Crypto mining firm Riot Blockchain has been sued to pay $728,200 to cover an investor’s legal costs from separate security regulation violation lawsuits.
An investor sued Nasdaq-listed cryptocurrency mining firm Riot Blockchain for $728,200 that the investor owes in another contract breach lawsuit.
According to court documents filed on April 3, the aforementioned sum is the money Riot Blockchain investor Barry Honig and consulting firm GRQ Consultants spent on the legal proceedings over the contracts between the parties. The filing reads:
“All of the agreements contain robust indemnification provisions which require Defendant to defend and indemnify Mr. Honig and GRQ against any subsequent lawsuits or claims ‘with respect to any of the’ securities purchases that they made, and/or ‘any violation or alleged violation by [Defendant] of the Securities Act, [or] the Exchange Act.’”
Securities regulation violation lawsuits
According to the documents, in March 2017 Honig and GRQ — of which he served as a trustee — entered into securities purchase agreements and registration rights agreements with Riot Blockchain for $1,725,000 million. The next year multiple legal proceedings were moved against Honig and GRQ alleging that the securities transactions included in the contract violate the regulations. The filing reads:
“Honig vigorously denies each and every one of the claims asserted against him in those proceedings, and has expended significant sums to mount his defense.”
Still, while Honig believes the legal actions against him to be unfounded, he claims that those lawsuits trigger the indemnification obligations to him and GRQ. Riot Blockchain, on the other hand, refused to cover the legal fees in question, and the plaintiffs point out that the firm’s most recent quarterly report shows that it held over $20,324,000 of assets.
Lawsuits in crypto
The cryptocurrency industry, as any other space with a large quantity of money involved, sees a large number of lawsuits. As Cointelegraph recently reported, seven cryptocurrency firms were targeted in lawsuits filed in the New York federal court on April 3.
Yesterday, Cointelegraph also reported that an entity representing the more than 100 victims of the alleged $35 million Q3 Ponzi scheme filed a class-action lawsuit against Wells Fargo Advisors.