ConsenSys Accused of Stealing IP From a Startup in Its Own Incubator

Canada-based fintech firm BlockCrushr has filed a lawsuit in New York accusing blockchain tech company ConsenSys of stealing trade secrets.

BlockCrushr claims that ConsenSys launched an Ether (ETH)-based recurring payments platform called ‘Daisy Payments’ one day before the Canadian firm launched its own product. 

BlockCrushr was a participant in the Consensys Tachyon Accelerator program and accuses the elder firm of posing as an advocate and mentor before replicating the startup’s proprietary technology. “Defendants launched Daisy Payments by leveraging the trade secrets Burke and Redden disclosed during the Tachyon accelerator program,” the complaint asserts. 

BlockCrushr participates in accelerator

The complaint asserts that ConsenSys invested $100,000 in BlockCrushr to back the launch of its platform. After being invited to participate in ConsenSys’ Tachyon accelerator program, the complaint says that BlockCrushr’s founders Andrew Redden and Scott Burke “uprooted their lives” and relocated to California in September 2018 to participate in the incubator.

BlockCrushr claims that ConsenSys was provided with access to “every aspect of its marketing, financial, technical and regulatory strategy,” in addition to the code for its payments platform. 

“BlockCrushr also shared its main asset: the source code and proprietary technical solution to its recurring payments platform," the complaint states.

ConsenSys ceased communication

However, in early March 2019, ConsenSys allegedly “abruptly ceased their communications with BlockCrushr and its team.” BlockCrushr claims that ConesenSys failed to provide additional funding it had previously promised, resulting in the firm laying off several of its staff. Despite finding new investors, BlockCrushr sought renewed interest from ConsenSys, and revealed the product’s planned launch date during correspondence on July 23, 2019.

The suit seeks a permanent injunction, damages, legal expenses, and disgorgement of profits gleamed from the alleged theft of BlockCrushr’s technology.

ConsenSys issued the following statement in response:

We are aware of certain claims filed by Blockcrushr d/b/a Groundhog. It is general ConsenSys policy to not comment on on-going legal matters but we must deviate from that policy in this case to express our severe disappointment that such baseless claims are even being filed. The facts tell a markedly different story than the falsities put forth by Groundhog and their counsel. We look forward to vigorously defending the reputation of our organization and products.