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A cryptocurrency startup is taking legal action against one of the industry's largest exchanges after falling victim to an apparent scam.
Glow Token LLC has filed a lawsuit in a Florida court against Crypto.com, accusing the major exchange of breach of contract and claiming it owes over $250,000 in damages—even while acknowledging that Crypto.com may not have been involved in the fraud.
According to court documents, Glow Token CEO Bryan Lawrence was approached earlier this year by individuals posing as Crypto.com employees about listing Glow's cryptocurrency on the exchange. After months of purported negotiations and document exchanges, Lawrence transferred the funds to an account he believed belonged to Crypto.com.
But in March, officials from the real Crypto.com informed Lawrence he had been scammed by imposters. Crypto.com said it had no record of a listing agreement with Glow Token, and told Lawrence to stop asserting as much. Lawrence, meanwhile, insisted that he was careful to ensure the deal was legitimate.
"I conducted my due diligence and directly verified every step with Crypto.com," he said in a letter announcing the lawsuit. "This included checking the listing link on their website, reviewing all received emails, confirming all the contact information I was provided, accessing the communication platform required by the listing agent, examining the actual listing contract, and all the details [were] verified by multiple representatives from Crypto.com."
Good morning Glow Family!
I have not been able to talk about the situation until now so here is the formal statement to explain the situation and lawsuit against https://t.co/zGWE43JquH. Thank you everyone for your patience as we work to get a resolution. #GlowToken pic.twitter.com/clIQMHxIz6
— 🎗️Bryan Lawrence (@GlowTokenCEO) August 18, 2023
Having sent the scammers $250,000 plus one Bitcoin, then valued at $23,000, Lawrence is now seeking a legal remedy, even though he says the logs of his online chats with Crypto.com representatives were subsequently deleted.
."I had taken precautions and saved copies of all conversations, as I would in any verification process," Lawrence said in a statement. "It was then that I reached out to [my law firm] to seek assistance in resolving this situation."
Lawrence started his company "with a focus on charity and giving back to the community" and a desire "to educate the community regarding the positive impacts of Decentralized Finance (DeFi)," according to the filing, which asserts that he "took a position early in the cryptocurrency climate of opposition to 'bad actors' in the cryptocurrency space."
He asserts in his filing that he "had an upstanding reputation with the cryptocurrency community" and "was poised to become a positive, industry-leader in the community of cryptocurrency trading." Now, Lawrence says he is struggling with both his health and his finances.
"The stress from these events has caused significant stomach issues, leading to four hospitalizations—I am currently consulting with specialists in the hope of finding a solution to my health problems," he wrote. "In order to cover all court costs and work towards a resolution, I had to sell my cherished home. This decision was not easy, as my home held great personal value."
After taking his case public yesterday, Lawrence responded to the support he received on Twitter.
"I woke up this morning to seeing all of the messages and comments and it honestly had me tearing up and I'm still at a loss for words," he said. "We have [always] been very big on doing our due diligence in everything that we do and we have that on our side.
"I can assure everyone that I will give my all to make sure everyone is made whole again," he added.
While scams using the names of major crypto platforms are common, the lawsuit represents an unusual effort to hold an exchange legally responsible. Glow Token alleges that even if the scam was conducted by third parties, they managed to "compromise and use Crypto.com's platform" to deceive the startup. The company accuses Crypto.com of enabling the fraud due to lack of security protocols.
Crypto.com has not yet responded to a request for comment from Decrypt.
Editor's note: This story was drafted with Decrypt AI from sources referenced in the text, and fact-checked by Ozawa.