California judge dropped ICP investor (DFINITY) lawsuit due to expired statute of limitations

On Tuesday, U.S. District Judge James Donato dismissed a class action lawsuit against DFINITY, the crypto company behind Internet Computer (ICO). The judge found the case “time-barred” under the Securities Exchange Act’s three-year statute of repose.

The federal judge ruled that DFINITY USA Research LLC and its Swiss parent foundation defeated allegations that they misled investors about a 2021 initial crypto coin offering. Jude Donato said that investors neither sufficiently alleged the reliability of sources accusing DFINITY employees of selling tokens nor the level of intent to commit securities fraud with enough detail to meet heightened pleading standards.

Judge James Donato dismisses lawsuit against DFINITY over timeliness

California Judge Dismisses Dfinity Investor Suit For Being 'Time-Barred'https://t.co/tByDDZhdyS

— John Morgan (@johnmorganFL) March 27, 2025

U.S. District Judge James Donato dropped the case against DFINITY on March 25. The California federal judge granted DFINITY’s motion to dismiss after finding the case “time-barred” under the Securities Exchange Act’s three-year statute of repose. The judge ruled that investors’ claims the firm sold unregistered securities exceeded the statute of repose by a year and six months.

Judge Donato sided with the company’s argument that it offered ICP tokens to the public in February 2017. He said that the claims placed the August 2021 investor lawsuit outside the required timeframe. California resident Daniel Ocampo filed the complaint “on behalf of all investors who purchased Internet Computer Project tokens on or after May 10, 2021.”

When the lawsuit was first filed, the plaintiffs and their representative, currently Freedman Normand Friedland LLP (formerly Roche Freedman), offered no response to the defendant’s argument. The California judge also found that investors failed to prove their fraud claims.

Judge Donato rejected the plaintiffs’ core argument that DFINITY founder Dominic Williams knew and “necessarily had knowledge” about token distribution issues simply because of his position.

The case ended after Tuesday’s ruling, ending a contentious legal battle marked by controversy surrounding the plaintiffs’ previous counsel. Kyle Roche, a former partner at defunct crypto law firm Roche Freedman, was allegedly recorded bragging about leveraging litigation to gather confidential information on crypto firms.

The founders of Roche Freedman later went to court after fighting over $60 million worth of tokens issued by Ava Labs. The complainants, under the counsel of Selendy Gay PLLC after their previous counsel’s replacement, had alleged that DFINITY manipulated the digital asset market and inflated ICP token prices after its May 2021 trading debut.

Judge Donato still granted plaintiffs a final chance to amend their complaint by April 8 and warned that failure to meet the deadline would result in dismissal under federal rules on civil procedure.

Arkham Intelligence published a report on DFINITY’s ICP token after analysts noticed the token’s 90% price crash in its first month was highly unusual. The analytics platform also noted some $2 billion in ICP tokens were transferred to cryptocurrency exchanges by “probable insider addresses” after the Genesis launch. The firm argued that the transfers coincided with notable drops in price.

The defendants alleged the 469,213,710 ICP tokens that were made available during ICP’s Genesis launch were “created out of thin air” and sold in violation of the 1933 Securities Act.

Judge dismisses DFINITY’s case under jurisdiction parameters

On Tuesday, April 30, 2024, the United States District Court also dismissed a lawsuit brought against DFINITY, its founder Dominic Williams, and board member Gian Bochsler. Eftychios Theodorakis filed that the firm made false statements about its ICP crypto tokens and sold millions of dollars before the value dropped. The complainant argued that he was deceived into holding on to tokens that lost value.

The lawsuit indicated claims of negligence, conversion, penalties under California law, trespass to chattels, intentional misrepresentation, and civil Racketeer Influenced and Corrupt Organizations (RICO) Act violations.

Judge Araceli Martinez-Olguin concluded that the court had no personal jurisdiction over Williams and Bochsler as individuals. The judge found no substantial proof to establish that the accused had purposefully availed themselves of operating in California despite selling the ICP tokens through the California-based crypto exchange Coinbase.

Without jurisdiction over the RICO claims only alleged against the plaintiffs, the judge concluded that the court could not exercise supplemental jurisdiction over the remaining state law claims against DFINITY as a company.

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