Coinbase CEO Brian Armstrong Is Sued for Allegedly Stealing Blockchain Startup’s Work
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Brian Armstrong, the CEO of publicly traded crypto exchange Coinbase, allegedly stole the work of a blockchain accelerator under the guise of potentially making an investment in one of its projects.
Blockchain accelerator MouseBelt Labs filed a complaint in California’s supreme court Friday alleging that in June 2019 Armstrong offered to invest in Knowledgr – a platform used to distribute scientific papers with tokens offered as an incentive – so he could use confidential information for ResearchHub, a similar platform he was working on, and eliminate Knowledgr as a competitor.
According to the complaint, Armstrong offered financial backing to Knowledgr – in which MouseBelt was already investing – and the opportunity to list the tokens on Coinbase. The accelerator is alleging that Armstrong, Coinbase and related entities committed fraud, interfered with a contract and were unjustly enriched among other charges.
The company is seeking damages and other forms of relief as part of a jury trial.
MouseBelt also alleged that Armstrong contacted Knowledgr founder Patrick Joyce in late June 2019 offering to personally invest $50,000 for a 1% share with a view to Coinbase making a larger investment subject to due diligence. The $50,000 was wired to Knowledgr in mid-July.
It was, according to the complaint, Armstrong’s intent to “steal MouseBelt’s work for themselves, to not only eliminate a potential competitor but to obtain for ResearchHub the benefits of the financial, design and technical resources MouseBelt put into Knowledgr, thereby allowing ResearchHub to launch sooner at less cost a successful platform based entirely or substantially on MouseBelt’s work.”
According to the complaint, Armstrong promised Joyce a job if he contributed to ResearchHub while remaining the chief executive at Knowledgr, while misleading MouseBelt in the process.
During this time, MouseBelt alleges, Joyce used an algorithm originally intended for Knowledgr for ResearchHub instead.
“MouseBelt asked whether Joyce had recently been in touch with Armstrong or ResearchHub. Joyce stated that neither he nor anyone else at Knowledgr had been in touch with Armstrong during the previous four months. Joyce would later admit the truth, which was that Armstrong had asked Joyce to work on ResearchHub during that same four-month period and that Joyce actually had been doing so. Joyce’s omission of this information was a breach of Knowledgr’s agreements with MouseBelt and was done to conceal Joyce and Knowledgr’s inappropriate actions,” the lawsuit claimed.
“We believe the claims are entirely frivolous and we look forward to proving our case in court,” a Coinbase spokesperson said in an email to CoinDesk.
Read more: SEC Threatened to Sue Coinbase Over Lending Product, CEO Says
UPDATE (Dec. 21, 12:15 UTC): Adds Coinbase response in last paragraph.
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