Judge rules in favour of Bitstamp owner after courtroom clash with founder

Quick Take

  • A call option that allows Bitstamp’s new owners to acquire the rest of founder Nejc Kodrič’s shares at a big discount has been upheld.
  • Kodrič, Bitstamp’s founder, had filed a lawsuit to try to prevent the controversial call option from being exercised.

Nejc Kodrič, founder and former CEO of Bitstamp, has failed in his bid to stop the crypto exchange’s new owners from wresting away his remaining shares.

In a recent filing, Judge Eason Rajah QC ruled in favour of the defendant Bitstamp Holdings NV, an investment vehicle owned by NXMH, which acquired Bitstamp in October 2018.

Rajah said he would make orders requiring Kodrič to sell his remaining shares — which he had transferred to a Luxembourg-based entity named White Whale Capital — to Bitstamp Holdings NV.

The ruling effectively upholds the validity of a controversial call option that was at the heart of the dispute.  

The case

In August last year, Kodrič filed a lawsuit against Bitstamp Holdings NV in the United Kingdom’s High Court after the company exercised a call option to snap up his remaining 9.8% stake in the company for $13.46 million, a price his legal team described as “very significantly lower” than their market value.

Kodrič claimed that the option was invalid and unenforceable and sought an injunction preventing the investment firm from forcing through a transfer of his shares (he had already sold two-thirds of his stake in Bitstamp in the 2018 sale).

In its defense, NXMH’s subsidiary argued that it was contractually entitled to acquire Kodrič’s shares at a discount because of its option agreement, which had been negotiated at the time of the acquisition. 

NXMH, an investment firm with some €3 billion of assets under management, is owned by South Korean gaming billionaire Kim Jung-ju.

“We are pleased the court has upheld our contractual rights,” said spokesperson for the company.

A bitter feud

Filings connected to the lawsuit have shed light on the ugly conclusion to Kodrič’s tenure at the top of Bitstamp, which he set up in 2011.

In the initial lawsuit, Kodrič described Jong Hyun (Jamie) Hong, one of NXMH’s board representatives, as “hostile and domineering.” Bitstamp Holdings NV fired back in its defense that it did not regard Kodrič’s involvement “as a shareholder or director to be critical or necessary” in any effort to take the exchange public.

The latest filings reveal Kodrič’s dismay when Bitstamp’s owners tried to exercise the call option.

“I am very very disappointed Jamie! Hope you think it is worth it. I don’t think it is. I don’t know what I did wrong. But if it is just money, I think you are making a mistake,” Kodrič told Hong at the time, according to the judgement filing. Another extract shows that Kodrič told Dan Morehead, founder and CEO of Pantera Capital, that it looked as though Hong was forcing him out of the company.

Former Starling Bank COO Julian Sawyer took over at CEO of Bitstamp in July the 2020. When reached, Sawyer said the lawsuit was a private matter that doesn't impact the company's strategy. 

Kodrič was contacted for comment but did not respond by press time.

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