Shin v. ICON Foundation

Background

The court had previously granted ICON Foundation summary judgment—a decision resolving a claim without a trial—in ICON’s favor on its unjust-enrichment counterclaim against Mark Shin. The counterclaim sought restitution after Shin allegedly exploited a software bug 557 times, generating 13,950,558 ICX cryptocurrency tokens in his ICONex wallet. The opinion states that Shin transferred millions of the bug-generated tokens to family and friends and sold millions more for other cryptocurrencies.

The Federal Bureau of Investigation seized cryptocurrency assets traceable to the bug-generated ICX from exchanges where Shin and his transferees stored them. A Receiver held the seized assets during the litigation. ICON sought the greater of 30 percent of the assets’ value or $3,471,594 in attorney fees and costs. It also asked the court to reconsider its earlier decision not to require that seized assets held in forms other than ICX be converted back into ICX before destruction.

Attorney Fees and Costs

The court applied the common fund doctrine, an exception to the usual rule that each side pays its own attorney fees. Under that doctrine, a litigant who creates or preserves a fund that benefits identifiable others may receive reasonable fees from that fund. The court found that the beneficiaries here were identifiable people who owned ICX when Shin attacked the network and still owned ICX. It found that the benefit could be traced through the FBI’s seizure of the bug-generated and traceable assets.

The court selected the lodestar method rather than ICON’s proposed percentage method. The lodestar method calculates fees by multiplying reasonable hours by reasonable hourly rates. ICON’s lawyers claimed 3,442.50 hours of work by attorneys at Manatt, Phelps & Phillips; Morrison Cohen; and Holland & Hart. The court found the proposed rates and hours reasonable considering the litigation’s length, complexity, novelty, counsel’s experience, and results.

The court also found that reasonable litigation costs, including expert and consulting fees, were recoverable under the common fund doctrine. It awarded ICON $3,471,594 in attorney fees and costs, to be paid by the Receiver before the seized assets were destroyed.

Reconsideration of Remedies

The court reconsidered part of its earlier remedies order after further briefing and a February 26, 2025 hearing. It concluded that, after the Receiver paid ICON’s fee and cost award, all remaining seized assets that were not ICX should be converted back into ICX and then destroyed. The court reasoned that this approach would more directly benefit ICX holders harmed by Shin’s conduct than destroying the assets in their existing forms.

The court also ordered that ICON and its Council members could not sell ICX while the Receiver was converting the seized assets back into ICX. The Receiver must file a declaration in the case docket after completing the conversion and destruction.

Disposition

ICON’s motion for attorney fees and costs was granted. ICON’s request for partial reconsideration of the remedies order was also granted. The court ordered payment of $3,471,594 to ICON before destruction, followed by conversion of the remaining seized non-ICX assets into ICX and destruction of the converted assets.