On Thursday, September 17, 2026, the United States District Court for the District of Connecticut denied a request from ABC Company, XYZ Company, and an individual identified as Noah Doe to block the distribution of a new cryptocurrency tied to a planned Bitcoin blockchain hardfork.
U.S. District Judge Kari A. Dooley ruled against the plaintiffs’ motion for a preliminary injunction, finding they had failed to demonstrate either irreparable harm or a likelihood of success on the merits of their claims.
The dispute centers on a hardfork announced by Defendant LayerTwo Labs, Inc. (“L2L”), which is set to split off from the Bitcoin blockchain and create a new, separate blockchain. L2L had initially stated that holders of Bitcoin would receive the new cryptocurrency, called ECX, on a one-to-one basis. However, the company later said that a portion of ECX originally intended for a group of wallet addresses the plaintiffs claim to own would instead go to defendants identified only as John Doe Investors Nos. 1-99.
Plaintiffs argued that this group of wallets, referred
Plaintiffs argued that this group of wallets, referred to in court filings as the “Subject Addresses,” had been abandoned and that they held rightful ownership over them. They sought an order requiring L2L and the John Doe Investors to place the disputed ECX distributions into a court-supervised escrow account managed by three parties.
In her ruling, Judge Dooley acknowledged that blockchain distributions, once completed, cannot be reversed. But she wrote that the relevant legal question was not whether the triggering transaction was irreversible, but whether the resulting harm could be adequately addressed through monetary damages.
She noted that the plaintiffs’ own complaint sought compensatory damages for any ECX already distributed to third parties, undercutting their argument that the harm was not quantifiable. The judge added that even if ECX is currently difficult to value ahead of the hardfork, its market value would eventually become clear.
On the merits, Judge Dooley found
On the merits, Judge Dooley found that the plaintiffs had not adequately established an ownership interest in the ECX tokens themselves, a requirement for both of their legal claims: conversion and unjust enrichment. She noted that a separate case concerning ownership of the underlying wallet addresses is being litigated in New York, and that her court was not weighing in on that question.
Regardless of how that ownership dispute is resolved, she wrote, the plaintiffs had not shown a corresponding right to the ECX distributions connected to those addresses.
As a result, Judge Dooley denied the request for a preliminary injunction, allowing L2L’s distribution plans to proceed as the underlying litigation continues.
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