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Yun v. Gladiacoin.Com

United States District Court, M.D. Pennsylvania

December 10, 2019

GLADIACOIN.COM, et al ., Defendants.

          MARIANI, J.



         Plaintiff Gloria Sun Jung Yun commenced this action by filing a pro se complaint, on July 18, 2017, asserting that (“Gladiacoin”) and several other defendants ran a Bitcoin-based Ponzi scheme through which they fraudulently obtained Yun's bitcoins.[1](Doc. 1) (Doc. 4). Yun brings claims, not only against the entities and individuals directly liable for defrauding her (collectively, “Defendants”), but also against companies and service providers, such as, LLC (“GoDaddy”), from which Yun seeks information to prove her claims (collectively, “Codefendants”). (Doc. 1, at 1-2, 15).[2] However, if GoDaddy or any other Codefendants “conceal information and conspire[] together for bitcoin scam, ” Yun asserts that she will pursue damages against them as well. (Doc. 1, at 15, ¶ 71-72).

         Presently before the Court is GoDaddy's motion to dismiss the complaint, filed May 6, 2019, (Doc. 21), on three grounds: (1) Yun seeks relief only for hypothetical future conduct; (2) Yun has not pleaded the elements of civil conspiracy; and (3) none of Yun's allegations gives rise to a cause of action against GoDaddy.[3]

         For the reasons that follow, the Court recommends that GoDaddy's motion to dismiss be GRANTED and that GoDaddy be dismissed from the case.

         I. Background

         In May 2017, acting on friends' recommendations, Yun began to invest bitcoins in Gladiacoin. (Doc. 1, at 5, ¶ 5). At the time, Gladiacoin advertised that investors would “double the bitcoin within 90 days” and promised daily returns of 2.2% on all deposited bitcoins. (Doc. 1, at 5, ¶ 5). Gladiacoin claimed to buy bitcoins in one market and sell them in another market in which bitcoins had a higher value, “exploiting the difference in price on difference exchanges.” (Doc. 1, at 8, ¶ 28). Because Yun initially saw returns on her investment, she borrowed money and increased her investment from .1 to 4.8 bitcoins. (Doc. 1, at 6, ¶ 6-7).

         Soon, however, Yun lost 1.3 bitcoins due to a technical error. It was then that she first contacted defendant William Portillo, who claimed to have access to Gladiacoin's administrative and technical support. (Doc. 1, at 6, ¶¶ 8-9). Portillo was not able to refund Yun's account, although it appears Yun did receive .2 bitcoins back into her account. (Doc. 1, at 6, ¶ 9). Another technical glitch resulted in Gladiacoin's system being down between May 18 and May 24, 2017. (Doc. 1, at 6, ¶ 13). It reopened until June 3, 2017, and then shut down its accounts for a second time. (Doc. 1, at 6, ¶ 14). With her account blocked, Yun was forced to pay an administrative fee equal to 15% of her deposited bitcoins for three months. (Doc. 1, at 6, ¶ 16). The end result: Yun's investments were halved rather than doubled (Doc. 1, at 6-7, ¶¶ 16-17).

         The balance of Yun's complaint consists of allegations of Portillo's ties to Gladiacoin and the ways in which he knowingly defrauded Yun and others. Despite having disclaimed any ownership in Gladiacoin, (Doc. 1, at 7, ¶ 20), Portillo apparently put up promotional videos on Facebook and YouTube touting and flaunting the wealth he obtained by investing with Gladiacoin. (Doc. 1, at 7-8, ¶¶ 22-23, 27, 30-31, 33). Portillo used other companies, such as Defendants,, and, to defraud investors. (Doc. 1, at 9, ¶¶ 32, 35-36). Yun's investigations revealed that Defendants are “all related or copying the same concept of [multi-level marketing] to scam.” (Doc. 1, at 10, ¶ 37).

         As mentioned, supra, Yun does not allege that GoDaddy played a role in the Ponzi scheme or multi-level marketing scam. Rather, because the website Defendants such as Gladiocoin were hosted and registered with GoDaddy, (Doc. 1, at 4, 11-12, ¶¶ 47, 52), Yun named GoDaddy as a defendant for the purpose of obtaining information from GoDaddy to aid in litigating her claim against the primary “scam site[]” Defendants, (Doc. 1, at 15, ¶ 71). Asserting purely injunctive relief against GoDaddy, Yun concedes that she “does not have any claim or money judgment against [GoDaddy and the other] Co-Defendants unless co-defendants conceal information and conspires together for bitcoin scam, ” in which case Yun will “claim injury for helping [the primary defendants] by providing such service.” (Doc. 1, at 15, ¶ 72).

         Yun appears to assert three causes of action: (1) intentional misleading and misrepresentation; (2) money laundering; and (3) racketeering. She seeks millions of dollars in damages from Defendants and injunctive relief from Codefendants-unless, of course, Codefendants conceal information and conspire to further the Defendants' scam. (Doc. 1, at 10-15).

         II. Discussion

         A. Motion to Dismiss Standard

         Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes a defendant to move to dismiss for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). “Under Rule 12(b)(6), a motion to dismiss may be granted only if, accepting all well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court finds the plaintiff's claims lack facial plausibility.” Warren Gen. Hosp. v. Amgen Inc.,643 F.3d 77, 84 (3d Cir. 2011) (citing Bell Atlantic Corp. v. Twombly,550 U.S. 544, 555-56 (2007)). Although a court must accept the fact allegations in a complaint as true, it is not compelled to accept “unsupported conclusions and unwarranted inferences, or a legal conclusion couched as a factual allegation.” Morrow v. Balaski,719 F.3d 160, 165 (3d Cir. 2013) (quoting Baraka v. McGreevey,481 F.3d ...

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