Washington Couple Claims Safeco Insurance Wrongly Classifies Cryptocurrency as Money in $600,000 Theft Case
On Thursday, January 2, 2025, Hilvi T. Garrow and Mark Minich, a Washington couple, saw their complaint against Safeco Insurance Co. removed from Washington state court to federal court in Seattle. The couple alleges that Safeco wrongfully denied coverage for $600,000 in stolen cryptocurrency, arguing that the tokens should be classified as personal property rather than money, which would subject them to a $250 loss limit under their homeowners’ policy.
Garrow and Minich claim that hackers, using malware, drained the cryptocurrency from their Coinbase account and a separate crypto wallet. According to the couple, Safeco informed them that their policy only allowed for a maximum payout of $250, as it considers cryptocurrency to fall under the category of money.
In their complaint, they contest Safeco’s interpretation, asserting that cryptocurrency does not fulfill the three essential functions of money: serving as a store of value, a unit of account, and a medium of exchange. They referenced previous court rulings that have classified cryptocurrency as personal property, which has a higher liability coverage limit of $443,150 in their policy.
The couple’s complaint, initially filed in December, does not specify the types of digital currency involved in the theft. Safeco’s notice of removal states that the insurer views cryptocurrency as part of a broader category that includes various forms of money, such as prepaid cards and banknotes, justifying the $250 coverage limit.
Garrow and Minich described a series of events leading up to the theft, including a call in December 2023 from someone claiming to be a Coinbase representative. This individual alerted them to a hacking attempt on their account. Following the call, they received an email that appeared to confirm the representative’s identity. After initially verifying their tokens were still present, the couple was later locked out of their account.
The purported Coinbase representative instructed Minich to send copies of his driver’s license and upload a photo to regain access. After doing so, they managed to log back into their Coinbase account. However, soon after, Minich began receiving numerous text messages, which the representative claimed were from hackers. He then installed software that allowed remote access to their laptop after the representative allegedly contacted Kraken, another exchange where they held assets.
Later that night, they discovered malware on their laptop, which enabled hackers to steal their tokens from both Coinbase and the wallet, resulting in a total loss of approximately $600,000. Notably, Coinbase and Kraken are not named as defendants in the lawsuit.
The couple reported the incident to the FBI, who informed them that the stolen tokens had been disposed of and could not be recovered. In their lawsuit, Garrow and Minich allege breach of contract, insurance bad faith, and violations of the Unfair Claims Settlement Practices Act and the Washington Consumer Protection Act. They are seeking an unspecified amount in damages and legal costs.
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