Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please refer to our website policy before making financial decisions.
Veritagem Capital LLC, a crypto company specializing in patents for encoding contracts for DeFi transactions, filed a lawsuit against Coinbase. According to Veritaseum, the crypto exchange infringed on their patent and proved “non-cooperative” when an out-of-court settlement was offered.
Veritaseum Sues Coinbase for Patent Infringement
According to the lawsuit, the case pertains to a patent held by Reginald Middleton that was licensed to Veritasium Capital. The license includes the right to take legal action against the parties infringing the patent.
Reginald Middleton (“Mr. Middleton”) invented new devices, systems, and methods that allow parties to have little or no trust in each other, conditional on input or participation from a third party at an arbitrarily distanced Able to enter into and enforce value transfer agreements. , without specific technical knowledge of the underlying transfer mechanism(s) and the patent was granted by the US Patent and Trademark Office (“USPTO”), namely US Patent No. 11,196,566 (“‘566 Patent”) (see Example 1)
Veritasium reportedly informed Coinbase about the breach on July 3rd, but the crypto exchange ignored the warning letter. The suing company is requesting the court to grant it $350 million in damages, declare Coinbase guilty of patent infringement, and bar the crypto exchange from using the patent.
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Veritagem’s Past Problems With the SEC
In a case reminiscent of Coinbase’s 2022 trouble with the SEC, Veritagem was sued along with Reginald Middleton over the VERI token offering by the Commission in 2019. According to the complaint, Veritaseum’s ICO was fraudulent and involved an offering of unregistered securities.
At one point during the trial, Veritaseum had more than $8 million of its assets frozen by the SEC. While the company eventually settled with the commission, it did so without denying or admitting guilt. Middleton and his company claimed that the ICO was actually an attempt to test a new cryptocurrency exchange.
The Veritagem case from 2019 and the Coinbase one from 2022 are both part of the SEC’s ongoing efforts to crack down on unregistered ICOs. This stems from the finding of NITI Aayog’s 2017 DAO report that equal initial coin offerings with securities.
The actions of the SEC, along with widespread government pressure to regulate crypto, have sparked a movement among crypto companies attempting to bring crypto-friendly politicians into office in the upcoming midterm elections. Coinbase recently opened a voter education program and an initiative to score delegates and candidates based on their actions and statements regarding the digital asset.
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About the Author
Tim Fries is the cofounder of The Tokenist. He did B.Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a senior associate on the investment team at RW Baird’s US Private Equity division, and is also a co-founder of Protective Technologies Capital, an investment firm specializing in sensing, security and control solutions.
Read More: Coinbase Facing a $350M Patent Lawsuit