Clayton et al v. Does

Filing 21

ORDER granting Plaintiffs' 16 Motion for Discovery; granting in part and denying in part 17 Plaintiffs' Motion for Joinder; denying Plaintiffs' 18 Motion for Contempt; and denying Plaintiffs' 19 Motion for Contempt. The Court DIRECTS the Clerk to add Guotao Yang as a defendant in this matter. Signed by Judge James L. Robart. (MJV)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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STEPHEN JOHN CLAYTON, et al.,
Plaintiffs,

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CASE NO. C24-0182JLR
ORDER

v.
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DOES,
Defendants.

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I.

INTRODUCTION

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Before the court are four motions filed by pro se Plaintiffs Stephen John Clayton

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and Christopher Stephen Clayton: (1) a motion for discovery from third party Domains

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by Proxy, LLC (“DBP”) (Disc. Mot. (Dkt. # 16)); (2) a “motion for joinder of identified

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CEX.IO platform user” (Joinder Mot. (Dkt. # 17)); (3) a motion for contempt of Binance

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Holdings Limited (“Binance”) (Binance Mot. (Dkt. # 18)); and (4) a motion for contempt

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of OKG Technology Holdings Limited (“OKG”) (OKG Mot. (Dkt. # 19)). The court

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GRANTS Plaintiffs’ motion for discovery from a third party, GRANTS in part and

ORDER - 1

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DENIES in part Plaintiffs’ motion for joinder of an identified CEX.IO LTD (“CEX.IO”)

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user, DENIES Plaintiffs’ motion for contempt of Binance, and DENIES Plaintiffs’

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motion for contempt of OKG.

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II.

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BACKGROUND

This case arises out of an alleged cryptocurrency scam. Plaintiffs allege that

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unknown fraudsters created a fake cryptocurrency exchange accessible via

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“vip.biitflyeir.com.”1 (Compl. (Dkt. # 1) at 1.) Stephen John Clayton claims to have

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deposited 51.355 units of Ethereum (“ETH”) into an account on that website, which

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“appeared and reasonably functioned in the same way as other cryptocurrency trading

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platforms[.]” (Id. at 2-3.) He thought he was making “gains,” but in reality, nearly all of

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the ETH had been transferred out of his account “on the back-end.” (See id. at 5-6, 9.)
Plaintiffs seek to unmask the “dark net entity” that allegedly defrauded them. (Id.

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at 9.) Plaintiffs claim to have “utilized professional cryptocurrency tracing services” to

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discover the “transaction IDs” associated with the fraudulent transfers of ETH out of

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Stephen John Clayton’s account. (Id. at 10.) According to Plaintiffs, the fraudulent

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transfers are “definitely associated with wallets” on exchanges operated by non-parties

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Binance, OKG, and CEX.IO.

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On May 21, 2024, the court granted Plaintiffs leave to serve third-party subpoenas

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on Binance, OKG, and CEX.IO to “produce documents sufficient for Plaintiffs to identify

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Defendants’ names, email addresses, and physical addresses.” (5/21/24 Order (Dkt. # 6)

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//

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As opposed to “bitflyer.com.”

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at 8.) Because the exchanges operate abroad,2 Plaintiffs filed a motion to serve the

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exchanges via email. (Service Mot. (Dkt. # 9).) The court denied that request but

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permitted Plaintiffs to mail copies of the subpoenas to the exchanges because the “United

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Kingdom, the Cayman Islands, and Hong Kong are parties to the Hague Service

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Convention and have not objected to service by mail.” (7/16/24 Order (Dkt. # 10) at 3,

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5-6.) The court “warn[ed] Plaintiffs that mere delivery of the subpoenas to the

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Exchanges does not mean the Exchanges will or must comply with them.” (Id. at 6.)

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Furthermore, the court emphasized that if Plaintiffs failed to meet their burden with

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respect to establishing personal jurisdiction, there would be “no question” that Plaintiffs

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would have to “resort to the Hague Evidence Convention’s discovery procedures.” (Id. at

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4 (quoting In re 3M Combat Arms Earplug Prods. Liab. Litig., No. 3:19-md-2885, 2020

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WL 5578428, at *7 n.6 (N.D. Fla. Feb. 18, 2020)).) To remove any doubt, the court also

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instructed Plaintiffs that it was “merely authorizing Plaintiffs to deliver the subpoenas to

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the Exchanges via physical mail” and was “NOT compelling the Exchanges to respond to

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the subpoenas” and would not do so “absent their consent or a future showing that the

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court has jurisdiction over them.” (Id. at 6.)

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Plaintiffs mailed the subpoenas abroad, which resulted in limited success.

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CEX.IO provided information concerning one individual purportedly involved in the

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fraudulent transactions. (Joinder Mot. at 3.) That individual is Guotao Yang, who

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Binance is located in the Cayman Islands, CEX.IO is located in the United Kingdom,
and OKG is located in Hong Kong. (See generally Binance Subpoena (Dkt. # 9-1); CEX.IO
Subpoena (Dkt. # 9-2); OKG Subpoena (Dkt. # 9-3).)

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appears to reside in China. (Id.) Plaintiffs did not receive a response from Binance (see

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Binance Mot. at 4), and OKG refused to provide Plaintiffs with any information about its

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users (see OKG Email (Dkt. # 19-2)).

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Plaintiffs now request a smorgasbord of relief through the present four motions.
The court considers each motion in turn.

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III.

MOTION FOR DISCOVERY

Plaintiffs’ first motion seeks leave to subpoena information from DBP, a third

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party located in Arizona. (See generally Disc. Mot.) According to Plaintiffs, DBP is a

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“DNS proxy service with which GoDaddy partners” that should have information

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concerning the individual(s) who registered the fraudulent website domain. (Id. at 1-2.)

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For the same reasons the court found good cause to permit Plaintiffs to serve Binance,

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OKG, and CEX.IO (see 5/21/24 Order at 4-8), the court again finds good cause to grant

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Plaintiffs leave to serve a third-party subpoena on DBP prior to a Rule 26(f) conference.

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Plaintiffs may serve DBP with a Rule 45 subpoena commanding it to produce documents

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sufficient to identify the name(s), email address(es), and physical address(es) of the

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individual(s) who registered the vip.biitflyeir.com domain. The court therefore grants

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Plaintiffs’ motion to permit third-party discovery (Dkt. # 16).

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IV.

MOTION FOR JOINDER

Plaintiffs’ second motion concerns Mr. Yang. (See generally Joinder Mot.)

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Plaintiffs ask the court to (1) join Mr. Yang as a defendant, (2) authorize “any means of

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service of process” on Mr. Yang, and (3) order that his CEX.IO account “be frozen as a

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specific form of injunctive relief.” (Id. at 13.) The court considers Plaintiffs’ requests in

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turn.

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First, in light of information from CEX.IO associating Mr. Yang with the

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allegedly fraudulent transactions, the court grants Plaintiffs’ request to join Mr. Yang as a

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defendant. Pursuant to Federal Rule of Civil Procedure 21, the court directs the Clerk to

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add Mr. Yang as a defendant in this matter.

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Second, the court will not authorize any alternative means of service, particularly

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email service, on Mr. Yang at this stage. Plaintiffs have an address for Mr. Yang, which

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they believe to be derived from his passport. (See Joinder Mot. at 3-5.) As Plaintiffs

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seem to recognize, they must proceed through the Hague Service Convention. (See id. at

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8-9.) The court denies Plaintiffs’ request for it “to act as Applicant on a Hague Model

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Form” (id. at 9) and will not do so unless and until Plaintiffs prepare all of the necessary

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materials and file a motion with appropriate citations to relevant case law. Serving

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process in China is a technical task. Plaintiffs, who are not proceeding in forma pauperis,

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would likely benefit from the assistance of an attorney skilled in cross-border litigation,

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as the court cannot provide legal advice to Plaintiffs to help them navigate the Hague

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Service Convention.

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Finally, the court denies Plaintiffs’ request for an injunction freezing Mr. Yang’s

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cryptocurrency assets located in the United Kingdom. Plaintiffs have made no showing

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that the court has personal jurisdiction over Mr. Yang or CEX.IO and have not analyzed

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the relevant legal standard concerning preliminary injunctions and temporary restraining

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//

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orders. See Stormans, Inc. v. Selecky, 586 F.3d 1109, 1126-27 (9th Cir. 2009) (citing

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Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008)).

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In sum, the court grants in part and denies in part Plaintiffs’ motion for joinder
(Dkt. # 17) of Mr. Yang.

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V.

MOTIONS FOR CONTEMPT

Plaintiffs’ third and fourth motions ask the court to (1) hold Binance and OKG in

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contempt for failing to provide information in response to the subpoenas and (2) join

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Binance and OKG as defendants in this action. (See generally Binance Mot; OKG Mot.)

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The court denies both motions in their entirety.

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First, the court will not hold Binance and OKG in contempt for failing to provide

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information in response to the subpoenas because the court previously informed Plaintiffs

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that it would “NOT compel[] the Exchanges to respond to the subpoenas . . . absent . . . a

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future showing that the court has jurisdiction over them” (7/16/24 Order at 6), and

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Plaintiffs have failed to establish that the court has personal jurisdiction over Binance or

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OKG in this matter. Neither Plaintiffs’ motion nor their supplemental brief concerning

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personal jurisdiction (Supp. Br. (Dkt. # 14)) explain whether, why, or how the court has

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general or specific jurisdiction over Binance and OKG. Indeed, Plaintiffs write that “the

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platforms . . . are only tied to the forum because of a single or few respective acts by

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Does.” (Id. at 3.) The court concludes that Plaintiffs have fallen well short of satisfying

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their burden with respect to personal jurisdiction.

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Second, the court will not add Binance and OKG as Defendants because Plaintiffs
do not allege any wrongdoing by them in their complaint. (See generally Compl.)

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Plaintiffs are upset that Binance and OKG have not cooperated in their efforts to identify

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the Doe Defendants who allegedly stole Plaintiffs’ cryptocurrency, but that alone is not

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reason to name Binance and OKG as defendants in this matter. Plaintiffs may amend

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their complaint if they wish to assert claims against Binance and OKG. See Fed. R. Civ.

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P. 15(a)(1) (allowing a party to “amend its pleading once as a matter of course”).

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Accordingly, the court denies Plaintiffs’ motions to compel (Dkt. ## 18, 19).

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VI.

CONCLUSION

For the foregoing reasons, the court GRANTS Plaintiffs’ motion for third-party
discovery (Dkt. # 16), GRANTS in part and DENIES in part Plaintiffs’ motion for

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joinder (Dkt. # 17), DENIES Plaintiffs’ motion for contempt of Binance (Dkt. # 18), and

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DENIES Plaintiffs’ motion for contempt of OKG (Dkt. # 19). The court DIRECTS the

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Clerk to add Guotao Yang as a defendant in this matter.

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Dated this 24th day of September, 2024.

A

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JAMES L. ROBART
United States District Judge

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ORDER - 7