The founder of a blockchain startup that raised $86 million has been arrested in the Netherlands on charges of misleading investors and deceiving supplies and employees. The founder, Sam Narain, is accused of leading the startup to bankruptcy, despite raising millions of dollars from investors.
Narain is the founder of Komodore64, a blockchain startup that was building a gaming platform on the Komodo blockchain. Based in The Hague, the startup promised investors that it would revolutionize the gaming industry, using blockchain technology to track all the transactions.
According to a report by local outlet Sprout, several investors were convinced of its potential and invested in the startup. The report cites an Italian investor who claims to have invested $661,000. To further increase the appeal of the company, Narain misled the investors into believing that a large American investment firm had invested in the project as well. The firm was New York-based banking giant Goldman Sachs, but as it was later revealed, Narain had hired people to act as representatives of the bank in order to dupe investors.
Despite receiving tens of millions of dollars in investment, Narain was unable to pay most of the suppliers who offered his company services, according to the report. The employees also went for months without any payment, filing a lawsuit against Narain and the company two weeks ago. The rent in the premises he occupied is also yet to be paid.
Narain had also misled the investors on the people running the company, including the co-founder. The news outlet reported that the alleged co-founder, Max Theyse, never worked for the company. The curator of the company revealed, “I think that N. has put him forward as such. The real co-founder is someone else, I did talk to him. This person says he is surprised that the co-founder was someone other than himself.”
Narain was arrested while staying at the Hilton hotel in The Hague. He had sought refuge in the hotel in fear of the angry investors he had defrauded.
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