In a recent ruling, the New York Supreme Court dismissed negligence claims against Circle Internet Group Inc. and Circle Internet Financial, LLC related to a significant cryptocurrency theft. The case, Kaplan v. Circle Internet Group Inc. (Index No. 650459/2026), involved plaintiff Tobias Kaplan, who lost over $13 million in USD Coin (USDC) due to a cybercriminal's actions. The court's decision clarifies the legal responsibilities of cryptocurrency platforms when it comes to theft and user protections.

The ruling, issued by Justice Joel M. Cohen on November 2, 2026, is significant for cryptocurrency users and companies alike, as it sets a precedent regarding the extent of liability that digital asset platforms may face in similar situations.

Background

Tobias Kaplan, the plaintiff, experienced a theft of 13,342,433 USDC from his cryptocurrency wallet in January 2026. The theft was executed by an unidentified individual referred to as John Doe. Kaplan alleged that Circle, which issues and manages USDC, failed to act promptly to freeze the stolen funds despite being notified of the theft. He also claimed that Uneven Labs, Inc., which operates a cryptocurrency routing service, aided in the dissipation of the stolen assets.

The case reached the New York Supreme Court after Kaplan filed a complaint seeking damages for negligence and aiding and abetting conversion against both Circle and Uneven Labs. Kaplan argued that Circle had a duty to protect his assets due to its control over the USDC smart contract and that it should have acted on his requests to freeze the stolen funds.

Circle and Uneven Labs both filed motions to dismiss the claims against them. The court's ruling addressed these motions and the underlying legal issues surrounding the responsibilities of cryptocurrency platforms.

The Ruling

The court ruled in favor of Circle, granting its motion to dismiss the negligence claims against it. Justice Cohen stated, "Circle was not under a legal duty to freeze the USDC remaining in John Doe's wallet upon request by Plaintiff, with whom it had no commercial or other relationship, absent a court order." This ruling emphasizes that Circle had no obligation to act without a legal directive.

Furthermore, the court found that Circle's inaction did not constitute aiding and abetting the theft. The judge noted that Kaplan had not established that Circle had knowledge of the theft or that it had a duty to intervene. The court dismissed the negligence claim against Circle with prejudice, meaning Kaplan cannot bring the same claim again.

In contrast, the court denied Uneven Labs' motion to dismiss without prejudice, allowing for further jurisdictional discovery. Justice Cohen indicated that Kaplan had made a "sufficient start" in establishing personal jurisdiction over Uneven Labs, which could lead to further legal proceedings against that company.

Impact

This ruling has significant implications for cryptocurrency users and platforms. By dismissing the negligence claims against Circle, the court has clarified that digital asset platforms may not be held liable for thefts that occur without a direct relationship or prior engagement with the user. This could limit the avenues available for users seeking recourse after losing funds due to cybercrime.

The decision may also influence how cryptocurrency companies formulate their policies regarding user security and response to theft. With the court's emphasis on the need for a legal order to freeze assets, platforms may feel less compelled to take immediate action in response to user reports of theft, potentially leaving users vulnerable.

What's Next

While Circle's motion to dismiss was granted, Uneven Labs may still face legal challenges as the court allowed for jurisdictional discovery. Kaplan may amend his complaint based on the findings from this discovery process, which could lead to further litigation against Uneven Labs. The outcome of this case may set important precedents for future disputes involving cryptocurrency theft and the responsibilities of digital asset platforms.