Manatt Delivers Victory for Blockchain Organization Over User Who Exploited a Network Software Bug to Generate $14 Million in Crypto

Manatt Partners , , , Counsel and Associate secured a win for ICON Foundation, a nonprofit organization that founded and supports the ICON Network, a decentralized system on which the cryptocurrency “ICX” is transacted. U.S. District Judge William Orrick awarded ICON $3.5 million in attorney’s fees and costs it incurred in litigation with ICON user, Mark Shin, relating to approximately 14 million ICX tokens he received after exploiting a bug in the Network software.

The legal dispute centered around Shin’s claims that the bug-generated tokens were his property. When ICON discovered Shin’s actions, ICON cooperated with law enforcement and other stakeholders to remedy the harm caused by Shin, resulting in the freezing of the crypto wallets and exchange accounts holding bug-generated tokens traceable to the exploit. In turn, Shin sued ICON and alleged that it had infringed his property rights.

Shin argued that his actions did not violate any Network rules, and ICON had no legitimate basis to interfere with his possession of the tokens. ICON countered by stating Shin’s exploit and receipt of bug-generated tokens resulted in his unjust enrichment. Judge Orrick ultimately sided with ICON in a June 2024 decision, despite the fairly unique circumstances the case presented.

Wanger noted the importance of the judge’s decision, indicating that it empowers decentralized networks to obtain recovery against those who engage in network exploits.

To learn more about the case, click .