- oinbaseAccording to the lawsuit, Armstrong and others stole the concept of a startup platform in which they had previously invested
- They allegedly used the concept to build Coinbase while eliminating a potential competitor.
In the lawsuit filed Dec. 17 in San Francisco, plaintiff MouseBelt Labs alleges that Coinbase CEO Brian Armstrong stole data from a competing blockchain startup. He allegedly pretended to invest in the startup.
Armstrong was allegedly working on a platform for publishing scientific research results using tokens that could be traded. These tokens were intended to reward users for their efforts in the ecosystem, called “ResearchHub”.
Specifically, the plaintiff alleges that Armstrong learned of a platform called Knowledgr that was already pursuing a similar goal. Armstrong offered a financial stake, the details of which included listing the tokens on Coinbase. MouseBelt Labs itself invested in Knowledgr at the time, they said.
MouseBelt Labs now claims as a plaintiff that Armstrong in fact had no serious interest in the growth of Knowledgr, but merely wanted to eliminate a future competitor in advance and adapt its concept into its own platform. If this turns out to be true, it would be a classic case of industrial espionage.
Mousebelt Labs would also have been harmed in this case, because its investment in the startup Knowledgr would never have had a chance to become profitable.
Coinbase likely to fight the case
Coinbase has not publicly commented on the lawsuit so far. It remains to be seen how valid the arguments made in the lawsuit are, and the exchange will likely fight back fiercely. It has already faced several controversies in the past. Two of them had to do with accusations of racism and an “anti-employee” attitude.
Coinbase’s success since its IPO has been extraordinary. According to the company’s CFO, the exchange holds 12 percent of the world’s total crypto assets. The business is doing very well – in the third quarter of 2021, revenue was $1.2 billion.