[author: Jeff Riazi]
For regulatory reasons players in the defi space well know, protocols are often legally wrapped in offshore entities, whether they be the Caymans, BVI, Panama, or in the present case, Curaçao. Here, plaintiff on-chain casino legally incorporated in Curaçao (“Casino”), fell victim when two of its independent contractor, customer service agents ran off with $4MM in ETH. The casino assigned its claims to the ETH to a newly formed subsidiary, a Delaware limited liability company (“Delaware LLC”), and the Delaware LLC brought several claims in Delaware Chancery court against the two defendants. These defendants, however, were citizens of Algeria and Saudi Arabia, respectively, who did not reside or live in the United States, let alone Delaware. The Delaware LLC also brought claims against third party cryptocurrency platforms also located outside the United States.
The court found “in rem” jurisdiction over the ETH. The court writes:
“No Delaware court has addressed how in rem or quasi in rem jurisdiction applies to cryptocurrency. This decision holds that Ether is an intangible asset located—at a minimum—in its owner’s domicile. Here, the owner is the LLC, and the LLC’s domicile is Delaware. The Ether is therefore located in Delaware for jurisdictional purposes.”
The “Owner Domicile” theory, evoking the elective power of the plaintiff to assign its rights into a “foreign” (United States) jurisdiction, and establish in rem jurisdiction, sheerly by will, is incredible, considering the possibilities. For example, the court thoroughly analyzed other theories, such as the “Node Theory,” in which wherever a node of the blockchain network exists that holds a copy of the distributed ledger, is where jurisdiction should be found. Or the “Key Theory,” which treats cryptocurrency as tangible property based on the location of the key that unlocks the digital asset. If the key exists offline in a physical location, then the Key Theory treats the cryptocurrency as located there. Which could be anywhere.
However, finding “in rem” jurisdiction over the ETH was only half the analysis. To otherwise force the defendants to appear in court, and otherwise turn over the keys to the wallet holding the stolen ETH, the plaintiff would have to establish “quasi in rem” jurisdiction, i.e., some tie of the defendants to the Delaware forum. The plaintiff could not do so as defendants had no such ties. However, the court’s decision opens the door to the possibility that, on other facts sufficient to establish the defendants’ minimum contacts with Delaware, the outcome may have been different. This potentially paves a path to bringing offshore claims back onshore where a plaintiff can show that a defendant holders of digital assets, or better yet third party exchanges holding digital assets, have “some tie” to the U.S.-based forum.
To read the decision, please see Timoria LLC v. Chaib Anis,et al., 2025 WL 2827657 (Ct. Chancery Del. October 6, 2025).
