Case 1:18-cv-03392-AT Document 86 Filed 03/11/20 Page 1 of 28

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

BDI CAPITAL, LLC, :

:
:
:
Plaintiff, :
:
v. :
:
BULBUL INVESTMENTS LLC d/b/a : CIVIL ACTION NO.
CAMPBX, KEYUR MITHAWALA : 1-18-cv-3392-AT
:
:
Defendants. :

ORDER

This matter is before the Court on Defendants Bulbul Investments LLC

d/b/a CampBX (“CampBX”) and Keyur Mithwala’s (collectively, “Defendants”)1

Motion for Summary Judgment [Doc. 75]. Plaintiff BDI Capital, LLC has also filed

a Motion to Strike, which contains an embedded request for leave to file a sur-

reply. [Doc. 83]. The Motion to Strike is DENIED, but the request to file the sur-

reply is GRANTED, and the Court will direct the clerk to file the proposed sur-

reply, Doc. 83-1, Pages 9–14. For the reasons that follow, the Motion for Summary

Judgment is GRANTED IN PART and DENIED IN PART.

1Plaintiff’s claims against Defendant Priyam Mithawala were voluntarily dismissed without
prejudice on August 8, 2019 (See Doc. 74).
 Case 1:18-cv-03392-AT Document 86 Filed 03/11/20 Page 2 of 28

I. STANDARD FOR SUMMARY JUDGMENT

Summary judgment may only be granted when “the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits, if

any, show that there is no genuine issue as to any material fact and that the moving

party is entitled to summary judgment as a matter of law.” FED. R. CIV. P. 56(c).

The “purpose of summary judgment is to pierce the pleadings and to assess the

proof in order to see whether there is a genuine need for trial.” Matsushita Elec.

Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting the

Advisory Committee’s note to FED. R. CIV. P. 56). “[The] party seeking summary

judgment always bears the initial responsibility of informing the district court of

the basis for its motion, and identifying those portions of the [record before the

court] which it believes demonstrate the absence of a genuine issue of material

fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to

the non-movant to establish, by going beyond the pleadings, that there is indeed a

genuine issue as to the material facts its case. Thompson v. Metro. Multi–List,

Inc., 934 F.2d 1566, 1583 n.16 (11th Cir. 1991); Chanel, Inc. v. Italian Activewear

of Fla., Inc., 931 F.2d 1472, 1477 (11th Cir. 1991). A dispute of material fact “is

‘genuine’ . . . [only] if the evidence is such that a reasonable jury could return a

verdict for the non-moving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

248 (1986); see also Matsushita, 475 U.S. at 587.

When ruling on the motion, the Court must view all the evidence in the

record in the light most favorable to the non-moving party and resolve all factual

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disputes in the non-moving party’s favor. Welch v. Celotex Corp., 951 F.2d 1235,

1237 (11th Cir. 1992); Ryder Int’l Corp. v. First Am. Nat’l Bank, 943 F.2d 1521,

1523 (11th Cir. 1991). The Court must avoid weighing conflicting evidence. Liberty

Lobby, 477 U.S. at 255; McKenzie v. Davenport–Harris Funeral Home, 834 F.2d

930, 934 (11th Cir. 1987). Nevertheless, the non-moving party’s response to the

motion for summary judgment must consist of more than conclusory allegations,

and a mere “scintilla” of evidence will not suffice. Walker v. Darby, 911 F.2d 1573,

1577 (11th Cir. 1990); Pepper v. Coates, 887 F.2d 1493, 1498 (11th Cir. 1989). But

where a reasonable fact finder may “draw more than one inference from the facts,

and that inference creates a genuine issue of material fact, then the court should

refuse to grant summary judgment.” Barfield v. Brierton, 883 F.2d 923, 933–34

(11th Cir. 1989) (citation omitted).

The essential question is “whether the evidence presents a sufficient

disagreement to require submission to a jury or whether it is so one-sided that one

party must prevail as a matter of law.” Anderson, 477 U.S. at 251–52.

II. FACTUAL BACKGROUND2

In 2011 Defendant Keyur Mithawala began, through his company CampBX,

to develop the code for a Bitcoin trading platform that would allow its users to buy

2 Keeping in mind that when deciding a motion for summary judgment, the Court must view the
evidence and all factual inferences in the light most favorable to the party opposing the motion,
the Court provides the following statement of facts. See Optimum Techs., Inc. v. Henkel
Consumer Adhesives, Inc., 496 F.3d 1231, 1241 (11th Cir. 2007) (observing that, in connection
with summary judgment, the court must review all facts and inferences in light most favorable to
non-moving party). This statement does not represent actual findings of fact. Priester v. City of
Riviera Beach, 208 F.3d 919, 925 n.3 (11th Cir. 2000) (“We . . . have repeatedly stressed that the
‘facts’, as accepted at the summary judgment stage of the proceedings, may not be the ‘actual’ facts
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and sell Bitcoins against U.S. Dollars. (Def.’s Statement of Undisputed Material

Facts (“SUMF”) ¶ 6, not disputed, Pl.’s Resp. to SUMF (“RSUMF”) ¶ 6).

Bitcoins3 are a type of virtual currency, or “cryptocurrency” stored in virtual

“wallets.” (Id. ¶ 1).4 A wallet, which is created by the official Bitcoin software, can

store bitcoins of a single user. (Id. ¶ 2). Alternatively, a wallet can store bitcoins of

multiple users using built-in “Accounts” functionality and track each user’s Bitcoin

balance independently, which is the type of “wallet” employed by CampBX. (Id. ¶

2–3). Each account on the CampBX trading platform had two types of balances -

Bitcoin and cash (in U.S. Dollars) (Id. ¶ 7).

Transferring bitcoins entails two “keys,” a public key and a private key.

“Both are large strings of numbers that are mathematically linked to the wallet

address. . . . The private key is used to mathematically derive the public key, which

is transformed with a hash function to produce the address that other people can

see.”5 Any bitcoin transfer thus creates a transaction ID (TXID), and in the case of

a single user wallet as described above, the TXID of outgoing transfers includes a

reference to one or more incoming TXID’s. (Id. ¶ 4). In the case of a multi-user

of the case.”). Instead, the Court has provided the statement simply to place the Court’s legal
analysis in the context of this particular case or controversy.
3 For the purposes of the Order, generally speaking, “Bitcoin,” in the capitalized singular refers to

the cryptocurrency with the symbol BTC, while “bitcoin” or “bitcoins” refers more generally to
cryptocurrency, inclusive of cryptocurrency modeled on Bitcoin.
4 It is also possible to store bitcoins in “hardware” wallets which must be physically accessible. See

ABA Section of Taxation, Comment Letter on Tax Treatment of Cryptocurrency Hard Forks
for Taxable Year 2017, at 4 (Mar. 19, 2018), https://www.americanbar.org/content
/dam/aba/administrative/taxation/policy/031918comments2.authcheckdam.pdf.
5 ABA Section on Taxation, supra note 4.

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wallet, the TXID’s of individual users may be jumbled due to the pooled nature of

the wallet. (Id. ¶ 5).

In 2013, BDI, through Jay Daniel, began the process to set up an account

with CampBX. (Id. ¶ 9). There were no transactions, attempted transactions or

communications between BDI Capital, LLC (“BDI”) and CampBX between May

2015 and July 2017. (Id. ¶ 10).

Somewhere around July 4, 2017, Mr. Daniel alleges that he attempted to

make a withdrawal of all of BDI’s bitcoins stored on CampBX. (Deposition of Jay

Daniel, at 40–42, Doc. 42). Mr. Daniel contends that he was unable to complete

the transaction, and received an error message. (Id. at 43:17–22). He contends that

he attempted to initiate a help desk ticket, but received a “red error message.” (Id.

at 47:11–17). Mr. Daniel alleges he tried to make a help desk ticket again the next

day, and received another error. (Id. at 49:12–20). Around that time, Mr. Daniel

alleges he sent an email to CampBX, but received no response. (Id. at 50:18–20).

Mr. Daniel does not have any record of these attempts and no longer has access to

the email address from which this email was allegedly sent. (Id. at 27:5–27:16,

28:09–28:19, 52:11–20). Camp BX contends that it has full help desk records

preserved from 2011 through the present, and there is no record of any help desk

tickets being attempted or submitted by BDI in or around July 2017. (K. Mithawala

Decl. ¶ 10, Doc. 75-3).6

6 BDI argues that it sought discovery of “all records regarding this issue and that Defendants
intended to use to support any defenses” and that “[n]o such records were produced to show the
absence of communications with BDI.” (Pl.’s RSUMF ¶ 14). BDI contends that under Fed. R. Civ.
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Mr. Daniel made no further attempts to withdraw the coins until December

of 2017. (Dep. Daniel at 53:17–21, 54:9–12, 17–20). Mr. Daniel contends that he

received the same error message when he attempted to withdraw the Bitcoin,

ostensibly regarding withdrawal limits, and the same error message when he

attempted to make a help desk request. (Id. at 55). Mr. Daniel has no record of

these attempts. (Id. at 56:1–4). Defendants likewise have no record of an email or

alleged attempted second transaction in July of 2017. (K. Mithawala Decl. ¶ 11).

Furthermore, the computer from which all of these transactions originated was

destroyed. (Dep. Daniel at 49:2–49:6).

In December of 2017, Mr. Daniel contends that after reading a post on

Reddit, he became aware that CampBX was in the process of shutting down or had

been shut down, and at this point contacted BDI’s counsel. (Id. at 57:14–20, 58:2–

22). The Court picks back up on this thread later.

Meanwhile, Defendants contend that in 2017, they decided to close CampBX

because the banks it used had elected to discontinue their business with entities

involved with virtual currencies such as Bitcoins. (K. Mithawala Decl. ¶ 13; Dep. K.

Mithawala at 150:17-150:24).7 The Reddit post referenced above was not posted by

any of the Defendants. (Def.’s SUMF ¶ 20, not disputed, Pl.’s RSUMF ¶ 20).

P. 37(c)(1), the failure to produce this information precludes Defendants from offering evidence
of it. BDI is mistaken. Rules 26(b)(1) and 34(b) do not require a party to produce all of its records
to prove the absence of a record; the party need only state that a diligent search was performed
and no such records were located. BDI’s objection to Defendants’ SUMF ¶¶ 16 & 25 are likewise
overruled.
7 Defendants testified to additional reasons for closing the exchange, such as increasing regulatory

burden. (Ex. 3, K. Mithawala Depo. 150:17-152:5)

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Defendants contend that they began to notify account holders in a staggered

manner to withdraw their coins, ostensibly “to try to prevent an overwhelming

number of questions to CampBX’s help desk at one time.” (K. Mithawala Decl. ¶

14; Dep. K. Mithawala at 125:14-125:21). There appears to be no dispute that BDI

never received such notice, though Defendants contend that this is because BDI

was not in the first batch of account holders to be notified. (K. Mithawala Decl. ¶

16; Daniel Decl. ¶ 13).

As noted above, BDI contacted its counsel in December of 2017, who sent a

demand letter to Defendants dated December 6, 2017. (Am. Compl. ¶ 19, Ex. 2,

Doc. 11-1 at 8; Answer ¶ 19 (“Defendants [sic] believes it received the letter

referenced in the allegations of Paragraph 19 of the Complaint.”)). The letter

indicated that it was sent on behalf of Jay Daniel, not BDI, and provided an email

address for Mr. Daniel directly. (Doc. 11-1 at 8). The letter stated that “our client is

having trouble withdrawing bitcoins from the CampBX account from your

company” and that “he has 14.86155791 BTC in their [sic] trading account along

with . . . $2,816.87.” (Id.). The letter requested that CampBX “transfer these

amounts immediately.”

Defendant Keyur Mithawala did not receive the letter until approximately

January 10, 2018. (Def.’s SUMF ¶ 27, not disputed, Pl.’s RSUMF ¶ 27). Defendants

did not respond to the letter. (Id. ¶ 28). Defendants claim that they did not respond

to it because it did not contain a valid CampBX user name or email address, making

it impossible to identify the account to which it corresponded, and that the email

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and user name in the letter were not the same as the ones used to register the

account. (Id. ¶¶ 28–29). Defendants claim that at the time, CampBX was receiving

a large number of fraudulent requests for account takeovers and CampBX did not

respond to anyone who did not provide the correct account information. (K.

Mithawala Decl. ¶ 20). BDI argues in response that by contacting the lawyer who

sent the letter, Defendants could have quickly determined the information

necessary to identify the subject account. (Daniel Decl. ¶ 9).

In any case, BDI’s counsel located and sent another letter dated January 9,

2018 to all additional addresses it could find for Defendants, (Daniel Decl. ¶ 10)

but it was returned as not deliverable. (K. Mithawala Decl. ¶ 22; Def.’s SUMF ¶ 32,

not disputed, Pl.’s RSUMF ¶ 32).

BDI filed this lawsuit on July 16, 2018, along with an Emergency Motion for

Preliminary Injunction. (Compl., Doc. 1; Mot. Prelim. Inj., Doc. 4). Defendants

Bulbul and Keyur Mithawala were served on July 25, 2018. (Docs. 17–18). After

CampBX was served with the lawsuit, and thus allegedly first became aware of

BDI’s desire to retrieve its Bitcoins, it requested certain authentication information

including a tax identification number from BDI before it would return BDI’s

Bitcoins. (K. Mithawala Decl. ¶ 23). BDI disputes that this information was

necessary given that BDI contends it had already provided this identifying

information. (Daniel Decl. ¶ 4).

Through their Answer, filed on August 15, 2018, Defendants admitted that

CampBX was in possession of $2,816.87 in cash and 14.86155791 Bitcoin belonging

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to BDI. (Am. Compl. ¶ 22, Doc. 11, admitted, Answer ¶ 22, Doc. 21). On November

26, 2018, the Parties entered into a Consent Order on BDI’s Motion for Preliminary

Injunction. (Doc. 48). The Consent Order recites that the Parties met on

September 26, 2018, at which point CampBX returned $2,816.87 in cash and

14.84109000 Bitcoin to BDI.8

Despite the return of the Bitcoin, BDI has contended throughout this lawsuit

that CampBX is unlawfully retaining Bitcoin “forks.” (Doc. 48 at 4). The Court

addresses this contention further in the section on BDI’s conversion claim, below.

III. ANALYSIS

BDI asserts that Defendants are liable to it, over and above the value of the

returned Bitcoin, under the federal Commodities Exchange Act, as well as based

on several state law claims. The Court addresses each in turn.

A. Commodities Exchange Act

“The Commodity Exchange Act (the ‘CEA’), 7 U.S.C. §§ 1–25, regulates those

who participate in transactions involving commodities futures.” Scott v.

Prudential Sec., Inc., 141 F.3d 1007, 1013 n.10 (11th Cir. 1998), abrogated by Hall

St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008).9 For the purpose of the

present motion, the Court assumes that Bitcoin is a “commodity” under the Act, as

no party appears to dispute this. See CFTC v. McDonnell, 287 F. Supp. 3d 213, 217

8 The remaining 0.02046791 Bitcoin was assessed by the Bitcoin system as transaction charges.
“As an accommodation,” CampBX provided BDI a check for $126, representing the approximate
value as of the time of the transfer of the other Bitcoins. (Doc. 48).
9 A helpful discussion of the mechanics of commodities futures trading is set forth in Kohen v.

Pac. Inv. Mgmt. Co. LLC, 571 F.3d 672, 674 (7th Cir. 2009) (Posner, J.).
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(E.D.N.Y. 2018) (“A ‘commodity’ encompasses virtual currency both in economic

function and in the language of the statute.”).

The Parties agree that to bring a private right of action under the CEA, a

plaintiff must fit into one of the categories set forth in 7 U.S.C. § 25:

(a) Actual damages; actionable transactions; exclusive

remedy
(1) Any person (other than a registered entity or registered futures
association) who violates this chapter or who willfully aids, abets,
counsels, induces, or procures the commission of a violation of this
chapter shall be liable for actual damages resulting from one
or more of the transactions referred to in subparagraphs
(A) through (D) of this paragraph and caused by such violation to
any other person—
(A) who received trading advice from such person for a fee;
(B) who made through such person any contract of sale of
any commodity for future delivery (or option on such
contract or any commodity) or any swap; or who deposited with
or paid to such person money, securities, or property (or
incurred debt in lieu thereof) in connection with any order to
make such contract or any swap;
(C) who purchased from or sold to such person or
placed through such person an order for the purchase
or sale of—
(i) an option subject to section 6c of this title (other than
an option purchased or sold on a registered entity or
other board of trade);
(ii) a contract subject to section 23 of this title; or
(iii) an interest or participation in a commodity pool; or
(iv) a swap; or
(D) who purchased or sold a contract referred to in
subparagraph (B) hereof or swap if the violation
constitutes—
(i) the use or employment of, or an attempt to use or
employ, in connection with a swap, or a contract of sale
of a commodity, in interstate commerce, or for future
delivery on or subject to the rules of any registered entity,
any manipulative device or contrivance in contravention
of such rules and regulations as the Commission shall
promulgate by not later than 1 year after July 21, 2010; or

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(ii) a manipulation of the price of any such contract or

swap or the price of the commodity underlying such
contract or swap.

7 U.S.C. § 25 (emphasis added).

There is no dispute that Subparagraph (A) does not apply to this case, as

Defendants provided no trading advice for a fee. And courts have held that a

“condition precedent” to a Subparagraph (D) claim is that “the plaintiff purchased

or sold a contract for future delivery.” In re Dairy Farmers of Am., Inc., Cheese

Antitrust Litig., 60 F. Supp. 3d 914, 965–66 (N.D. Ill. 2014), aff’d, 801 F.3d 758

(7th Cir. 2015) (citing See Thompson’s Gas & Elec. Serv., Inc. v. BP Am. Inc., 691

F.Supp.2d 860, 871 (N.D. Ill. 2010); In re Soybean Futures Litig., 892 F. Supp.

1025, 1041 (N.D. Ill. 1995)). As such, cash or “spot” purchasers of physical

commodities do not have a claim under that section. Id. at 965–66 (“Purchasers of

physical commodities whose prices were affected by futures trading do not have a

claim.”).

The same logic — that only “futures contracts” are covered by Section 25 —

would logically apply to a Subparagraph (B) claim, as Subparagraph (D) expressly

incorporates Subparagraph (B). That is exactly what was held in Berk v. Coinbase,

Inc., No. 18-CV-01364-VC, 2018 WL 5292244, at *2 (N.D. Cal. Oct. 23, 2018)

(“[Plaintiff] has a private right of action under the CEA only if he used [Defendant]

to make a “contract of sale of [a] commodity for future delivery” – in other words,

a “futures contract.”). Berk is particularly on point, as the court in that case

dismissed with prejudice a claim arising from the purchase of Bitcoin Cash because

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the plaintiff used the defendant “to purchase Bitcoin Cash, rather than to make a

contract to purchase Bitcoin Cash at a specific date in the future.” Id. Defendants

contend that this Court should follow Berk and dismiss BDI’s claims under the

CEA because BDI seeks damages arising from the spot sale of a commodity. The

Court agrees.

In a last ditch effort to save its claims, BDI asserts that it may bring a claim

under Subparagraph C against a person “who purchased from or sold to such

person [who violated the CEA] or placed through such person an order for the

purchase or sale of . . . a contract subject to section 23” of the CEA. (Resp. at 5–6

(citing 7 U.S.C. § 25(a)(1)(C)(ii))). BDI contends that because it “purchased Bitcoin

through a contract for a commodity as described in Section 23(a) of the CEA, . . .

[it therefore] has a private right of action” under Subparagraph (C). (Id. at 6). As

you might expect, this cross-reference portends another block quote. Section 23(a)

of the CEA prohibits a transaction for the delivery of commodities under a “margin

account, margin contract, leverage account, or leverage contract,” or any similar

arrangement as determined by the Commodities Futures Trading Commission,

except as provided in Section 23(b):

(b) Permission to enter into contracts for delivery of silver or gold

bullion, bulk silver or gold coins, or platinum; rules and
regulations.

(1) Subject to paragraph (2), no person shall offer to enter into,

enter into, or confirm the execution of, any transaction for the
delivery of silver bullion, gold bullion, bulk silver coins,
bulk gold coins, or platinum under a standardized
contract described in subsection (a), contrary to the

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terms of any rule, regulation, or order that the Commission

shall prescribe, which may include terms designed to ensure the
financial solvency of the transaction or prevent manipulation or
fraud. Such rule, regulation, or order may be made only after
notice and opportunity for hearing. The Commission may set
different terms and conditions for transactions involving
different commodities.

(2) No person may engage in any activity described in

paragraph (1) who is not permitted to engage in such activity,
by the rules, regulations, and orders of the Commission in effect
on the date of the enactment of the Futures Trading Act of 1986
[enacted Nov. 10, 1986], until the Commission permits such
person to engage in such activity in accordance with regulations
issued in accordance with subsection (c)(2).

7 U.S.C. § 23(b). Defendants correctly argue that this section, which deals with

unregulated margin accounts10 and leverage contracts11 for commodities

(specifically gold, silver, and platinum), is inapplicable to this case.12 Accordingly,

Defendants are entitled to summary judgment on this claim.13

B. Conversion

BDI next argues that Defendants should be held liable for conversion of its

bitcoins by failing to return them upon demand. As no court in Georgia has

10 “A margin account is a device used to extend credit to investors who buy securities. Initially, the
investor pays only a percentage of the purchase price, borrowing the difference from the
brokerage firm. The purchased securities are themselves used as collateral for the loan. The
arrangement is a dynamic one, however, because the value of stock fluctuates. If the market price
of the securities decreases, the collateral’s value is diminished and the broker may demand that
the investor deposit incremental funds.” Advest, Inc. v. McCarthy, 914 F.2d 6, 7 (1st Cir. 1990).
11 A “leverage contract” means “a contract, standardized as to terms and conditions, for the long-

term (ten years or longer) purchase (“long leverage contract”) or sale (“short leverage contract”)
by a leverage customer of a leverage commodity,” subject to certain other specified provisions.
17 C.F.R. § 31.4(w).
12 It goes without saying that “Bitcoin Gold” is not the equivalent of “gold bullion” or “bulk gold.”
13 While this disposes of the only federal claim set forth in the Amended Complaint, BDI has also

invoked this Court’s diversity jurisdiction based on the complete diversity of the parties and the
amount in controversy asserted due to the purported difference in value between when BDI’s
bitcoins were allegedly demanded and when they were returned.
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addressed the issue, an initial question is whether bitcoins, as virtual, intangible

cryptocurrency, may be the subject of a conversion action at all. Several potential

analogues exist. For example. “[c]onversion is not available as a cause of action

with respect to intangible property representing an interest in a business. S.

Cellular Telecom, Inc. v. Banks, 431 S.E.2d 115, 120 (Ga. Ct. App. 1993) (citing

Hodgskin v. Markatron, 365 S.E.2d 494 (Ga. Ct. App. 1988)). However, “specific

intangible property may be the subject for an action for conversion, but as fungible

intangible personal property, money, generally, is not subject to a civil action for

. . . conversion.” Taylor v. Powertel, Inc., 551 S.E.2d 765, 769 (Ga. Ct. App. 2001)

(citing Jennette v. Nat. Community Dev. Svcs., 520 S.E.2d 231 (Ga. Ct. App 1999);

William Goldberg & Co. v. Cohen, 466 S.E.2d 872 (Ga. Ct. App 1995); Jones v.

Turner Broadcasting System, 389 S.E.2d 9 (Ga. Ct. App 1989)).

Kleiman v. Wright, No. 18-CV-80176, 2018 WL 6812914, 2018 U.S. Dist.

LEXIS 216417 (S.D. Fla. Dec. 27, 2018) addressed whether bitcoins were “money”

and thus incapable of being the subject of a conversion action under Florida law.

The Court held that bitcoins could be the subject of a conversion action, because in

“regards to the bitcoin’s specificity and identity, Plaintiffs have alleged that the

bitcoin blockchain is a giant ledger that tracks the ownership and transfer of every

bitcoin in existence and that every bitcoin wallet and the number of bitcoin inside

that particular wallet can be identified on the blockchain by referring to its public

key.” Id., 2018 WL 6812914, at *15–16 (internal quotations omitted). The Court

agrees with Kleiman that bitcoins are sufficiently identifiable to be considered

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“specific intangible property” subject to an action for conversion. The next

question is whether a conversion claim is applicable to this set of facts.

As explained above, BDI’s bitcoin purchases through CampBX were cash

sales, as opposed to margin sales. Under Georgia law governing stockbrokers, “[a]

cash customer, as distinguished from one who has purchased stock on margin, is

entitled to the delivery of stock purchased for him, and in the absence of an

agreement or instructions to the contrary, the broker undertakes and agrees to

deliver the stock to the customer either immediately or in such time as is necessary

to effectuate the transfer and is reasonable under the circumstances . . . If a broker

refuses to make delivery upon demand . . . he is liable for conversion.” Drexel

Burnham Lambert, Inc. v. Chapman, 329 S.E.2d 595, 600 (Ga. Ct. App. 1985)

(quoting E.F. Hutton & Co. v. Weeks, 304 S.E.2d 420 (Ga. Ct. App. 1983) (internal

quotations omitted)). The Georgia appellate courts would likely extend the logic of

Drexel Burnham Lambert to Bitcoin in this circumstance. As such, a claim for

conversion exists, and several genuine, material disputes of fact exist, such as:

(1) whether or when the demands for possession were made; (2) Defendants’

intent; (3) whether Defendant’s explanation for failing to respond promptly to the

letter sent by Plaintiff’s counsel on December 6, 2017 is a factually and legally

justifiable defense; and, (4) as noted in the section on unjust enrichment below,

whether the purported CampBX Terms of Service apply to this case and if so,

whether they limit Plaintiff’s damages.

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Bitcoin Forks

As noted above, BDI has contended throughout this lawsuit that CampBX is

unlawfully retaining Bitcoin “forked currency” which occurred “within the period

during which CampBX admits to having possession of BDI’s 14.86155791 Bitcoin”

(Doc. 48 at 3). Specifically:

On August 1, 2017, Bitcoin forked at block 478558 (in the Blockchain)

resulting in the creation of Bitcoin Cash. For each Bitcoin held on that
date, an equal number of Bitcoin Cash was created which BDI
contends became tied or linked to the respective Bitcoin owner’s
wallet;

On October 24, 2017, Bitcoin forked at block 491407 (in the

Blockchain) resulting in the creation of Bitcoin Gold. For each Bitcoin
held on that date, an equal number of Bitcoin Gold was created which
BDI contends became tied or linked to the respective Bitcoin owner’s
wallet; and

On February 18, 2018, Bitcoin forked at block 511346 (in the

Blockchain) resulting in the creation of Bitcoin Private. For each
Bitcoin held on that date, an equal number of Bitcoin Private
was created which BDI contends became tied or linked to the
respective Bitcoin owner’s wallet.

(Doc. 3 at 4–5). Pending the resolution of this suit, Plaintiff counsel is holding

$8,128.98 representing the value of these “forked currencies” as of November 12,

2018.

A bitcoin “fork” is the creation of a new virtual currency based on the

blockchain ledger of an existing virtual currency. Kleiman contains a discussion on

Bitcoin forks (based on allegations made in that plaintiff’s complaint):

Since its beginning, Bitcoin has inspired the creation of over one
thousand other digital currencies. These new currencies often borrow
from the initial Bitcoin program but make changes to the model in an

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attempt to create a new cryptocurrency with distinct functions or

more suited to a specific market or niche. In other cases, Bitcoin has
been modified by individuals in a way they believed would improve
the Bitcoin itself, such as by allowing more transactions into a single
block of blockchain. In these situations, the supporters of the new
Bitcoin, have created a “fork” through which the original Bitcoin
blockchain/ledger is divided into two distinct, but identical, copies, (i)
the original Bitcoin, and (ii) the new Bitcoin. The result is that any
individual who owned the original Bitcoin now owns an identical
amount of the new Bitcoin.

Kleiman, No. 18-CV-80176, 2018 WL 6812914, at *2 (citations omitted).

A bitcoin exchange’s duties with respect to a bitcoin fork presents a case of

first impression in the truest sense of the word.14 Commentators have struggled to

place bitcoin forks into an existing legal framework. For example, “[i]t has been

suggested, and disputed, that the hard fork represents a scenario similar to a stock

split[,] . . . like a two-for-one stock split, a unit was doubled by the hard fork;

holders of Bitcoin received an equal amount of [forked currency] Bitcoin Cash.”

Nick Webb, Comment, A Fork in the Blockchain: Income Tax and the

Bitcoin/bitcoin Cash Hard Fork, 19 N.C.J.L. & Tech. On. 283, 299 (2018)

(footnotes omitted). However, “the divergence of the network and the creation of

two entirely separate blockchains do not sound like a stock split. Stock splits do

not result in the construction of an entirely separate entity.” Id. at 299–300.

14It appears that lawsuits against exchanges arising from cryptocurrency forks have been filed in
China and Japan. Kevin Helms, Lawsuit Brewing Against Crypto Exchanges in Japan Over
Withheld Forked Coins, Bitcoin.com (June 1, 2018), https://news.bitcoin.com/lawsuit-crypto-
exchanges-japan-withheld-forked-coins/; Stephen O’Neal, Can Crypto Exchanges Be Trusted
With Hard Forks?, Cointelegraph.com (Aug. 9, 2019), https://cointelegraph.com/news/can-
crypto-exchanges-be-trusted-with-hard-forks. As of the entry of this Order, the Court was unable
to ascertain the outcome of these lawsuits, if any.
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Forked currency does not simply appear in a bitcoin wallet.15 To access the

forked coins, the holder of the bitcoins must download software which supports

the forked currency.16 Accordingly, commenters have noted an important

distinction between bitcoin owners who hold the coins in their own private wallets

and those who hold their bitcoins on an exchange (as BDI did in this case). Writing

in the context of when forked currency constitutes taxable gain, one commentator

wrote:

Investors who own private keys to their digital wallets have likely
constructively received the forked coins at the time of the hard fork
because they only need to download a new software that is compatible
with the forked coins to receive them. . . However, many third-party
exchanges take no action to claim the forked coins until the security
risks have been evaluated and mitigated. Since these investors’ receipt
of forked coins is subject to substantial limitations, that is, the third-
party exchange’s decision to download the software and support the
forked coins, their accession to wealth is not “clearly realized” at the
time of the hard fork.

Danhui Xu, Comment, Free Money, but Not Tax-Free: A Proposal for the Tax

Treatment of Cryptocurrency Hard Forks, 87 Fordham L. Rev. 2693, 2701 (2019)

(footnotes omitted).

15 ABA Section on Taxation, supra note 4, at 4–5 (“When an owner holds a cryptocurrency wallet
directly (rather than through a custodial wallet), the owner does not actually receive anything new
in a Hard Fork. Instead, the owner — once he or she has taken the necessary steps (as described
below) — is able to use the same private key to transact on each of the ledgers. If the owner uses
his or her private key to transact in the original cryptocurrency, the network participants verifying
transactions on the original ledger will add it to that ledger, but the network participants verifying
transactions on the forked ledger will not recognize it.”). In other words, after the fork, the same
private key may be used to transact on the forked ledger without affecting the original ledger, and
visa versa.
16 Id. at 5 (“An owner that holds the original coin in a basic wallet (whether hardware or software),

generally must download new software to a computer to use the forked coin.”).
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Forks can happen for numerous reasons.17 “Because the software that runs

the ledger generally is open-source, and the network of computers that verify

transactions generally operates via consensus, the software can be modified if

enough participants on the network agree to do so.”18 This open-source nature has

resulted in all kinds of forks.19

As noted above, in order for a bitcoin owner who holds her virtual currency

in an exchange (or other type of shared wallet) to access the forked currency, the

exchange must take some affirmative action. The Court would be imposing a major

new duty on all cryptocurrency exchanges operating in Georgia to affirmatively

honor every single bitcoin fork. Bitcoin investors are aware they are operating in

an unregulated market, and therefore it seems more reasonable to place the

burden to ensure access to forked currency on the investors themselves. There is

no requirement that investors keep their coins in exchanges; they can always

withdraw the coins to their own private wallets.20 In the unregulated

17 “For example, one reason for Hard Forks is that users of the network agree that a fundamental
upgrade to the ledger software is required. . . . . In contrast, some forks are a response to user
mistrust in the original coin.” ABA Section on Taxation, supra note 4 at 5.
18 ABA Section on Taxation, supra note 4 at 4.
19 Other examples include “bitcoin gold in October 2017, bitcoin diamond in November 2017, and

superbitcoin, bitcoin hot, and lightning bitcoin in December 2017.” Id. at 5 n.6. Programmers
have also created strange and fanciful alternative cryptocurrency, known as “altcoins,” such as
Coinye West, which was not endorsed by Kanye West and led to litigation in the Southern District
of New York. See West et al v. 0Daycoins.com et al., No. 1:14-cv-00250-AT (S.D.N.Y. filed Jan.
14, 2014). Further examples abound: one altcoin, Dogecoin, sponsored a NASCAR driver. Wow.
Doge At ‘Dega: Dogecoin Sponsors Race Car, NPR Morning Edition, May 1, 2014, available at
https://www.npr.org/sections/alltechconsidered/2014/05/01/308569803/doge-at-dega-
dogecoin-sponsors-race-car; see also Kevin Roose, Is There a Cryptocurrency Bubble? Just Ask
Doge, N.Y. Times, Sept. 16, 2017, at B1, available at https://www.nytimes.com/2017/
09/15/business/cryptocurrency-bubble-doge.html.
20 ABA Section on Taxation, supra note 4, at 6 (“It is generally possible for an owner to transfer

the original coin from one wallet that will not support a Hard Fork and into another wallet that
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cryptocurrency market, potential investors are well advised to ensure that the

terms of service of the exchange they are using clearly spell out what the exchange’s

obligations are with respect to forked cryptocurrency, if any.

Even if Defendants were not required to support the currency forks, BDI

implies that Defendants should have warned its users about the impending fork.

In Mr. Daniel’s declaration, he states that “exchanges or trading platforms provide

notices sufficiently in advance of the date of individual forks, that the trading

platform or exchange will not be making a specific forked currency available so that

the customer could withdraw Bitcoin to the customer’s own wallet to take

advantage of a particular fork.” (Daniel Decl. ¶ 21). BDI points to no Georgia law

on point that would require such notice.

Under Georgia law, a stockbroker is under no duty to advise clients of a

pending stock split or dividend before processing a sale order. Drexel Burnham

Lambert, Inc. v. Chapman, 174 Ga. App. 336, 339, 329 S.E.2d 595, 599 (1985)

(holding that there is not “any legal support” for a duty of a stockbroker to advise

clients that “when they ordered sales, that the result would be that they would not

be entitled to the dividend stocks.”). The Court assumes that the Georgia appellate

courts would extend this logic to the context of Bitcoin forks. Accordingly, the

Court holds that Defendants were not under any affirmative obligation to warn

BDI in advance that it would not be supporting forked cryptocurrency.

will support the Hard Fork prior to the occurrence of the Hard Fork. In that manner, the owner
generally should be able to go through the processes necessary to claim the forked coin, at least if
the owner is aware that a Hard Fork is going to occur.”).
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This holding does not mean that cryptocurrency forks are ripe for theft. If an

exchange, trading platform, or other shared wallet affirmatively undertakes to

support forked currency, they have voluntarily assumed the obligation of holding

these coin forks for their respective owners. At this point, they must account for

the forked currencies upon demand by their rightful owner. However, BDI has not

submitted any evidence that CampBX at any point undertook to support the forked

currency at issue. The only evidence BDI provides in opposition to Defendants’

summary judgment motion is Mr. Daniel’s declaration, which in turn simply states

that “[t]he dates of the respective forks are all within the period during which

CampBX admits to having possession of BDI’s 14.86155791 Bitcoin.” (Daniel Decl.

¶ 18). This is not sufficient circumstantial evidence to create an inference that

CampBX voluntarily undertook to support the forked currency during that period.

In fact, Mr. Daniel’s declaration goes on to state that

“[n]one of the information available on the CampBX website made

any mention of Defendant’s current position that they would attempt
to retain the forked currencies as they [sic] own, that they would
restrict access to the forked currencies, or would prevent customers
such as BDI from extracting those forked currencies themselves as
property born from the Bitcoin held in BDI’s account.”

(Id. ¶ 19). Mr. Daniel makes several allegations about CampBX’s public statements

but does not allege that it ever made any statement that it would voluntarily

undertake to support the forked currency at issue. Accordingly, there is no genuine,

material factual dispute as to this issue, and Defendants are entitled to summary

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judgment on BDI’s conversion claim as to the forked cryptocurrency.21 Plaintiff

may continue to hold the $8,128.98 representing the value of the forked currency

pending final judgment of this case and termination of all rights of appeal.

However, in the event that the Court’s ruling that Defendant is not liable for

conversion of the forked currency becomes final, the Court will award Defendants

interest on the $8,128.98 at the judgment rate from the date of entry of this Order,

unless the $8,128.98 is returned to Defendants within fourteen days of the date of

entry of this order.

C. Unjust Enrichment

The Court next turns to BDI’s claim for unjust enrichment. Defendants claim

that “the only benefit that CampBX received from the BDI account was the $614.00

in trading fees that it collected as a result of BDI’s trades.” (K. Mithawala Decl. ¶

36). BDI alleges that “[b]y delaying the return of BDI’s Bitcoin, and in fact

substituting different Bitcoin acquired at a much lower value, Defendants were

able to enjoy the use of BDI’s higher value Bitcoin for their own purposes while at

the same time depriving BDI of the use of benefit of own property.” (Resp. at 13,

citing Daniel Decl. ¶ 23). To the extent that BDI seeks the difference in value

21 None of this is to say that the value of the cryptocurrency forks are not recoverable as
compensatory damages for conversion of the Bitcoin. Under O.C.G.A. § 51-10-6, in an action for
civil theft, a “property owner may recover compensatory damages which may include, in addition
to the value of the personal property, any other loss sustained as a result of the willful damage or
theft offense.” If the jury finds that some or all of the forks occurred during a period of time where
Defendants were willfully retaining the Bitcoin in the face of a valid demand for possession, it may
determine that the value of the forked currency constitutes loss sustained as a result of the theft.
See Grant v. Newsome, 201 Ga. App. 710, 711, 411 S.E.2d 796, 798 (1991) (“[C]onsequential
damages, which are generally recoverable in tort actions under OCGA § 51-12-3(b), can also be
recovered in a conversion action.”). The Court will take up this issue closer to trial.
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between the Bitcoin at the time of demand and at the time of return, this essentially

duplicates the measure of damages of the conversion claim, which the Court has

held is not subject to summary judgment except as to the forked currency. To the

extent that BDI contends that CampBX used the bitcoins to profit in the

marketplace before returning them, there is a factual dispute about whether

CampBX received any such benefit above and beyond the $614 in trading fees.

Furthermore, under Georgia law, “‘[t]he theory of unjust enrichment applies

when there is no legal contract and when there has been a benefit conferred which

would result in an unjust enrichment unless compensated.’” Clark v. Aaron’s, Inc.,

914 F.Supp.2d 1301, 1309 (N.D. Ga. 2012) (quoting Smith Serv. Oil Co. v. Parker,

549 S.E.2d 485, 487 (Ga. Ct. App. 2001)). A party can only recover for a claim of

unjust enrichment if there is not an express contract that governs the dispute. See

Fed. Ins. Co. v. Westside Supply Co., 590 S.E.2d 224, 232 (Ga. Ct. App. 2003)

(“Recovery under [the theory of unjust enrichment] presupposes the absence of a

contractual agreement.”).

Defendants attached the purported CampBX User Agreement

(“Agreement”) as Exhibit 8 to the Motion for Summary Judgment. (Doc. 75-10).

The Agreement states that “CampBX makes no assurances or warranties about the

value, performance, or integrity of Bitcoins or the CampBX platform” (Agreement

¶ 3) and that “CampBX accepts no responsibility for the accurate maintenance of

the trading platform, information, calculation, or valuation. The Client bears the

entire risk of loss, including, but not limited, for data, calculation, and valuation of

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Bitcoins and Bitcoin transactions.” (Id. ¶ 8). The Agreement also purports to limit

CampBX’s liability to “one month’s charges to client by CampBX.” (Id. ¶ 13).

There is a factual dispute in this case about whether the terms of service

apply as between the parties. (Pl.’s RSUMF ¶ 17 (“Disputed. The CampBX User

Agreement advanced by Defendants does not apply as no User Agreement or ‘terms

of service’ was ever presented to BDI when BDI opened its account with CampBX

or later used the CampBX site . . . .”, citing Daniel Decl. ¶¶ 5, 21; Dep. Daniel. 72:16-

74:14). Accordingly, Defendants are not entitled to summary judgment on this

claim.

D. Fraudulent and Negligent Misrepresentation

Counts 3 and 4 of the Amended Complaint are for fraudulent and negligent

misrepresentation respectively. (Am. Compl. ¶¶ 56–62). The counts do not contain

specific instances of misrepresentations, but rather incorporate by reference

preceding allegations. (Id.). In response to Defendant’s motion for summary

judgment, BDI states that it has “set forth sufficient admissible evidence showing

representations made by Defendants that later proved to be incorrect to create

issues of fact for determination by a jury.” (Resp. at 12, citing Daniel Decl. ¶ 6.) BDI

does not otherwise indicate anywhere in the record where such representations

exist.

Defendant’s Statement of Material Facts contains two statements of fact

arguably on point. Number 36 states, “[n]one of the Defendants ever tried to

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mislead the Defendants.”22 (Def.’s SUMF ¶ 36, citing K. Mithawala Decl. ¶ 25). In

denying this statement, BDI states, “[f]or instance, Defendant misled BDI

regarding KYC compliance and access to withdrawals, and as to whether forked

currencies attributable to BDI’s Bitcoin would be available to BDI.” (Pl.’s RSUMF

¶ 38, citing Daniel Decl. ¶¶ 6, 14–25). Number 38 states that “[n]either K.

Mithawala nor CampBX ever spoke to anyone at BDI before it began using the

CampBX platform.” (Pl.’s SUMF ¶ 38, citing K. Mithawala Decl. ¶ 27). In response,

BDI states, “[n]ot disputed though also not alleged as a basis for the written

representations made by CampBX on its website regarding the availability of

Bitcoin withdrawals that turned out to be false.” (Pl.’s RSUMF ¶ 38, citing Daniel

Decl. ¶ 6).

As paragraphs 14–24 of the Daniel Declaration concern Bitcoin forks, of

which the Court has held Defendants were under no obligation to inform BDI, the

sole piece of evidence that BDI submits in response to summary judgment on its

misrepresentation claims is paragraph 6 of the Daniel Declaration, set forth below:

At the time BDI established its account with CampBX, the statements made
by CampBX on its website were to the effect that it would provide a stable
and reliable exchange platform without the limits on withdrawals or trading
activity that CampBX later imposed. For instance, KYC [Know Your
Customer] compliance was not required for transactions under $1000.00.
After BDI completed its KYC requirements in December 2013, BDI was
supposed to be able to perform transactions between $1000.00 and
$5,000.00 per day. BDI reasonably relied on CampBX’s statements to this
effect, and as referenced in BDI’s Verified Complaint, when making the
decision to open and maintain its account with Defendants. Beginning in
July 2017, CampBX was unilaterally and without explanation limiting BDI’s
transactions at all levels despite BDI’s KYC approval.
22 So in original. Should likely read Plaintiff.
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(Daniel Decl. ¶ 6).

The proffered CampBX Agreement contains several provisions in tension

with these supposed misrepresentations. For example, Paragraph 3 states,

“CampBX makes no assurances or warranties about the value, performance, or

integrity of Bitcoins or the CampBX platform.” (Agreement ¶ 3, Doc. 75-10).

Paragraph 6 states, “CampBX reserves the right, in its sole discretion, to at any

time, change any transaction limit and or policy.” (Id. ¶ 6). Paragraph 8 states that

“CampBX accepts no responsibility for the accurate maintenance of the trading

platform, information, calculation, or valuation.” (Id. ¶ 8). Paragraph 13 states,

“[t]o the extent permitted by applicable law, the CampBX trading platform and any

and all CampBX services are provided “as is” and without express or implied

warranty of any kind . . . . No covenants, warranties, representations, or

indemnities of any kind are provided to client or any end user.” (Id. ¶ 13).

If the Agreement in fact is binding in this case, reliance on the supposed

misrepresentations provided in Mr. Daniel’s declaration are precluded by the

Agreement’s express terms. However, as the Court has held that a fact dispute

exists over whether this agreement was in fact presented to and agreed to by BDI

when its account was created, the Court will deny summary judgment on this

Count.

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E. Attorney’s Fees

BDI seeks attorney’s fees under O.C.G.A. § 13-6-11. Because the Court has

not entered summary judgment on all of BDI’s claims, the issue of BDI’s

entitlement to attorney’s fees is premature. Under that statute, entitlement to fees

and expenses for bad faith is an issue for the jury. Trade AM Int’l, Inc. v. Cincinnati

Ins. Co., No. 1:08-CV-3711-ECS, 2012 WL 12957383, at *1 (N.D. Ga. Jan. 18, 2012).

IV. CONCLUSION

BDI is correct that, even though it lacks documentary evidence of its earlier

attempts to withdraw its Bitcoin, Mr. Daniel’s sworn statement that BDI made such

attempts precludes summary judgment. United States v. Stein, 881 F.3d 853, 854

(11th Cir. 2018) (holding that “an affidavit which satisfies Rule 56 of the Federal

Rules of Civil Procedure may create an issue of material fact and preclude summary

judgment even if it is self-serving and uncorroborated.”). It is not the Court’s role

to weigh evidence on summary judgment. However, before proceeding to trial, BDI

should seriously consider how the loss of all records of its earlier attempts to

withdraw the Bitcoin and the lack of any documentary evidence on Defendants’

end will be received by a jury. On the other hand, Defendants should give serious

thought to whether a jury will find Mr. Mithawala’s justification for disregarding

the letter from BDI’s counsel credible. The Court is aware that the Parties were not

able to successfully mediate this case before. (Doc. 67). It is in the interest of all

Parties to try again.

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Accordingly, Defendants’ Motion for Summary Judgment [Doc. 75] is

GRANTED IN PART and DENIED IN PART. Plaintiff’s Motion to Strike [Doc.

83] is DENIED, but the embedded request to file the sur-reply is GRANTED.

The Clerk is DIRECTED to file the proposed sur-reply (Doc. 83-1, Pages 9–14).

The Court ORDERS the parties to attend a second round of mediation to

be completed within 40 days of the entry of this Order. The parties may use the

same mediator they used before, or alternatively may request for the Court’s

appointment of a private mediator. The parties should notify the Court within

seven (7) days of the date of entry of this Order if they request that the Court

appoint a new private mediator. The parties are DIRECTED to file a status report

within 5 days of the conclusion of the mediation indicating whether this matter is

resolved.

If this case is not settled in mediation, the parties are DIRECTED to submit

a consolidated pretrial order within 20 days of the filing of their status report. The

Clerk is DIRECTED to submit this matter to the undersigned if there is no activity

in this case within 70 days of the date of entry of this Order

IT IS SO ORDERED this 11th day of March, 2020.

___________________________
AMY TOTENBERG
UNITED STATES DISTRICT JUDGE

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