A former partner in Israeli blockchain firm Orbs is suing two of the funding partners for dispossessing him of his shares in a failed joint venture. According to a report by local media outlet Globes, Elad Arad alleges that the two partners, brothers Uriel and Daniel Peled, practiced deceit, fraud and a breach of contract. Arad also sued four other companies in which the two brothers are partners.
Arad filed the claim in the Tel Aviv District Court. The two parties have been in a mediation procedure for the past eighteen months but were unable to come to an agreement, the report reveals. The claim could be worth tens of millions of dollars. It includes oppression of a minority shareholder, breach of fiduciary duty, theft of commercial secrets, breach of contract and unjust enrichment.
Arad was a founding partner of Cointree Capital, together with the two brothers. However, he claims they exploited Cointree Capital’s business opportunities to establish new companies which he was exempted from.
Part of the claim states, “In effect, the respondents deprived the claimant of his share in the new companies, left him behind, and emptied Cointree Capital of content by taking its business opportunities and competing with it in the new companies, and even emptied it of its tangible assets, its cash and its manpower, and made use of the reputation it had acquired.”
Arad further claims that Cointree Capital invested in some of the largest ICOs and token offerings in the last year. They include Kin, the native digital currency for Canadian messaging app Kik and Sirin, the token for Israeli blockchain startup Sirin Labs. Other investments include in Leadcoin and Stox.
The Peled brothers are the founding partners of Orbs, a blockchain startup that raised $133 million in 2018. In its ICO held in May, it raised $118 million, with South Korean internet and messaging giant Kakao investing $15 million in the company later that year.
Orbs was reportedly invited by President Donald Trump a month ago to demonstrate how blockchain-based solutions could solve the long-standing Middle East political conflicts. The company stated at the time that it was working with the White House on several projects, including development projects in Palestine.
Responding to the lawsuit, Orbs stated, “The claimant’s claims are completely unfounded and are devoid of any factual or legal basis, and their entire aim is to lead to the unlawful enrichment of the claimant at others’ expense. This attempt will not succeed. […] The company will not submit to the claimant’s threats, and since he has chosen to resort to legal channels, the company has all the arguments and evidence necessary to refute his version of events, and these will be brought before the court in due course.”
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