Ethereum Advisor Hits US Government with Colossal $9.6 Billion Lawsuit

Steven Nerayoff, a prominent early advisor to the Ethereum network, has filed a $9.6 billion lawsuit against the United States government. The lawsuit, filed under the Federal Tort Claims Act (FTCA), alleges that federal agents knowingly pursued false charges against Nerayoff and engaged in harassment and intimidation tactics, including evidence fabrication.

Former Ethereum Advisor Sues US Government for $9.6 Billion

Nerayoff was arrested by the FBI in September 2019 alongside his associate Michael Hlady on charges of extortion. The authorities claimed they threatened to destroy a cryptocurrency startup if it did not pay millions in ether (ETH), the native cryptocurrency of the Ethereum network. However, after a four-year legal battle, the US government dismissed the case in May 2023.

In the newest court filing dated last week, Nerayoff's legal team has argued that the damages to his reputation and businesses warrant the substantial lawsuit for $9.6 billion.

“Today I have filed my Federal Tort Claims Act (FTCA) lawsuit suing the U.S. government for personal damages related to false prosecution,” Nerayoff wrote on X. “It is time we took a stand against this unrestrained corruption, for all the people wrongly accused & to ensure justice against those who have been a part of this.”

BREAKING: Today I have filed my Federal Tort Claims Act (FTCA) lawsuit suing the U.S. government for personal damages related to false prosecution. It is time we took a stand against this unrestrained corruption, for all the people wrongly accused & to ensure justice against… https://t.co/PQZjz6Ewcp

Nerayoff, a serial entrepreneur and blockchain pioneer, is known for his early involvement in Ethereum since 2015. He has been at the center of various controversies and legal battles, including making serious allegations against the Ethereum Co-Founder, Vitalik Buterin, and others regarding fraudulent ICOs, personal misconduct, and collusion with corrupt officials.

"Mr. Nerayoff's well-being, personal life and career were irreparably harmed… He incurred significant legal fees to defend himself while simultaneously losing income as a result of becoming a feared pariah in the crypto community,” the filing stated.

The lawsuit has garnered attention due to the significant damages sought and the involvement of prominent lawyer Alan Dershowitz as a consultant on the case. The outcome of this legal battle could have implications for the cryptocurrency industry and the US government's handling of such cases.

Nerayoff's Allegations against Buterin

In the past, Nerayoff accused both Vitalik and his father, Dmitry Buterin, of coordinating efforts to damage his reputation. He cited a video in which Vitalik allegedly claimed that Nerayoff was involved in significant fraudulent activities.

Furthermore, Nerayoff alleged that the Ethereum Foundation, under Vitalik Buterin's guidance, abandoned senior researcher and developer Virgil Griffith after his arrest for helping North Korea evade sanctions. Nerayoff also claimed that Vitalik Buterin copied his idea of issuing utility tokens and threatened to sue over his supposed invention.

In recorded conversations from 2015, Nerayoff criticized Ethereum's financial management, particularly the decision not to hedge Ethereum's Bitcoin holdings during price fluctuations. He also highlighted issues with Ethereum's early days, including lack of operational infrastructure, legal and regulatory risks, poor internal structure, and co-founder conduct.