The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian blockchain and digital assets firm has slammed a $20m damages claim as “unfounded”, asserting that it was lavished with praise by the party making the allegations less than five months earlier.

Delchain, the affiliate of Deltec Bank & Trust, in a statement pointed out that Bahamas-incorporated Dreamr Labs on October 22, 2021, hailed its role in the virtual token offering that is now at the centre of their legal dispute.

Responding to the latter’s March 10, 2022, lawsuit, Delchain referred to Dreamr’s Yahoo Finance release - seen by Tribune Business - in which it described the Deltec affiliate as a “leading digital asset firm” and thanked it for the advisory role it played in helping to raise $2m in capital.

“We are aware of the recent news regarding a complaint that was filed against Delchain Ltd with allegations related to a token launch and issuance by Dreamr that are unfounded and unsubstantiated,” Delchain’s statement said.

“Projects in this space are not always successful. At Delchain we work to support our clients with a compliant launch strategy, and then to provide regulated custody and conversion services. Delchain does not operate any crypto currency exchange and cannot control the decision or timing to list any token.”

Suggesting that relations soured suddenly, and rapidly, Delchain added: “Over one month after the token listing, a press release was issued by Dreamr on Yahoo Finance where Dreamr’s chief executive commented: ‘Thanks to the help of our partners at Delchain we were successful in reaching our pre-listing capital goal.

“‘Having the right partners on our project has made all the difference and resulted in a successful tier-one exchange listing that has provided the company a strong foundation to build upon’.” Delchain and Deltec have thus both denied that they participated in a “conspiracy to sabotage” a virtual token issue.

“As a licensed and regulated entity, Delchain must provide the top-level standard of custodial services,” the company added in its statement. “Our clients are the ones who look for the highest level of safety and security. This means having in place processes and procedures to safeguard against cyber security threats, validate identities and continuously monitor account activities. Delchain provided its services in line with these compliance procedures and policies.

“Delchain will continue to vigorously defend itself in this matter, including as to the proper forum for any such claims to be heard, and will assert any and all legal rights and remedies afforded to us under the law.”

Deltec Bank & Trust, in response to previous Tribune Business inquiries, asserted that Dreamr Labs was seeking to blame itself and others for its own failings after the value of its virtual tokens crashed by 93 percent within 90 days of being listed on the Bittrex Global crypto currency exchange.

Responding to the lawsuit filed in the eastern New York federal court, the New Providence-based institution branded the allegations against it as both “unfounded and unsubstantiated”, and “frivolous and vexatious”, given that it is not directly involved in the digital assets/crypto currency space.

The Dreamr complaint also names Delchain as a defendant together with its Florida-based chief executive, Bruno Macchialli. It claims they worked with two other defendants, Suisse Finance Holdings and Richard Iamunno, to undermine its digital token offering and cause $20m worth of losses.

Making allegations including breach of contract, fraudulent inducement and fraud, Dreamr claimed: “Defendants, individually and collectively, caused Dreamr to lose more than $20m. Dreamr retained and paid each defendant to provide certain advisory services concerning Dreamr’s attempt to launch and list Dreamr’s DMR crypto-tokens on a recognised crypto currency exchange, namely among others Bittrex Global.

“Rather than support Dreamr’s endeavour, each defendant instead conspired against Dreamr and sabotaged Dreamr’s crypto token launch by, among other things, causing a delay of the release of Dreamr’s tokens; preventing and stalling the transfer of Dreamr’s tokens out of its own bank accounts; and coercing Dreamr into an unjustified settlement agreement in exchange for additional compensation.”

Accusing Deltec, Delchain and the others of breaching their fiduciary duty to provide advisory and consulting services for the offering, Dreamr asserted that all knew “there was no legitimate reason to delay the release” of the tokens but did so in order to extract more fee income.

“Unbeknownst to Dreamr, defendants had pre-existing, complex, interlocking relationships, which defendants failed to disclose. As a direct result of defendants’ actions, Dreamr’s tokens crashed 93 percent in the first 90 days,” the lawsuit alleged.

While incorporated as a Bahamian company, Dreamr’s offices are based in Brooklyn, New York, which likely explains why the lawsuit was filed there. Deltec’s and Delchain’s replies, though, indicate they will likely seek to have the action thrown out on jurisdictional grounds. It is understood that the agreements between the parties require any dispute to first go to arbitration under Bahamian law.