Irish tech startup Greentech Holdings is among hundreds of plaintiffs in the US that are suing blockchain firm StrongBlock.
trongBlock developed a blockchain platform and sold investors cryptocurrency tokens and nodes that could be operated on the platform.
The plaintiffs claim that StrongBlock’s tokens are unregistered securities and that the company placed caps on the awards it would pay out to investors in a “material alteration of the terms” of their investments.
Greentech Holdings is a Meath-based startup building an e-commerce service for cannabidiol (CBD) products that are traded using cryptocurrency. The startup runs under the Greenheart CBD brand and recently raised €500,000 from investors.
Greentech Holdings and its co-founder Mark Canavan are each listed as plaintiffs in the lawsuit filed in the Southern District of New York at the end of December.
According to the complaint, Greentech spent over $1.1m (€1m) on StrongBlock tokens and nodes. Canavan declined to comment.
The plaintiffs claim that investors that purchased StrongBlock tokens and nodes did so with the expectation of turning a profit when the tokens went up in value. A person who purchased a node, which is necessary to operate the platform, could expect to be rewarded for doing so with more tokens.
However a cap on rewards imposed by StrongBlock last April inhibited that earning potential, they say.
The plaintiffs also say the tokens qualify as securities, and so should have been registered with the US Securities and Exchange Commission (SEC).
StrongBlock chief executive David Moss denies the claims made in the complaint.
“We are steadfast that nothing improper occurred regarding StrongBlock, and are confident that the matter will be resolved in our favour,” he said.
The plaintiffs, made up of individuals and companies, are seeking compensatory damages of at least $22.3m.