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Boss of major crypto exchange sued over alleged fraud

According to the complaint, in June 2019 Armstrong offered financial backing to Knowledgr, a platform used to distribute scientific papers with tokens offered as an incentive. He also promised the opportunity to list the tokens on Coinbase. 

All that was done so he could use confidential information for ResearchHub, a similar platform he was working on, and eliminate Knowledgr as a competitor, the suit alleges.

MouseBelt, which was already investing in Knowledgr, also alleged that Armstrong contacted the platform’s founder Patrick Joyce, offering to personally invest $50,000 for a 1% share with a view to Coinbase making a larger investment subject to due diligence. The sum was wired to Knowledgr in mid-July.

The plaintiffs say Armstrong intended 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.”

The company accuses Armstrong, Coinbase, and related entities of committing fraud, interference with a contract and unjustifiable enrichment, among other charges.

A Coinbase spokesperson told CoinDesk that the claims “are entirely frivolous” and they look forward to proving that in court.

© 2021, paradox. All rights reserved.

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