain data security.

The lawsuit is seeking to hold 3Commas responsible under various state consumer protection and unfair competition laws. However, 3Commas claims in its motion that the plaintiffs’ claims for failing to safeguard user data do not arise directly from any contacts the company has with California.

A new allegation in the amended complaint is that 3Commas contracts with Cloudflare, a cybersecurity firm headquartered in San Francisco, to host user data. But 3Commas argues in the motion that Cloudflare’s standard terms, including a forum selection clause, should not be used to establish jurisdiction over 3Commas as a non-party to the agreement.

If the court finds it does not have jurisdiction over 3Commas, the lawsuit against the Estonian company will be dismissed. A hearing on the motion is scheduled for July 2, 2024, in San Francisco.

The case highlights ongoing issues around regulation and jurisdiction in the borderless cryptocurrency industry. While blockchain tech allows for easy digital access worldwide, it also means any company operating online can end up in courts far from their headquarters. If granted, 3Commas’ motion to dismiss would reaffirm due process limits on asserting jurisdiction over foreign firms. But a ruling the other way could have ripple effects for other non-US crypto businesses accessing global user bases through the internet.

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