Virginia Court Dismisses Unjust Enrichment Claims in Blockchain Startup Loan Case

On Wednesday, August 14, 2024, the United States District Court for the Eastern District of Virginia, Alexandria Division handed down a ruling in a breach of contract and unjust enrichment case related to loans provided for blockchain business ventures.

The case involved plaintiff Zhengfeng Bo, who alleged he had loaned a total of $380,000 to defendant Rui Tang and defendant ConnectChain, Inc. in 2018 and 2020 for blockchain and digital currency projects. Bo claimed the loans were consolidated into a written agreement in April 2020 requiring repayment by May 2021. According to the complaint, Tang is the actual person in control of ConnectChain.

When repayment was not made as scheduled, Bo and Tang entered a new repayment plan in October 2021 wherein Tang agreed to pay $5,000 monthly for 74 months. Tang allegedly made the initial payments but then defaulted, prompting the lawsuit.

In his suit, Bo argued breach of contract against both defendants, as well as unjust enrichment. Regarding breach of contract, District Judge Rossie Alston Jr. upheld that Bo had plausibly made his claim against each defendant. However, the judge limited damages recoverable from Tang to the missed monthly payments rather than the full balance, since the contract lacked an acceleration clause.

Judge Alston dismissed the claim against ConnectChain on the unjust enrichment charge because an express contract covered the loan. He also rejected unjust enrichment against Tang, finding Bo did not plausibly allege that Tang directly received or retained a personal benefit from the loaned funds.

While allowing the core breach of contract claims to advance, the ruling demonstrated the limits of damages and higher pleading standards for associated claims like unjust enrichment.

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