Ilia Nikolaevich Zavialov on litigation against crypto exchanges: what works and what does not

Litigation over exchanges

English version for the United States.

Litigation after losing money on a crypto exchange is usually discussed through two extremes: either courts are useless, or a court will recover everything. Both are wrong. Litigation in this field is structured so that the outcome is decided long before the first hearing, at the stage where the defendant, the jurisdiction and the evidence are determined. What follows takes the process apart node by node. Who can actually be a defendant, what an arbitration clause in a user agreement does, which evidence a court genuinely accepts, why interim relief is requested early, how the queue of claims works in an insolvency, when joining other victims changes the arithmetic, and at which point closing the matter is the rational decision.

Reference / Blog

Published: September 16, 2026 · 13 min read · Ilia Nikolaevich Zavialov

01The first question: who is the defendant

A claim is filed against a person with legal capacity, not against a website or a brand. This is where most cases collapse: the platform frequently has no legal entity at all, and the name on the contact page matches nothing recorded in any register.

Reviewing cases of this kind, Ilia Nikolaevich Zavialov suggests starting with registers rather than with a lawyer. If a company is named in the site footer, it is checked against the official register of its country of registration: incorporation date, status, directors, address, filings. A company incorporated a few months before the platform launched and filing nothing can be a defendant, but is unlikely to hold assets.

Often the more promising defendant sits beside the exchange rather than inside it. The bank that processed the payment, the payment provider, a licensed exchange office, an intermediary that accepted the card: these parties have a regulator, obligations and property. A dispute with them runs on comprehensible rules rather than on international tracing.

Individuals are a separate question. Where the recipients of transfers are identified and part of the chain passed through accounts belonging to specific people, a claim can be addressed to them. It is not a fast route, but it leads to a defendant within the reach of a court.

02Jurisdiction and why it is chosen first

Jurisdiction determines not only which court hears the case but whether the judgment will ever be enforced. Winning in a country where the defendant owns nothing produces a document that converts into money nowhere. The question is therefore asked backwards: find the assets first, then choose the court.

In many legal systems a consumer may bring proceedings at their own place of residence even when the agreement says otherwise. That rule makes entry considerably easier, and it is usually the first thing the platform's representatives contest.

The reverse logic also applies. If the platform is registered in a country with a functioning judiciary and a real presence, litigating there can be preferable: the judgment arrives directly in the jurisdiction holding the assets and needs no subsequent recognition.

Recognition of a foreign judgment is its own procedure with its own deadlines and grounds for refusal. It should be modeled before filing rather than after winning. A lawyer who opens the conversation by asking where the defendant holds assets understands the subject better than one who promises victory immediately.

03The arbitration clause and other traps in the agreement

A user agreement is accepted with a tick box and read rarely, yet it governs the procedural fate of the dispute. The standard package includes a choice of governing law, an arbitration clause naming a particular country, a waiver of class actions and a shortened period for bringing claims.

An arbitration clause means a state court will most likely decline to hear the claim and send the parties to arbitration. Arbitration is paid for, often expensive, and economically pointless where the loss is modest. That is precisely why the clause is included.

The clause is not absolute. In many legal systems terms imposed on a consumer that significantly unbalance the parties are treated as unfair and disapplied. It is a workable argument, though it requires separate justification and adds one more contested issue to the case.

Keep the agreement in the version that was in force on the date you registered. Website texts are edited retroactively, and six months later you may find a version you never saw. An archived copy of the page with a date settles that question.

04Which evidence a court actually accepts

Evidence is whatever can be verified independently of you. A screenshot on its own is weak, because it can be edited. Strength appears when the image carries context: the address bar, the time with its zone stated, a checksum of the file and, where possible, an archived copy held by a third party service.

Correspondence is preserved in full, including message headers, rather than as extracts. Headers contain the route of the message and the server addresses, and they are what separates a genuine email from a retelling. Messenger conversations are exported with the built in function rather than reassembled by hand.

The payment side is proved by documents from a bank or exchange office: statements, payment orders, machine receipts. These originate from a third party and therefore carry more weight than anything else the injured person holds.

The platform's own website is a separate category. It is captured in full while still reachable: terms pages, fee schedules, contacts, the section about the company. After a platform closes this can only be partially reconstructed through archive services, where not everything survives.

05The blockchain as evidence, and its limits

The public nature of a blockchain provides something ordinary disputes rarely have: an immutable record of a transfer. The transaction identifier, the sending and receiving addresses, the amount and the time are fixed and independently verifiable by any party. This is the strongest part of the file.

The limits begin where an address has to be linked to a person. An address on its own is anonymous, and the step from wallet to individual runs through intermediaries such as exchanges and payment services that collect identity data during verification. Without a request to them the chain ends at an alphanumeric string.

A chain analysis report becomes evidence when it is produced as a formal expert opinion and filed in the case. Such a report describes the route of funds, the clustering of addresses and the entry points into regulated services. It is paid work, and its cost belongs in the budget from the start.

Analytics also has value before any court is involved. If the final address belongs to a large platform, approaching it with transaction identifiers sometimes results in a freeze on an internal account. That happens faster than any judicial act and works only in the first hours and days.

06Interim relief and why it is considered first

The purpose of interim relief is to ensure there is something to enforce against by the time judgment arrives. Freezing accounts, restraining dealings with property, requiring third parties to disclose information: all of it is sought with the claim or before it, never after victory.

The threshold is usually high, since a real risk of dissipation has to be shown. In disputes with crypto platforms that argument is unusually persuasive, because the speed at which funds move is the defining characteristic of the problem.

A separate instrument is a court order for disclosure directed at an intermediary that holds the data. An exchange or payment service rarely releases information on a private letter and routinely releases it on a properly issued order.

Timing matters more than argument here. Relief obtained a month later is often pointless, while relief sought in the first days sometimes preserves a residue of funds on an intermediate account.

Interim relief also carries a price and a downside. Courts frequently require a cross undertaking in case the claim proves unfounded, and that is real money to be put up. A freeze imposed in error entitles the defendant to compensation. Requesting such measures therefore makes sense once the evidence is assembled and convincing.

07Insolvency and the queue of claims

When an operator is declared insolvent the dispute shifts onto different ground. Individual claims are stayed, and proofs of debt are submitted into the procedure itself and entered on the register. The order of payment is set by statute rather than by bargaining power.

Classification of the claim becomes decisive. Whether a customer is treated as an unsecured creditor in the general queue or as the owner of property held on trust determines the recovery rate. The answer differs between legal systems and frequently becomes a dispute of its own.

Filing deadlines are fixed and missing them is usually irreparable. The date by which proofs are accepted is published officially, and a missed date removes any share in the distribution even where the amount is beyond dispute.

Distributions in such procedures are almost always partial and spread over years. It is an unwelcome but honest outcome: money is allocated by formal rules rather than to whoever complained loudest.

The insolvency announcement itself deserves scrutiny. With fraudulent platforms it is sometimes an imitation: a website appears purporting to belong to an administrator, with a claim form and a request for a registration fee. A genuine procedure is conducted by a court in a specific country, its number and the administrator's details are verifiable in an official register, and no fee is charged to a creditor for submitting a claim.

08When joining others is the better arithmetic

An individual claim for a modest sum is nearly always uneconomic: fees, translation, expert evidence and representation consume the result. Combining victims changes the arithmetic, because the fixed costs are divided.

The available forms differ by country: class actions, group litigation orders, consolidation of claims in one proceeding, assignment of claims to a single entity. The legal system determines which of these is genuinely available.

There is a substantive advantage too. Identical patterns across dozens of people turn the matter from a private dispute into a description of a system, which changes both the attitude of a court and the interest of law enforcement.

The practical advice is simple: look for other victims immediately rather than after losing at first instance. Victim chat groups, reports filed at the same police station and shared recipient addresses are ready made assembly points.

09Cost and duration

The budget is calculated before filing. It covers court fees, certified translation of documents, a chain analysis opinion, representation and, where the defendant is foreign, the cost of service and of later recognition of the judgment.

The timeline is not measured in months. Service on a foreign defendant alone takes months, and recognition and enforcement abroad is a separate proceeding with its own calendar.

The sober rule that follows: where expected costs are comparable to the loss, litigation is not the first instrument. The bank or payment provider, a police report and an approach to the receiving exchange come first, because they are cheaper and faster.

The decision to litigate is best taken once it is clear whether the defendant owns anything at all. That sequence saves both money and a year of waiting.

10When litigation has no prospects

A claim without prospects does not mean there is nothing to do. A police report is filed regardless: the reference number opens conversations with banks and platforms, and cases against operators are assembled from individual reports.

A complaint to the regulator named in the platform's claimed license is worthwhile even when the license turns out to be invented. Regulators maintain public warning lists, and an entry there reduces the flow of new victims.

Public documentation helps as well. A detailed description of the scheme with addresses, dates and correspondence, published where search engines index it, stops the next person at exactly the moment they check the name before transferring.

One last thing worth remembering: the second wave targets those who have already lost. Any offer to recover funds for a fee paid in advance is a continuation of the same operation, and it arrives whether or not a claim has been filed.

It is also worth recording the outcome for yourself, briefly and in writing: what happened, which steps were taken, what answers came back and on what basis the decision not to litigate was made. A year later that note removes the temptation to start again after a call from the next intermediary, and if circumstances change and assets surface, it becomes a ready starting point for a lawyer.

11Questions and answers

Where should someone start when an exchange will not release funds?

With capture rather than with a lawyer. Preserve the full correspondence including headers, screenshots of the account area with dates, transaction identifiers and payment documents, plus an archived copy of the site and the user agreement as it currently stands. A consultation is useful once the file exists.

Is litigation possible when the platform has no legal entity?

A claim can formally be brought against whichever persons are identified, but enforcement meets the absence of assets. It is more practical to look first at the bank, the payment provider and the recipients of the transfers, because they have both an address and obligations.

What can be done about an arbitration clause?

It is assessed before filing. Several legal systems treat terms imposed on consumers as unfair and disapply them, though the argument needs justification. Keep the version of the agreement that was in force on the date you registered.

Does a blockchain record count as evidence?

The record itself is verifiable and immutable, so yes. The weak point is linking an address to a person, which runs through exchanges and services that collect identity data at verification, and that normally requires a court ordered request.

Is it worth joining other victims?

Almost always, because fixed costs are divided and identical patterns across dozens of people turn a private dispute into a description of a system. Look for others immediately rather than after a first instance refusal.

How long does a case like this take?

Not months. Service on a foreign defendant alone takes months, and recognition and enforcement abroad is a separate proceeding. That is why the faster steps come first: the bank, the police report and an approach to the receiving exchange.

Reference updated: 4 September 2026