Private Equity Firms File Lawsuit Against Everest Insurance After Blockchain Fund Theft
On Wednesday, October 9, 2024, Panorama Point Partners, LLC and InterAlpen Partners, LLC filed an amended complaint in the US District Court for the District of Nebraska against Everest National Insurance Company, alleging breach of contract following the denial of an insurance claim exceeding $2.83 million.
The plaintiffs, both private equity firms based in Omaha, Nebraska, assert that they purchased a Directors and Officers (D&O) insurance policy along with a cyber liability policy from Everest National Insurance Company to protect against potential financial losses arising from breaches of duty by corporate officers and losses from cyber-related incidents.
According to the complaint, the issue arose after a loan agreement was established to create a reserve account intended to safeguard purported investors. The funds were subsequently transferred by Panorama’s Managing Partner into an unsecured blockchain wallet on a platform accessed through his iPhone. The complaint details that the purported investors then hacked the account, stealing the entire reserve amount.
The plaintiffs claim that they promptly filed a claim under their insurance policy with Everest following the incident, but the insurance company denied coverage, leading to the current legal action.
The complaint outlines the parties involved, stating that Panorama Point Partners, LLC and InterAlpen Partners, LLC are Limited Liability Companies registered in Nebraska and Delaware, respectively. The majority shareholder of Panorama is identified as its Managing Partner, who is primarily responsible for soliciting investment funds and opportunities. The minority shareholder resides in London, UK.
Everest National Insurance Company is characterized as a corporation registered in Delaware, with its principal place of business in Warren, New Jersey. The complaint claims that jurisdiction is appropriate in Nebraska, as the policy was purchased from Everest’s authorized agents operating within the state.
Details of the insurance policy are included in the amended complaint, highlighting that the policy was titled “Everest Elevation Private Equity Insurance Policy” and identified the plaintiffs as the “Named Insured.” The policy period is stated to be from February 9, 2023, to February 9, 2024. Key provisions of the policy are cited, including coverage for losses resulting from wrongful acts and third-party cyber liability.
The sequence of events leading to the insurance claim is also detailed in the complaint. Starting in May 2023, Panorama’s business development team engaged with individuals claiming to represent a Swiss-based investment group. Following several months of communication, these individuals pledged an investment exceeding $50 million, contingent upon the establishment of a Good-Faith Reserve account amounting to $2.83 million.
To fund this reserve account, Panorama secured a loan from a Nebraska bank, which required the maintenance of a minimum cash balance and the execution of a Security Agreement mandating insurance coverage for the loan proceeds. After creating the reserve account, the Managing Partner transferred the funds into a secure Tether account.
The complaint further explains that during a meeting with the potential investors, the Managing Partner was pressured to demonstrate the chain of ownership for the reserve funds by moving the money to a blockchain wallet recommended by the investors. Despite lacking familiarity with the platform and ignoring security warnings, the Managing Partner complied with the investors’ request, transferring the funds into an unsecured account. The plaintiffs allege that the investors then hacked the Managing Partner’s devices, resulting in the theft of the entire reserve fund.
The amended complaint states that prior to this incident, the bank had no claims against Panorama. However, following the unauthorized transfer, the bank issued a Default Letter, indicating an Event of Default and threatening legal action to recover the loan balance. The Default Letter also instructed Panorama to make a claim on their insurance policies to recover the lost funds.
In their legal filing, Panorama argues that the loss falls within the insuring provisions of the policy and contends that Everest breached its contract by failing to honor the claim. The plaintiffs seek damages, including the stolen amount, accrued interest, attorney fees, and other related costs.
Additionally, Panorama has requested a jury trial in accordance with federal rules, seeking a judgment against Everest for the financial losses incurred.
Please contact BlockTribune for access to a copy of this filing.
