An insurance company sued by industry startup BitPay following a claim dispute has fired back, denying the bitcoin payment processor’s allegations in a new court filing.

BitPay originally filed suit against Massachusetts Bay Insurance Co (MBIC) months after it lost 5,000 BTC (then valued at roughly $1.8m) following a phishing attack. The company later alleged breach of contract and bad faith in a suit filed against MBIC.

However, in a 17th November court filing, MBIC has stated that it believes it was justified in rejecting BitPay’s claim, formally requesting the court to toss the suit.

At the heart of the dispute is whether the transfers in question were fraudulently executed. According to court documents, perpetrators initially hijacked the computer of BTC Media CEO David Bailey, and later used that device to steal the credentials of a senior BitPay executive, prompting the issuance of three payments.

The incident took place between 12th and 14th December, 2014.

MBIC has said that because BitPay executives authorized the payments – rather than those who had acquired the credentials of CFO Bryan Krohn – they don’t fall under the criteria for fraud outlined in the policy.

Further, the company asked in a separate filing that the court agree to bifurcate and stay discovery on the bad faith charge.

“Count II should be bifurcated from Count I and discovery stayed relating to Count II because, under Georgia law, a bad faith claim under O.C.G.A. § 33-4-6 cannot proceed unless coverage under an insurance policy is found,” the company said.

BitPay is seeking $950,000 plus interest, as well as damages and court fees, from the insurer.

MBIC’s response can be found below:

Response

Disclaimer: CoinDesk founder Shakil Khan is an investor in BitPay.

Court of law image via Shutterstock