Co-founders of Israeli blockchain firm Orbs are being sued by former partner Elad Arad following the dissolution of his shares in a failed joint venture, Cointree Capital.
According to Israeli business media Globes, Arad is suing partners and brothers Uriel and Daniel Peled, Orbs, Cointree Management Microverse, Hexa Labs, and Hexa Solutions following a failed 18-month mediation in a Tel Aviv court. Arad claims the brothers committed “conspiracy, deceit and serious fraud, as well as unlawful enrichment.” The official report accuses the brothers of breach of fiduciary duty, oppression of a minority shareholder, breach of contract and breach of commitments, theft of commercial secrets, and negligence.
Initial reports suggest that the lawsuit could reach into the tens of millions of dollars as Arad is demanding a settlement from the Elad brothers’ 12 separate digital currency offerings including Leadcoin, Kin, Orbs, Sirin, and Stox.
Arad claims the brothers allocated his Cointree Capital shares towards Hexa, a non-profit blockchain foundation. From the lawsuit:
“The respondents (the Peled brothers) exploited Cointree Capital’s business opportunities to set up new companies based upon new opportunities in the new world of virtual currencies, as well as ideas and plans of Cointree Capital.”
Orbs first launched in 2017 with an initial coin offering following in May 2018. It raised $118 million. A $15 million investment followed in December from Korean firm Kakao Investments.
Interestingly, transactions between Orbs and two recent and large ICO’s Kik and Sirin Labs are listed. Arad claims he was the contact point between Kik and the Peled brothers before they cut him off. Currently, Kik is under fire from the SEC for an unregistered securities offering. Earlier this year, Sirin Labs CEO Moshe Hogeg was given two months by an Israeli judge to settle an investment misappropriation charge by a Chinese investor. The current connection between Kik, Sirin Labs, and Orbs is unspecified.
Responding to the suit, Orbs says the claimant’s demands are unremarkable. “We have not yet managed to study the claim documents, which were sent to us at the same time as they were distributed to the press and media,” they wrote. “Unfortunately, the statement of claim did not surprise us, and follows previous attempts and threats on the part of the claimant.”
As initially reported by CoinDesk in July, Orbs was tapped by the White House to build out a blockchain-based peace plan for ongoing hostilities between Palestine and Israel. Dubbed “Peace to Prosperity,” the proposal would have required Orbs to build out a blockchain land registry.