A Nasdaq-listed blockchain company is hitting back at an investment firm in federal district court in Manhattan over an eight-figure lawsuit, the latest in a series of lawsuits that found borrowers were exposed to “harmful conduct” by financiers. claimed to be the latest. lending practices. ”
Michael B. Karlinsky, co-managing partner and global head of complex litigation at Quinn Emanuel Urquhart & Sullivan, has filed a lawsuit against Bitdia, a counter-plaintiff who sued counter-defendant Ayrton Capital LLC.・He is the lead attorney of the Technologies Group. BitDeer noted in its filing that Ayrton was accused of operating as an unlicensed broker-dealer in 2023 after trapping small-cap listed companies in a “death spiral” financing scheme.
Michael B. Karlinsky, co-managing partner and global head of complex litigation at Quinn Emanuel Urquhart & Sullivan. (Photo: Ryland West/ALM)
“Similarly, in 2018, Ayrton reneged on its prior commitment to extend the borrower’s maturity date and subsequently offered to extend the maturity date if the borrower replaced its CEO,” Bitdia said in its filing. I added it. “Ayrton continued to pursue a business model that quickly resolved these cases and trapped small and medium-sized businesses into forced lending arrangements to avoid full disclosure of its harmful lending practices.”
Andrew David Gladstein and Gail Klein, partners in the New York office of Freshfields Bruckhaus Derringer, are acting in the case, which is pending before U.S. District Judge Lewis J. Lehman for the Southern District of New York. Acts as Ayrton’s agent.
“We are the only company to quickly challenge and publicly withdraw Mr. Ayrton’s investment,” the companies said in a statement. “Bitdeer’s claims are an irrelevant distraction and its counterclaims are completely without merit.”
The dispute over Bitdeer dates back to the spring, when the company, which provides cryptocurrency mining solutions and has a market capitalization of $1.5 billion, entered into negotiations with Ayrton to raise $100 million, according to both lawsuits. However, complaints and counterclaims are different from this.
Bitdea claims in its counterclaim that as those negotiations neared completion, Ayrton “substantially increased the scope of penalties that Ayrton could impose on BitDea for future violations it asserts. “We have amended the confidentiality and exclusivity clauses.”
According to the counterclaim, without drawing attention to these changes and stating that Ayrton will not further amend the term sheet, the term sheet split fee is Ayrton’s sole remedy for infringement of exclusive rights by Bitdia. It is said that he typed the words:
Additionally, according to the counterclaim, Ayrton gave himself a 25% right to participate in “any third-party transactions” Bitdia enters into for six months if Bitdia seeks alternative financing during the exclusivity period. It is said that As a result, Bitdeer argued that these changes, if forced, would create an “unconscionable contract.”
Gail Klein, partner at Freshfields Bruckhaus Deringer. Provided photo
“In short, Ayrton claimed to award itself nearly $1 million in damages as punishment for Bitdia negotiating alternative financing during the period of exclusivity,” the counter-plaintiffs argued. The company has only been listed on NASDAQ for two years. ”
Bitdia said in its filing that these fines “were significantly less than the actual damages that Ayrton could claim to have suffered,” since the term sheet already provided that Bitdia would cover up to $350,000 of Ayrton’s diligence costs. It’s disproportionate,” he argued. Instead, Ayrton was only obligated to consider financing Bitdea.
Ayrton claims total damages exceed $32 million.
“Ayrton, which deceived Bitdia into an unconscionable contract, refused to provide the funding as envisaged in the term sheet after only a few days of negotiations,” Bitdia claimed. “Despite Bitdia’s previous representations that the parties could close the transaction within weeks given the available collateral, Ayrton continues to claim that the collateral is insufficient and that the refused.”
