It looks as if Riot Blockchain Inc. will be found in breach of the contract it has with investor Barry C. Honig. According to an April 3 civil action in federal court in New York, the crypto mining company owes him at least $728K for attorney bills so far.
Riot Crypto Firm in Breach of Contract
During the action, Honig claimed that he was promised indemnification by Riot Blockchain. According to the agreements entered into by both parties in March 2017, the would cover any legal fees against him. The signed documents:
contain robust indemnification provisions which require defendant to defend and indemnify Mr. Honig and GRQ against any subsequent lawsuits.
And multiple lawsuits, indeed, Mr. Honig has suffered regarding alleged securities fraud concerning Riot in 2018. In one example, Honig spoke of a recent SEC investigation against Riot that had been concluded. However, he also faces a proposed shareholder class action in New Jersey as well as no less than five separate shareholder derivative actions.
The Riot investor “vigorously denies each and every one of the claims asserted against him in those proceedings.” However, he has “expended significant sums to mount his defense”.
More Legal Costs to Come on Top of $728K Total
He demanded that Riot (who has refused to meet its obligations thus far) cover his legal costs for representations in all the suits. He also said that on top of the $728k he had already spent, he would also face significant more costs ahead. On Monday, Honig said:
In the contracts between the parties at issue in this action, defendant agreed that the state or federal courts in New York shall have exclusive jurisdiction over any disputes arising out of or in connection with parties’ agreements at issue in this proceeding, and expressly waived any objection to this Court serving as a convenient venue.
Moreover, he argued that Riot Blockchain certainly has the funds to fulfill its obligations. He showed the company’s most recent quarterly report, showing assets valued at $20,324,236.
Honig’s attorney, Robert Weber told Law360:
The language of the agreements are black and white… Riot has an obligation to indemnify Mr. Honing for the defense fees that he incurred in the various lawsuits and hasn’t done it, and frankly, forcing us to file us to go to litigation is ultimately going to be a waste of Riot shareholders’ money.
What do you make of Honig’s claims against Riot crypto mining firm? Add your thoughts below!
Images via Shutterstock
