(Bloomberg) -- A newly created management platform at the 10th-biggest global cryptocurrency exchange has become the focus of a fight over who owns the potentially lucrative venture in a booming industry.
The operator of the Bibox Exchange and its co-founder Wanlin Wang sued Wei Liu, a Chinese citizen who lives in Manhattan, claiming she covertly named herself as the sole shareholder of the entity that owns the venture in an attempt to embezzle more than $3 million.
Liu’s attorney, Timothy Pastore of Duval & Stachenfeld LLP in New York, said the allegations couldn’t be further from the truth. Liu, 34, rightfully controls the venture, he said.
Bibox Group Holdings Ltd., based in the British Virgin Islands but with offices in New York, bills itself as the first company to apply artificial intelligence to a digital asset exchange. It was founded in September 2017 and claims daily trading volumes equivalent to about $205 million.
Wang, who is also a Chinese citizen living in New York, hired Liu in December to help with the launch of the new venture -- a cryptocurrency management platform that he claims to have conceived, called Investre Network, according to the suit. Wang claims he instructed Liu to form two corporate entities, including one that owns the new platform, and to name himself and a business partner, Hanchao Yang, as the sole managing members and shareholders of the entities.
"Liu ignored Wang’s instruction and surreptitiously named herself as the sole managing member and shareholder," according to the complaint. "Liu intentionally withheld this information from plaintiffs in order to gain improper access and control of the Investre Network."
Pastore cited Liu’s authorship of the white paper behind the venture, her ownership of the website domain and her control of the key to the entity’s digital wallet for releasing assets for asserting her ownership claims.
“The plaintiffs didn’t do any of that work,” Pastore said. “All the indicia of ownership rest with her.”
Wang’s only claim of ownership rests with his assertion that he asked Liu to set up the entities, which the lawyer said doesn’t amount to much.
The entities at issue are Save Technology Inc. in the British Virgin Islands, earmarked to be Investre Network’s operating entity, and a Delaware subsidiary called Bibox Technology LLC, which is supposed to provide blockchain consulting services in the U.S.
The plaintiffs raised about $3 million from May to July in seed money for Investre Network, according to the complaint.
The scheme was uncovered after Wang fired Liu in July for poor performance, Wang said in the complaint. That led to a heated in-person meeting in which Liu claimed ownership of the entities and demanded $500,000 and two months’ salary for their return, Wang said.
"Believing that she had been terminated without justification, Liu refused to return plaintiffs’ property and asked Wang to meet in person," according to the complaint.
When Wang refused to pay, Liu altered Investre Network’s website to add her photograph and biography, falsely identifying herself as “Business Development Director at Bibox," according to the suit. She then allegedly removed any mention of Wang from the site and "falsely described herself as the founder and CEO of the Investre Network."
Pastore said the website belongs to Liu and she can make whatever changes she desires.
Letters exchanged between lawyers before the suit was filed in Manhattan on Oct. 10 foretell a tense and unusual battle over Investre Network.
“Please be advised that neither Mr. Wang nor any entity under his direction or control has any ownership in or management rights to the Investre Network,” Pastore said in an Aug. 3 letter. “Instead, the Investre Network is the sole property of Save Technology Inc., a corporation that is solely owned and controlled by Ms. Liu.”
Other plaintiffs in the case are Yang’s New York-based technology services company Captain Capital Management LLC, which was intended to be the initial owner of the new venture, and the Seoul-based digital asset investment firm Blockwater Management Ltd., where Wang is a partner.
--With assistance from Dave Liedtka.
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