A U.S. appeals court upheld a lower court's dismissal of Ali Sedaghatpour's lawsuit against Lemonade Insurance, which he argued should cover his $170,000 loss from a crypto scam. The Fourth Circuit ruled on October 24, stating that Sedaghatpour's homeowner policy provided coverage only for direct physical loss of property. Sedaghatpour had claimed that the digital theft of cryptocurrency constituted such a loss, but the court noted that Virginia law defines direct physical loss as requiring material destruction or harm. The court found that the digital nature of cryptocurrency does not meet this criterion. Sedaghatpour had invested the funds with a company called APYHarvest, purportedly an investment firm, but later discovered the company was fraudulent. Lemonade Insurance argued that while a crypto wallet is a tangible object, the cryptocurrency itself remains intangible, thus not qualifying for direct physical loss coverage. The appeal followed an earlier dismissal of Sedaghatpour's case in February 2023.

Source 🔗