Lawsuit alleges underuse of fake interest-creating bots

Quick Take

  • Anotek LLC v. Venture Exchange, SCS
  • According to the lawsuit, the case arises out a breach of an agreement by Anotek to provide services to Venture for some kind of token sale “associated with cryptocurrency”
  • Allegedly, Venture didn’t “take an affirmative steps to move the token sale forward” but was happy with Anotek’s work
  • In part, Plaintiff is suing for the failure to be paid for creating fake interest in a token sale to induce people to buy into it

Disclaimer: These summaries are provided for educational purposes only by Nelson Rosario and Stephen Palley. They are not legal advice. These are our opinions only, aren’t authorized by any past, present or future client or employer. Also we might change our minds. We contain multitudes.

As always, Rosario summaries are “NMR” and Palley summaries are “SDP". Their guest poster Steven Middlebrook can be found on twitter at @stmdc

[related id=1]Anotek LLC v. Venture Exchange, SCS (Delaware Superior Court, Case No. N19C-04–211 JRJ) [SDP]

There’s a probably apocryphal story about a guy who went to the police after his cocaine was stolen and tried to file a police report. I am not saying that anyone in this lawsuit did anything illegal, but I was reminded a little bit of that story as I was skimming through this lawsuit and the contract that is attached to it because it’s … well … let’s get to it.

So, the plaintiff is a Delaware LLC called Anotek and the defendant is a Luxembourg company named Venture Exchange, SCS. According to the lawsuit, the case arises out a breach of an agreement by Anotek to provide services to Venture for some kind of token sale “associated with cryptocurrency” (whatever the heck that means).

The Complaint alleges that in exchange for providing services described in the agreement, Anotek was entitled to (1) 2.25 percent of the funds raised after “each token sale round”, (2) .25 percent if Anotek got a fellow named “Alexander Ivanov or [a] person of similar recognition to serve as an advisor to Venture, or to publish a photograph and positive comment on Venture’s website, and (3) .5 percent of the total “token supply” for making introductions and creating partnerships with “any of the top 100 cryptocurrencies.”

According to the Complaint, Venture didn’t “take any affirmative steps to move the token sale forward” but was happy with Anotek’s work. Anotek says that it made introductions to Sasha Ivanov from Waves and Brendan Blumer from Block.One, turned away other business opportunities, didn’t market/sell or distribute its proprietary software that it expected Venture was use to “tokenize” its assets (unclear what exactly that means).

Even thought the complaint says at one point that the token sale never moved forward, later in the complaint Plaintiff says that Venture actually raised $3 million from selling tokens and that it’s entitled to payment of the commission set forth in the Agreement. There are three counts — breach of contract, breach of the implied convenant of good faith and fair dealing (sort of an implied agreement in every contract that the parties will act in good faith) and unjust enrichment, which is an equitable claim that is sort of an alternative to a contract claim when for whatever reason a contract claim won’t get you over the finish line.