Ethereum Whistleblower Sues US Govt For $9.6 Billion In FTCA Case

On Tuesday, Steven Nerayoff, a former advisor to the Ethereum network, filed a lawsuit against the US government, seeking $9.6 billion in damages. The lawsuit, filed under the Federal Tort Claims Act (FTCA), accuses the government of false prosecution and a series of other serious allegations spanning from 2019 to 2023.

Ethereum Insider Vs. The US Govt

Nerayoff’s announcement of the lawsuit came through a post on X (formerly Twitter), where he vehemently expressed, “Today I have filed my Federal Tort Claims Act (FTCA) lawsuit suing the US government for personal damages related to false prosecution. It is time we took a stand against this unrestrained corruption, for all the people wrongly accused & to ensure justice against those who have been a part of this.”

He extended his thanks to Eleanor Terrett of Fox Business for publicizing the lawsuit, as well as his lawyer Michael Scotto and others involved in bringing the case to attention. Terrett, through her post on X, elaborated on the lawsuit, explaining that the former Ethereum advisor and his legal team have filed an FTCA lawsuit suing the US government for $9.6 billion in personal damages stemming from false charges and alleged mistreatment by federal agents between 2019 and 2023.

The lawsuit alleges that certain federal agents were cognizant of the groundless nature of the charges against Nerayoff and engaged in harassment, intimidation, and evidence fabrication to prosecute him under the Hobbs Act for extortion. Despite the dismissal of the federal indictment against Nerayoff “with prejudice” in May 2023, the legal documents argue that the damage to Nerayoff’s reputation and businesses justifies the substantial claim for damages.

The involvement of former Manhattan Assistant District Attorney Michael Scotto and renowned lawyer Alan Dershowitz as a constitutional consultant adds significant weight to the case. Dershowitz highlighted the exceptional nature of Nerayoff’s situation, “I am strongly opposed to prosecutors targeting individuals, which is why I agreed to serve as a constitutional consultant to Mr. Nerayoff.”

The detailed lawsuit documents provide a chilling narrative of alleged abuses of power by federal agents and officers, including physical assault, false arrest, unlawful detention, and malicious prosecution. Notably, the documents reference a comment by an Assistant United States Attorney (AUSA) that the federal government was willing to “eat a shit sandwich” — a metaphor for the government’s purported willingness to cover up wrongful, negligent, and unconstitutional actions to maintain the illusion of legitimate law enforcement in the crypto space.

“The federal government was willing to ‘eat a shit sandwich,’ and ignore the federal agents and/or officers’ unconstitutional, unauthorized actions in order to maintain the public appearance that DOJ and SEC were engaged in legitimate, well-informed, sexy law enforcement actions in the crypto space…,” Nerayoff and his legal team claim.

Moreover, the lawsuit accuses federal prosecutors, agents, and officers of prioritizing their personal reputations and career prospects over justice, at the expense of Nerayoff’s constitutional rights and livelihood. “Such collateral damage was outweighed by federal prosecutors, agents and officers’ shared desires to build their own reputations and resumes in the cryptocurrency landscape, and in the lucrative private sectors,” the lawsuit alleges.

These accusations suggest a systemic issue within federal law enforcement’s handling of cryptocurrency cases, with Nerayoff’s experience serving as a potential watershed moment for others in the industry. The lawsuit alleges, “By eating that ‘shit sandwich’ federal prosecutors, agents and officers ignored how they were violating Mr. Nerayoff’s constitutional rights and destroying his life under color of law.”

At press time, the Ethereum price stood at $3,534.