Polychain Capital, a San Francisco-based crypto investment firm, is suing a decentralized cryptocurrency exchange (DEX) provider over an apparent share sale gone wrong.
The defendant in the legal tussle is Shipyard Software, a DEX developer company also based in San Francisco. It raised $21 million last July for its Ethereum-based retail platform, Clipper.
Meanwhile, as part of the DEX's fundraising, Polychain led a $4 million stock round, while liquidity providers contributed the remaining $17 million to the DEX's pool.
Also, Shipyard markets an OFAC sanctions compliance tool, which enables “DeFi protocols and crypto exchanges to comply with regulations and attract institutional investors.”
According to a new complaint filed in Delaware court and noted by Law360, Polychain alleges it has yet to receive its Shipyard Software shares more than a year after its investment. Polychain is now requesting the return and issuance of digital assets."
Polychain has not specified which assets it wants to be returned by Shipyard.
Polychain is a prominent investor in the crypto space. According to Crunchbase, the firm has led 80 fundraising rounds and sponsored 158 blockchain startups in total, including Compound (which it successfully sold) and the hacked blockchain bridge, Nomad.
Just last month, Polychain was ordered to pay $5.5 million in fees and expenses to a crypto hedge fund firm, Pantera Capital, which took part in its seed round in 2016.
According to Bloomberg Law, an arbitrator affirmed the accusation that Olaf Carlson-Wee (Polychain's founder) breached his fiduciary duty by "diverting corporate opportunities" away from Pantera and toward Polychain.
Polychain's most recent capital investment was with Vespene Energy, a firm that uses landfill methane to power bitcoin mining.
