The Most Expensive Private Lawsuit In Crypto Is Settled

A lawsuit over Augur, a decentralized platform for prediction markets on real-world events, has come to an end as court records show that the case was dismissed on Oct. 12.

Matthew Liston, the former CEO of Augur, filed the lawsuit back in April, alleging that three other founding members of Augur, Jack Peterson, Joseph Charles Krug, and Jeremy Gardner committed acts of fraud, oppression, and malice along with investor Joseph Ball Costello. According to Liston, the alleged “fraud” resulted in his forced removal from the project and the company in 2014.

Liston was seeking a total of $152 million on damages at the time, which made the case possibly the most expensive private lawsuit in the cryptocurrency space so far.

The most recent court records show that the court of California in San Francisco county has ordered to take the case management conference “off calendar,” after O. Shane Balloun of Balloun Law requested to dismiss the case “with prejudice,” on behalf of Liston, meaning that they would have the case dismissed permanently.

In an email response to Forbes by Liston, he declined to comment but confirmed that “the case was settled.”

Members of Augur did not immediately respond to requests for comment regarding the case.

Another court record published on Sept. 6 indicates that negotiations on a settlement were in progress.

“…the parties have reached a settlement in principle and are working diligently to finalize a written settlement agreement,” the document wrote.

As a project built upon on the ethereum blockchain that allows its users to bet on outcomes of real-world events, Augur has received wide attention since its birth. It is advised by ethereum co-founder Vitalik Buterin and the co-founder of Lightning Labs, Elizabeth Stark. The project was officially launched in July and is expected to have some major updates released soon, according to a post published on Oct. 4.


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Author: Muyao Shen
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Buyer’s Remorse? Cryptocurrency Lawsuits Have Tripled Since 2017

Cryptocurrency lawsuits increased threefold in the first two quarters of 2018 compared to the whole of last year.

This is according to a report prepared by Lex Machina, a legal analytics firm. Last year, the number of cases mentioning bitcoin, cryptocurrency or blockchain amounted to just 15 ,but in the first and the second quarters of this year, the figure has risen to 45. If the current trend continues, this means that the increase will likely be more than sixfold by the end of the year.

New Sheriff in Town

SEC Chairman Jay Clayton | Source: YouTube

Of all the cases that have been filed so far in 2018, the U.S. Securities and Exchange Commission was responsible for around a third, according to the National Law Journal. This coincided with the current chairman of the SEC, Jay Clayton, announcing a crackdown on the sector. Clayton was nominated to the position in January last year though he was formally inducted five months later.

The surge in the number of cases seems to have also coincided with the fall in the price of bitcoin and other cryptocurrencies from their record highs. Specifically, there were only seven cases relating to bitcoin, blockchain or cryptocurrency in the fourth quarter of last year but this more than tripled in this year’s first quarter.

“[T]he first two quarters of 2018 saw a significant rise in the number of securities cases relating to cryptocurrency or Bitcoin,” the legal analytics firm wrote in a statement. “Using Legal Analytics’ keyword search functionality, Lex Machina discovered case filings relating to this emerging area surged from seven cases in Q4 2017 to 22 cases in Q1 2018 Q1 and 23 cases in Q2.”

Major Lawsuits

Among the high-profile firms in the crypto space, Ripple Labs and Bitconnect are among the companies facing lawsuits in the United States. Recently, Ripple got a reprieve in one of the lawsuits after it managed to reach a settlement with blockchain tech firm R3, as CCN reported.

The dispute between the two firms came after the severance of a partnership deal which had allegedly stipulated that R3 would have the right to acquire XRP tokens totaling up to five billion at a price of US$0.0085 per unit till the end of next year. At the beginning of the year when XRP tokens were trading at nearly US$4 per unit, the value of the legal dispute was approximated to be close to US$20 billion.

In the case of Bitconnect ,which has been accused of running a Ponzi scheme, one of the lawsuits against the firm was filed in the state of Kentucky in January this year. This was after being issued with cease-and-desist orders in North Carolina and Texas.


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Author: Mark Emem
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Tim Draper Off the Hook [For Now] in Tezos Class Action Lawsuit

Claims against venture capitalist Tim Draper and Bitcoin Suisse in a Tezos class action lawsuit have been dismissed.

LIONBIT

No Direct Control

According to U.S. District Judge Richard Seeborg of the Northern District of California, the motions by Draper and Swiss-based crypto financial services company Bitcoin Suisse to dismiss them as defendants in the Tezos securities litigation case have been granted. In the case of Draper the motion has been dismissed with leave to amend while for Bitcoin Suisse it has been dismissed without leave to amend.

Per Seeborg, the lead plaintiff in the class action lawsuit, Arman Anvari, failed to argue the “statutory seller” claim against Draper and Bitcoin Suisse plausibly.

https://twitter.com/stephendpalley/status/1026970889945014273

Additionally, Seeborg ruled that Draper had no direct control over Tezos and thus could not be held individually responsible as a “control person.”

“Absent further averments regarding Draper’s “power to direct or cause the direction of [Tezos’] . . . management and policies,” as evidenced by his routine interactions with either DLS or the Foundation, Anvari cannot plausibly allege that Draper is liable as a control person,” Seeborg wrote in Case 3:17-cv-06779-RS.

Motions by the co-founders of Tezos, the husband and wife team of Arthur and Kathleen Brietman, as well as their firm Dynamic Ledger Solutions and Swiss foundation Tezos Stiftung were, however, denied.

In their motions to dismiss them as defendants, they had argued that the initial coin offering (ICO), which was conducted last year and raised $232 million by the time it closed on July 14, was merely a fundraiser.

TIP

United States Jurisdiction

Seeborg ruled that the defendants had passed the “personal jurisdiction” test since they had developed the Tezos.com website in the English language hosted on a server located in Arizona as well as structured the initial coin offering in a way that accommodated U.S.-based participation. Additionally, the U.S. district judge also determined that the Breitmans and Dynamic Ledger Solutions passed the “control person” legal test.

“As noted in the above discussion of Section 12 liability, DLS’ role in establishing and aiding the Tezos Foundation rendered the two entities deeply intertwined, if not functionally interchangeable, throughout the ICO process … While the Breitmans and DLS are free to renew their arguments regarding the detached operation and structure of the Foundation at later stages in this litigation, at this point, Anvari’s allegations are sufficient to enable his Section 15 ‘control person’ claim against them to survive dismissal,” wrote Seeborg.


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SEC Settles Trader Lawsuit Tied to Blockchain Firm Stock Sales

The U.S. Securities and Exchange Commission (SEC) has settled with two Nevada men over charges that they illegally profited from sales of stock in a claimed blockchain company, according to an SEC release.



The SEC originally alleged on July 2 that attorney T.J. Jesky and his law firm’s business affairs manager Mark DeStefano had allegedly made about $1.4 million by selling stock shares in UBI Blockchain Internet, a Hong Kong-based firm, between Dec. 26, 2017 and Jan. 5, 2018.

As CoinDesk reported at the time, the two Nevada men allegedly sold 72,000 restricted shares at prices ranging from $21.12 to about $50, even though the shares were supposed to be sold at the fixed price of $3.70, as stated in the registration statement.

 Sales of UBI Blockchain’s stock then ceased as the SEC suspended trading activities on Jan. 5, due to questions regarding the company’s public filings and unusual market activities around its stock, including a price spike.

“Without admitting or denying” the accusations in the SEC’s complaint, Jesky and DeStefano have now agreed in a New York District court to settle the case by returning $1.4 million of the allegedly illegal earnings and a $188,682 civil penalty. They have also agreed to “be subject to permanent injunctions” on future stock trading.

According to the SEC notice, the investigation is still ongoing


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