Superior Court of Justice - Ontario

COURT FILE NO.: CV-21-00671986 DATE: 2021/11/28

RE: CICADA 137 LLC, Plaintiff -and- ANDEAN MEDJEDOVIC, Defendant

BEFORE: Myers, J.

COUNSEL: Benjamin Bathgate, Reuben Rothstein, and Joseph Osborne, Counsel, for the Plaintiff Andean Medjedovic on his own behalf

HEARD: November 28, 2021

ENDORSEMENT[^1]

Relief Requested

[1] Ex parte preservation order, Anton Piller Order, and related interim relief.

Disposition

[2] Order granted as asked.

Costs

[3] Reserved as set out in the order signed.

Brief Reasons

[4] The plaintiff has established a strong prima facie case that the defendant took $15 million in digital assets and has them stored in a wallet that he controls.

[5] The plaintiff has fulfilled its obligation to provide likely responses by the defendant. The defendant may deny that he is the hacker and he may claim that he has done nothing wrong under the rules of the platform from which he took the digital assets. However, the plaintiff has performed a quick but thorough investigation that points to the defendant in several different paths. Moreover, the plaintiff has pointed to several different laws that appear to apply including, without limitation the civil tort of conversion (i.e theft).

[6] I make no finding about the nature of digital assets as property. It is enough for present purposes to find that people invested value to obtain control of the tokens that the defendant appears to have taken. The law will determine in due course whether the digital tokens are a specie of property and/or whether the defendant has any right to keep them (or control over them) or the value that they represent from the plaintiff regardless of how the law classifies them.

[7] The digital tokens are readily moved by the defendant and are hard to trace. The defendant has shown a willingness to take what is not his. I accept the plaintiff’s submission that the defendant went to great lengths to conceal his planning, transactions, and identity in carrying out the apparent theft, using numerous different anonymous usernames and addresses, which one would reasonably expect would lead to further hiding or destruction of evidence once the defendant is made aware of this action and motion.

[8] The plaintiff asks for an interim sealing order to protect confidentiality while the search and seizure is fulfilled. I am satisfied that a brief, temporary sealing order is required to facilitate this order and that the benefit of doing so outweighs the open court principle in the very short term.

[9] As the plaintiff claims a proprietary interests in the allegedly stolen digital tokens, there is no freeze sought of the defendant’s assets generally. This is properly a preservation order rather than a more complicated Mareva injunction. This is a proper case for an interim preservation order pending determination of the merits.

[10] The more rigorous tests for an Anton Piller order are met as well. The defendant’s interest in the tokens (if any) will be protected by having them controlled by an independent custodian. However, the control over the wallet in which the tokens currently “reside” is needed to obtain control of the tokens. Based on the facts set out above, I infer that the defendant is likely to hide the password to the wallet housing the tokens at present. It is possible that he has the complex password memorized. If is far more likely that it is in a computer or stored on a memory device. A search and seizure under independent supervision is necessary to find the password and to prevent destruction of evidence as set out in Appendix “A” to the order that I have signed.

[11] This is a very serious matter for which an Anton Piller order is justified. A very substantial amount of value has been taken. Moreover, the plaintiff’s expert provides evidence about the magnitude of hacking of digital assets to date. As this new form of investing and commerce grows, it is fundamentally important to the stability of the economy and the online market place that that the integrity of these assets be maintained. The investing and transacting public need assurance that the law applies to protect their rights. Despite what some might think, the law applies to the internet as it does to all relations among people, governments, and others.

[12] Once the file is unsealed, I reserve the right to re-publish this endorsement in a format suitable for publication.

FL Myers, J

Date: November 28, 2021

[^1]: This endorsement has been re-formatted for publication as discussed in para 12 below. I have corrected the grammar in para. [9] as shown by underlining and cross-out.