Cryptocurrency fraud victims lose lawsuit, US appeals court upholds insurance company's exemption from liability

Odaily News The United States Court of Appeals for the Fourth Circuit dismissed a lawsuit filed by Ali Sedaghatpour against his insurance company, Lemonade Insurance, on October 24. Sedaghatpour claimed to have lost $170,000 in a cryptocurrency scam and sought compensation from the insurer under his home insurance policy. However, the court held that under Virginia law, the insurance policy only covers "direct physical loss," and Sedaghatpour's cryptocurrency losses did not meet this definition. The lawsuit is a rare case in which a cryptocurrency user attempts to claim that cryptocurrency is personal property and legally force an insurance company to pay for losses caused by a scam. The appeals court judges explained that under Virginia law, "direct physical loss" requires physical destruction or damage. Because the digital theft of digital currency does not constitute "direct physical loss," Sedaghatpour's cryptocurrency losses were not covered by the insurance. (Cointelegraph)