Williams v. Block.One

Background

The opinion concerns two related class actions: Williams and Zhang v. Block.One and Crypto Assets Opportunity Fund LLC and Johnny Hong v. Block.One. The actions were pending before the court and had been consolidated. The settling parties submitted an amended settlement agreement and asked the court to approve notice to the proposed class and certify the class for purposes of the settlement.

The order states that the parties had modified the class definition after the court denied an earlier notice motion without prejudice to renewal. The proposed settlement would resolve the actions and dismiss them against the defendants and released parties if the settlement received final approval. The order also states that the settlement was not an admission of the allegations, liability, fault, wrongdoing, or damages.

What the Court Ordered

The court found that the settlement resulted from arm’s-length bargaining and could be submitted to the class for consideration under Federal Rule of Civil Procedure 23(e). It found that it would likely be able to certify the proposed class for settlement purposes. The court specifically identified the requirements involving the number of class members, common legal and factual questions, typicality of the lead plaintiff’s claims, adequacy of the lead plaintiff and lead counsel, and whether a class action would be superior to other methods of resolving the case.

The proposed class includes persons or entities who, during the period from June 26, 2017, through May 18, 2020, acquired ERC-20 Tokens or EOS Tokens in a domestic transaction and were damaged as a result. The definition includes specified purchases on listed exchanges, certain transactions between purchasers and sellers located in the United States, ERC-20 token purchases directly from Block.One during its token sale, and certain EOS token transactions involving United States-based block producers. The order excludes the defendants, specified Block.One officers and directors, their immediate family members, entities controlled by a defendant, Block.One affiliates, and people or entities who validly opt out.

The court also found that it would likely be able to certify the lead plaintiff as class representative and appoint lead counsel as class counsel. It approved the forms of the detailed notice, proof of claim and release, and summary notice. It appointed Epiq Global as the claims administrator and directed it to mail or email notice, post the materials on the settlement website, publish the summary notice, and make it available through the listed exchanges and other specified platforms and websites.

Settlement Hearing and Class-Member Procedures

The court scheduled a settlement hearing for September 19, 2023. At that hearing, it would consider whether the proposed settlement was fair, reasonable, and adequate; whether to certify the class and appoint class representatives and counsel for settlement purposes; whether to approve the plan for distributing settlement proceeds; whether to enter the proposed judgment; and whether to award attorneys’ fees, expenses, and certain costs.

Class members who wished to participate had to submit a signed proof of claim and release, supported by the required documents, by the stated deadline unless the court ordered otherwise. A class member who failed to submit a timely claim would generally be barred from receiving a distribution but would remain bound by a final judgment. Class members could opt out by submitting the required exclusion request by the stated deadline. Those who validly opted out would not receive settlement benefits and would not be bound by the settlement or any final judgment approving it.

Class members could object to the proposed settlement, the distribution plan, attorneys’ fees and expenses, or certain costs, but the order required objections to be submitted in the specified form and by the stated deadline. The order also stated that proceedings were stayed except as needed to implement the settlement or comply with the settlement agreement. If the settlement was not approved, terminated, or failed to become effective, the parties would be restored to their positions as of May 13, 2021, under the terms described in the order.

Disposition

The court approved the settlement notices and related procedures, found that the class and class representatives were likely certifiable for settlement purposes, appointed the claims administrator, scheduled the settlement hearing, and stayed further proceedings pending the settlement’s final determination. The order did not state that the settlement itself had received final approval.