Members of the Steem community have begun legal action against digital currency exchange Bittrex, in connection with some $5 million in allegedly misappropriated digital currency.
The lawsuit concerns the seizure of $5 million of Steem tokens from some 65 accounts in May 2020, which was tracked to the exchange, Decrypt first reported. The plaintiffs are now suing the exchange for the return of their funds, asking them to pay $16 million.
The case is the latest development in a long-running feud between the Steem community and Justin Sun, the CEO of Tron Foundation and new owner of Steemit Inc.
After purchasing Steemit in February, Sun had planned to integrate the blockchain-powered social media platform within the wider Tron ecosystem. However, the move proved unpopular with the Steem community, leading to disagreements between original Steem witnesses (elected to run the blockchain), and those appointed by Sun.
In May, the newly appointed witnesses seized $5 million, which was then transferred to an account through Bittrex. The payment to Bittrex came with a request that the funds be returned to their original owners, which Bittrex refused. As a result, those affected have brought the legal action to demand the return of their money.
The lawsuit has been filed by Daniel Notestein, Daniel Hensley and others, who have cumulatively lost allegedly $3 million in the seizure.
Bittrex has acknowledged receipt of the tokens, but has asked for the case to be dismissed, on the grounds that it did not cause loss or damages directly, and should therefore not be held responsible.
The exchange further argued that the party sending the tokens “did not provide an identifying memorandum or any other information purporting to identify these ‘original owners.’”
The plaintiffs argue that Bittrex should now hand over the funds without delay, which they believe were seized without justification from their accounts by the new Steem witnesses.
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