Former Ethereum Adviser Intends to Sue U.S. Government for $9.6B Over Dropped Extortion Charges

Steven Nerayoff, an early advisor to Ethereum, has announced his plan to sue the US government for $9.6 billion in compensation over allegations of criminal extortion against him in 2019. His legal team has described these charges as “unfounded” and “spurious”.

CoinDesk obtained Nerayoff’s Federal Tort Claims Act (FTCA) form from his lawyers as a prerequisite for filing a lawsuit against the Department of Justice (DOJ). In FTCA proceedings, it is necessary to inform the implicated agencies of the claimant’s intent to sue at least six months prior to initiating a formal legal action.

Alan Dershowitz, a renowned civil liberties attorney, announced on Wednesday his intention to provide constitutional expertise for Nerayoff’s case.

In May 2023, the government’s accusations against Nerayoff were dismissed. Back in March 2023, prosecutors decided to terminate the investigation due to the emergence of evidence that could clear Nerayoff and their inability to meet the burden of proof beyond a reasonable doubt. Prior to this development, Nerayoff’s legal team had already submitted a motion to dismiss filled with damning allegations against the federal investigators and prosecutors handling the case.

Read more: U.S. Prosecutors Drop Extortion Charges Against Early Adviser to Ethereum Network

According to Nerayoff and his legal team, they believe the FBI orchestrated a complex and prolonged scheme to falsely implicate him, ultimately intending to coerce him into providing incriminating information about influential figures in the crypto sector.

The FBI did not respond to CoinDesk’s request for comment by the time of publication.

On September 17, 2019, Nerayoff asserts that a dozen FBI agents with guns came to his house early in the morning and took him away in an unmarked van for extended questioning. He alleges that the agents threatened him, stating he would not witness his minor children grow up if he didn’t provide them with information.

The government refuted most of Nerayoff’s contentions in their counter-filing, including his allegation that Michael Hlady, a former co-defendant on extortion charges and a convicted swindler, had become an undercover agent for the government. Nerayoff’s legal team argues that the FBI had put Hlady in contact with Nerayoff to aid them in their investigation against him.

Last year, Hlady admitted guilt to extortion offenses that Nerayoff was also implicated in. However, the authorities recently decided to dismiss those charges against Hlady and permitted him to retract his plea. Instead, they requested that he confess to one count of wire fraud for an unrelated scam he orchestrated while awaiting trial on bail.