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Federal Court Dismisses Bitcoin Startup BitPay's Phishing Lawsuit

(@mpmcsweeney) | Published on May 24, 2016 at 17:18 BST
News

A legal battle between bitcoin payment processor BitPay and a major insurance company has ended.

Filed yesterday, a court order dismissed the suit between BitPay and Massachusetts Bay Insurance Company, a subsidiary of Hanover Insurance, without prejudice. According to the court order signed by US District Judge Steve Jones, the two sides "have reached a settlement in principal".

The suit traces back to late 2014, when BitPay lost approximately $1.8m in bitcoin during a phishing attack that targeted the company’s leadership team. At the time, the unknown attacker was able to trigger payments from BitPay by posing as BTC Media CEO David Bailey, whose computer had been taken over.

BitPay's management team went on to authorize three separate bitcoin transactions, including one from a company account on Bitstamp, a European bitcoin exchange.

Shortly after the incident, BitPay filed a claim on the losses with the insurer. After discussions over a payout deteriorated over disagreements about the terms of BitPay’s insurance policy, the Atlanta-based startup took Massachusetts Bay Insurance Co to court. At the time, BitPay was seeking a payout amount of $950,000, plus court fees and unspecified damages.

In subsequent court filings, Massachusetts Bay Insurance Co disputed the allegations, and in the months to come the two sides fought over the evidence-gathering process. These problems have ostensibly come to a conclusion with news of the settlement.

The exact terms of the settlement were not disclosed in the court order, and BitPay spokesperson James Walpole declined to comment when reached. A representative for Hanover did not immediately respond to a request for comment.

Disclaimer: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in BitPay.

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