Circle lawsuit seeks $1M refund for USDC lost by pharma CEO

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—by Protos Staff

A pharmaceutical firm is suing stablecoin provider Circle and demanding a refund after its CEO “accidentally destroyed” $1 million worth of USDC by sending it to the wrong wallet address. 

CelaCare filed the lawsuit in a Massachusetts district court this week that claims the USDC was “permanently destroyed” after its CEO, Kenneth Yates, entered the wrong Ethereum wallet address. 

The USDC was sent from CelaCare’s Coinbase account to a contract counterparty on July 3, 2024. The lawsuit claims, “When Yates used his computer to copy the destination address from a document sent to him by the counterparty, Yates’s computer erroneously transcribed a B as ‘8’.” This transcription error seems to have arisen as the CelaCare CEO attempted to copy and paste the address from a PDF and failed to verify the results.

As a result, CelaCare claims that Yates sent the crypto to an inaccessible wallet address that has no owner. In order to convince itself that the funds were truly inaccessible, it sent a message to the address which reads, “On July 3, 2024, Celacare Technologies Inc. sent one million USDC to this address erroneously. If you have the private key to this wallet address, please send 1.46 USDC to any address and contact us at [email protected].” It did not receive a response. CelaCare argues this renders the USDC destroyed. 

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It says that Circle should refund the crypto as the firm’s USDC stablecoin is classed as a “financial asset” while Coinbase is classed as a “securities intermediary” under the Uniform Commercial Code (UCC). Because of this distinction, CelaCare claims the UCC legally requires Circle to either reissue the funds, or “honor them.” 

The firm wrote to Circle on August 15 with the drafted lawsuit attached and asked Circle to return the funds. However, on September 6, Circle’s counsel refused CelaCare’s refund request.

Celacare is seeking a trial by jury and wants the court to declare that the USDC was destroyed. It wants to receive $1 million, either in USDC or fiat, or issue Circle the same $1 million value in damages.

Tether, the largest USD-backed stablecoin, offers a token recovery service where it will (at its discretion) burn and re-issue tokens in cases like this for a 10% fee.

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