NY Magistrate Judge Declines to Award Damages to Plaintiffs in Edelman Cryptocurrency Fraud Case

On Thursday, February 15, 2024, Ona T. Wang, Magistrate Judge for the United States District Court for the Southern District of New York, issued a report and recommendation in the case of Lowry Et Al V. Edelman et al, a lawsuit involving cryptocurrency investments.

The case stems from investments that plaintiffs John Lowry and members of the Appleton family made with Gabriel Edelman and his companies Vix Capital Partners, Edelman Blockchain Advisors, and others. Edelman allegedly persuaded the plaintiffs to invest in cryptocurrencies like WAX and Celsius tokens, promising high returns. However, Edelman later failed to provide documentation of ownership of the cryptocurrencies or return the investments when requested by plaintiffs. He also allegedly made false claims about selling Celsius tokens at inflated prices.

In total, Lowry invested $85,000 while the Appleton plaintiffs contributed investments ranging from $50,000 to $100,000 in various Edelman-affiliated companies and cryptocurrency ventures. This included investments in startups like Gibobs and Vendi that were touted by Edelman. When Edelman fled the U.S. for Gibraltar in early 2020, the plaintiffs could no longer get information about or access their investments.

The case was brought before Judge Wang for a damages determination after the entity defendants run by Edelman defaulted on the case. In her report, Judge Wang reviewed documentation and affidavits submitted by the plaintiffs but found them to be incomplete and inconsistent. No supporting affidavits for damages calculations were filed, despite the court granting four extensions of time.

While Judge Wang found Edelman’s entities liable for fraud and fraudulent inducement based on the facts alleged, she declined to award damages because the plaintiffs failed to prove their damages with reasonable certainty and specificity as required. The report notes this case is proceeding in parallel bankruptcy proceedings that may provide a better forum to address damages claims.

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