Woods Lonergan Wins Summary Judgment in $1.195 Million Cryptocurrency Escrow Dispute

By James Woods
Managing Partner

Southern District of New York holds an escrow agent cannot delegate control of escrowed funds

Woods Lonergan Wins Summary Judgment in $1.195 Million Cryptocurrency Escrow Dispute

The United States District Court for the Southern District of New York has ruled in favor of a Woods Lonergan client in a dispute over more than $1.1 million in cryptocurrency that disappeared from an escrow account within hours of being deposited.

In Lawrence v. Flohr, No. 23-cv-9844, Dkt. No. 157 (S.D.N.Y. Aug. 3, 2026), Judge Sidney H. Stein held that an attorney serving as escrow agent breached the escrow agreement by allowing an outside company to administer the escrow account. As the court put it:

It is manifest that, as Lawrence’s escrow agent, Flohr had a duty of strict compliance with the terms of the Escrow Agreement.

The firm’s client had agreed to purchase Bitcoin and placed $1,195,000 in stablecoin into escrow as collateral, to be returned if the transaction did not close. Within hours of the deposit, the funds left the escrow account. The account was administered not by the escrow attorney but by an outside company, New RiverBank, which the client did not know was involved. The court found that New RiverBank:

does not operate as a bank in the United States … [and] did not hold a NYDFS BitLicense or New York trust charter approval to provide virtual-currency custody in New York.

The transaction did not close. When the client demanded the return of his collateral, the escrow attorney did not return it.

The escrow agent’s position was that the third party had moved the funds without his authorization. The court rejected it:

It is no defense that Flohr’s performance under the Escrow Agreement might have been rendered impossible by the actions of third-party defendant New RiverBank.

On the breach itself, the court found:

Flohr breached sections 1.1 and 4.1 of the Escrow Agreement by failing to control the Escrow Account and by permitting New RiverBank to administer the Escrow Account… Flohr therefore breached the Escrow Agreement by failing strictly to comply with the requirement that Flohr control the Escrow Account and act as its administrator.

Summary judgment was granted in the sum of $1,195,000 plus pre- and post-judgment interest on the breach of contract claim, with prejudgment interest at New York’s statutory rate of nine percent per year running from December 23, 2022. The court reached that result on the contract claim alone, holding the parallel breach of fiduciary duty claim duplicative because it sought the same recovery the escrow agreement already provided. The judgment is in the process of being docketed.

The ruling followed an earlier decision in the same case. On September 30, 2025, the court dismissed the escrow attorney’s counterclaim with prejudice, holding that the escrow agreement’s indemnification provision covered third-party claims only and did not entitle the escrow agent to recover his own attorneys’ fees in a suit brought by the party who deposited the funds.

James F. Woods and Annie E. Causey represented the plaintiff.

The matter reflects the firm’s work in complex commercial litigation for business owners and investors across the New York metro area, including contract, escrow, and digital-asset disputes. Related work includes claims against professionals, corporate fraud and commercial fraud claims, asset tracing and recovery, and disputes over distribution and capital calls in multi-party ventures.

About the Author

James Woods is Founder and Managing Partner of Woods Lonergan. He has tried more than 60 jury cases to verdict as first-chair trial counsel and resolves complex commercial and real estate disputes valued at $1M to $100M+ for business owners, principals, and middle-market enterprises across the New York metro area. He appears regularly in the New York Commercial Division and in the federal district courts for the Southern and Eastern Districts of New York, and has argued appeals in the Appellate Division and the Second Circuit.

His practice covers complex commercial litigation, real estate and asset litigation, partnership and shareholder disputes, fiduciary breach and corporate fraud, and cooperative and condominium governance. He counsels corporate and cooperative boards throughout New York. Before founding the firm, he served as an Assistant District Attorney in Nassau County, trying both jury and bench matters.

The Legal 500 has ranked James for Commercial Disputes in its US Elite rankings for New York, and his peers have recognized him with Martindale-Hubbell's AV Preeminent rating. Woods Lonergan is ranked by Chambers Spotlight USA for Litigation: Commercial Disputes and Real Estate. James serves on the American Bar Association Committee for Commercial and Business Litigation, as well as the New York City Bar Association Cooperative and Condominium Bar Committee. His commentary on New York commercial and real estate disputes has been quoted in The New York Times, The Washington Post, Bloomberg Law, Law360, and Forbes.