Jared Ferguson is one of the latest cryptocurrency fraud victims taking his online crypto brokerage to court. And while his case raises novel legal arguments, it’s destined to face hurdles that have throttled other victims’ success in recouping stolen funds.

On Monday, Ferguson filed a federal lawsuit accusing Coinbase (COIN) of deliberately ignoring what he alleges as telltale signs of fraud, following an unauthorized mobile SIM swap that hackers used to drain his account of $96,000.

The case is unique in the nascent field of cryptocurrency law in that it attacks Coinbase on theories of equity, and not just negligence, Max Dilendorf, an attorney who represents crypto fraud victims, told Yahoo Finance.

Still, the pathway to recoup the funds is a narrow one at best.

The first hurdle for Ferguson, like most victims of crypto fraud, is the mandatory arbitration term embedded in his user agreement.

Coinbase’s user agreement states that any customer dispute related to a customer’s access to, or use of its services, must be resolved through binding arbitration, rather than in court. The conditions, and terms like it, have led judges to push lawsuits claiming fraudulent transfers out of the judicial system.

"A judge will ask, 'did the claim arise out of [Ferguson’s] use of the platform, or not?'” Dilendorf explained. If yes, then the matter can be settled only in arbitration per Coinbase’s user agreement.

“It’s very difficult to set these clauses aside unless they are found unconscionable," Dilendorf said.

Ferguson’s claims attempt to sidestep that rule.

Ferguson says the company violated the Electronic Fund Transfer Act (EFTA) — a federal law meant to safeguard electronic money transfers — as well as California’s Uniform Commercial Code by denying his request to refund stolen funds without first informing him of his right to access the documents it used to reach its decision.

The EFTA, passed in 1978, offers consumers protection from liability for fraudulent online bank transfers and fraudulent credit and debit card transactions. Cardholder losses are limited to $50 for those who notify their credit card issuer within two business days after they learn of the fraud.

Ferguson also argues that Coinbase ran afoul of California law by failing to fully investigate his transactions and by failing to establish reasonable security procedures.

Specifically, Ferguson claims that Coinbase engaged in “willful blindness” by discounting the uncharacteristic nature of the fraudulent withdrawals given his account’s history, and that the transfers were initiated from a new device, using a new IP address, and immediately after a password reset. He adds that Coinbase processed the transfer without requiring facial recognition, which had been activated on the account prior to the attack.

“Coinbase’s security procedure fails to flag and hold obviously fraudulent and unauthorized transactions…Any commercially reasonable policy would have assessed this combination of troubling factors, flagged the transactions as suspect, and held or rejected the transactions as likely to be fraudulent," the complaint states. “Once [Ferguson] notified Coinbase that his phone had been compromised, Coinbase had an obligation to cancel the transfers and freeze the account to prevent further unauthorized charges.”

In response to the suit, a Coinbase spokesperson described the company’s security team as a "world-class” group that takes “extensive security measures” to ensure the safety of its customers’ accounts.

“We educate our customers on how to avoid cryptocurrency scams and report known scams to appropriate law enforcement authorities. Coinbase customers can take additional steps to secure their accounts by taking advantage of these tips that we have published in our Help Center,” the company said in an email to Yahoo Finance.

Regardless of where the dispute is settled, Dilendorf said Ferguson faces the added hurdles presented by the expense and time needed to litigate complex and still-developing legal theories. And in arbitration, crypto platforms have the luxury of turning over fewer of the documents that could aid a victim’s case, and hiding settlements from public view.

“How can you build a case without seeing the documents?” he asked. “This would be a complicated case."

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

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