JustM2J LLC v. Brewer
2:25-cv-00380
| E.D. Cal. | Feb 7, 2025Background:
- JustM2J LLC, as assignee of Nakamoto LLC, sued Ayden Brewer, Jon Litz, Jason St. George, and John Doe for alleged fraudulent cyber-attacks (the "Bittensor attacks") resulting in $13 million in stolen crypto assets.
- The attacks involved the insertion of malicious software into the open-source Bittensor AI network, capturing users' wallet private keys and transferring TAO tokens to unknown wallets via various cryptocurrency exchanges.
- Plaintiff sought an ex parte temporary restraining order (TRO) to freeze assets in certain cryptocurrency wallets and expedited discovery to uncover the identities of unknown "Doe" defendants.
- The court evaluated whether ex parte relief and a TRO were justified given the risk of asset dissipation inherent in cryptocurrency.
- The court also considered if expedited discovery was warranted to identify the Doe defendants through subpoenas to crypto exchanges.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument (Assumed/Implied) | Held |
|---|---|---|---|
| Ex parte TRO without notice | Notice would allow defendants to move assets, making asset freeze moot | Notice should be required; risks of prejudice without it | TRO denied without prejudice for lack of sufficient showing |
| Likelihood of irreparable harm | Assets likely to be moved imminently, making recovery impossible | Harm is speculative; plaintiff delayed seeking relief | No sufficient showing of irreparable harm; TRO denied |
| Adequacy of monetary damages | Damages inadequate as assets may become unreachable | Plaintiff can be made whole with monetary damages; no proof otherwise | Monetary damages likely sufficient; no TRO warranted |
| Expedited discovery to identify Doe defendants | Needed to identify defendants and preserve claims | Could expose sensitive info; scope overbroad | Granted only as to identifying information of Doe defendants |
Key Cases Cited
- Winter v. Nat. Res. Def. Council, 555 U.S. 7 (2008) (sets the standard for preliminary injunction, requiring likelihood of success and irreparable harm)
- Stuhlbarg Int’l Sales Co. v. John D. Brush & Co., 240 F.3d 832 (9th Cir. 2001) (preliminary injunction and TRO standards are substantially identical)
- Granny Goose Foods, Inc. v. Bhd. of Teamsters, 415 U.S. 423 (1974) (ex parte TROs should be rare and limited in scope)
- All. for the Wild Rockies v. Cottrell, 632 F.3d 1127 (9th Cir. 2011) ("serious questions" sliding scale test for injunctions)
- Klein v. City of San Clemente, 584 F.3d 1196 (9th Cir. 2009) (burden on plaintiff to prove all elements for injunction)