Judge orders bitcoin incubator CoinLab to hand over $2.4 Million in bitcoins

CoinLab has been ordered to cough up $2.36m to Bitvestment over breach of contract.

Nov 8, 2013 at 10:35 a.m. UTC
Updated Sep 14, 2021 at 2:10 p.m. UTC

Some more bad news for startup incubator CoinLab: it’s been ordered by a judge to pay up - in bitcoin - to Bitvestment Partners LLC, who sued them just last week for breach of contract.

claimed CoinLab "wasn’t living up to its obligation to provide 8,000 bitcoins" under an arrangement the two firms made in August.

In ordering CoinLab to pay the contracted amount, Judge Robert W. Sweet of the US district court for the southern district of New York also blocked them from providing bitcoins to any other parties until it meets its obligations.

As well as the 8,000 BTC (approximately $2.4 million at today's Bitcoin Price Index), Bitvestment also sought access to CoinLab’s financial data, but the judgment denied this part of the claim.

Bitvestment’s website describes the firm as “involved in bitcoin mining, bitcoin-related e-commerce, and innovative uses of block chain-based algorithms,” and using its “expertise to evaluate bitcoin business and related investment opportunities.”

According to CoinLab’s CEO Peter Vessenes, the lawsuit was a contributing factor in the bankruptcy two days ago of Alydian Inc, a company that featured prominently on CoinLab’s portfolio site and also functioned as CoinLab’s bitcoin mining arm.

Alydian, which also offered its mining services to other parties without their own equipment, went under with a reported $3.6 million in debts.

CoinLab had also been funded to the tune of $500,000 by Silicon Valley venture capitalists. The company says it does not mine any bitcoin itself, however, and has not indicated whether Alydian is still on mining duty post-bankruptcy.

Peter Vessenes also happens to be the chairman of the Bitcoin Foundation, the nonprofit that acts as bitcoin’s mouthpiece and promotes its use.

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