A collective of investors associated with a cryptocurrency custody and trading firm has initiated a class-action lawsuit, asserting claims of false or misleading representations and a failure to disclose important information.
The lead plaintiff, Guy Serge A. Franklin, requested a jury trial in his complaint against the firm, along with its senior advisor and former CEO Gavin Michael, current CEO and president Andrew Main, and interim chief financial officer Karen Alexander, as outlined in a filing dated April 2 in the U.S. District Court for the Southern District of New York.
The investors contend that they have suffered damages stemming from violations of U.S. securities laws and a lack of transparency regarding the company’s agreements with clients Webull and Bank of America (BoA).
The investors assert that the loss of Bank of America and Webull will lead to a “73% loss in top-line revenue,” given that these two clients constituted a considerable portion of the firm’s service revenue. According to the lawsuit, Webull accounted for 74% of the company’s crypto services revenue for most of 2023 and into 2024, while Bank of America represented 17% of its loyalty services revenue from January to September 2024.
On March 17, the firm announced that Bank of America and Webull would not be renewing their agreements with them, which are set to expire in 2025. This revelation likely contributed to a more than 27% drop in the company’s share price within 24 hours. The investors allege that the firm “misrepresented the stability and/or diversity of its crypto services revenue” and failed to disclose that this revenue was “substantially dependent” on its contract with Webull.
The lawsuit states, “As a result of the defendants’ wrongful acts and omissions, along with the sudden decline in the market value of the Company’s securities, the plaintiff and other class members have incurred significant losses and damages.”
Additionally, other law firms have indicated they are investigating the company for potential securities law violations, hinting that more class-action lawsuits may be forthcoming. Inquiries to the firm regarding the lawsuit went unanswered at the time of publication.
In other news, the firm’s share price experienced a remarkable increase of approximately 162% in November 2024, following reports that then-President-elect Donald Trump’s media company was contemplating an acquisition of the firm. As of April 2025, there has been no official announcement regarding a deal.
At the time of publication, shares of the firm were priced at $8.15, having declined by more than 36% over the preceding 30 days.