Litigation Funding Transaction

SolidX Management LLC vs. VanEck Securities

Opportunity to participate as an investor in this $700,000,000 litigation

 

 

 

 

 

 

 

 

 

For important risk and disclaimer information, Click Here.

Industry

Litigation Funding

Company Type

Asset Management

Size

$7.5 Million

Investment Type

Equity/Debt

OVERVIEW


SolidX Management LLC has filed a lawsuit against Van Eck Securities for breach of contract – pending in New York State Court. SolidX was an early bitcoin investment company. VanEck is an established ETF issuer with approximately $69 billion in assets under management. VanEck and SolidX had partnered in the development of bitcoin-related financial products, including an ETF and a tradable trust

The partnership was a marquee relationship, and made front page news (e.g., WSJ)


After nearly three years of working together, VanEck breached its agreement with SolidX, taking SolidX’s work product and causing irreparable harm


SolidX filed a lawsuit against VanEck in January 2021 for $700 million in damages; the court denied VanEck’s 2021 motion to dismiss


The case is currently in the discovery phase, with both parties exchanging documents


Litigation outcomes are asymmetric and uncorrelated with global macroeconomic conditions / financial markets

TRANSACTION RATIONALE AND STRUCTURE

Atakama Inc., a cybersecurity company, seeks to divest and monetize a wholly owned subsidiary, SolidX Management LLC


SolidX had originally been a bitcoin-related business, but its only remaining activity is its litigation against VanEck


Atakama has become exclusively focused on its cybersecurity software business; SolidX no longer has any logical nexus to Atakama


Proceeds received by Atakama in the divestiture of SolidX will be used to support Atakama’s core cybersecurity business; the divestiture provides Atakama with a non-dilutive source of cash for growth

SUMMARY OF CORE ISSUES

First Product: bitcoin ETFSecond Product: XBTCZ
TermsVanEck to market and sell shares of the VanEck SolidX Bitcoin TrustVanEck to market and sell shares of the institutional bitcoin ETF
BreachVanEck terminated agreement and filed its own bitcoin ETF applicationVanEck terminated agreement and failed to market and sell shares of the ETF
DamagesSeeking $400m based on amount of management fees SolidX would have earnedSeeking $200m based on amount of management fees SolidX would have earned
StatusVanEck filed motion to dismiss which was denied. Case is in midst of discoveryVanEck filed motion to dismiss which was denied. Case is in midst of discovery

HISTORY

SolidX was a pioneer in the bitcoin securitization space

The lawsuit is about $700m in damages

  • 2016 – SolidX was the first company to propose a fully insured bitcoin ETF insurance via Lloyds of London that was to be listed on NYSE. XBTCZ was a bitcoin ETF –like product available to institutional investors (launched and available for trading under ticker: XBTCZ) and the other product was a bitcoin ETF that was to be offered to the public (was working its way through the SEC)

  • 2018SolidX partners with VanEck as both entities recognized synergies. SolidX’s was a Bitcoin ETF application with intellectual property and expertise, whereas VanEck was an established brand in business for more than 65 years with $69 billion assets under management

  • 2019 – SolidX and VanEck launch XBTCZ for institutional investors. Structured, created and managed by SolidX. Marketing and sales were to be done by VanEck

  • 2020VanEck “terminates” partnership

OPPORTUNITY

At the conclusion of the lawsuit, investors are expected to receive proceeds from the outcome of the lawsuit

  • Uncorrelated with global macroeconomic conditions and financial markets
  • Unrelated to inflation

LAWSUIT PROGRESS AND EXPECTED TIMELINE

MANAGEMENT

Daniel H. Gallancy | Co-founder & CEO


  • Learned to program in C at age 10, security obsessed
  • Built a secure, laser-based, point-to-point ethernet bridge at age 22, long before wireless ethernet was widely available
  • Hacked up a cold wallet for bitcoin storage in 2012
  • Consulted on crypto for the Boston Consulting Group and Depository Trust & Clearing Corporation, Monetary Authority
    of Singapore and many others
  • Over a decade in asset management industry focused on semiconductor, IT hardware, software, and telecommunications
  • BA in Physics and BSE in Electrical Engineering from the University of Pennsylvania, MBA from Columbia Business School

Dimitri Nemirovsky | Co-founder & COO


  • Technology nerd who began coding in 8th grade
  • Professional career started at Merrill Lynch during dotcom era, developed a deep understanding of the intersection between technology and cybersecurity
  • Spent bulk of legal career with a national law firm, immersed in technology related legal and enforcement matters involving enterprise clients
  • Left law to become an entrepreneur. Discovered bitcoin and blockchain technology in 2013
    BBA and MBA from Baruch College, JD from Brooklyn Law School
Learn More About SolidX
Thank you for your interest in SolidX.Please fill out your information and we will contact you shortly with more information on this opportunity.

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CONTACT US

Hi. We're not around right now. But you can send us an email and we'll get back to you, asap.

Thanks, Ken

Ken Margolis | Managing Partner Castle Placement, LLC
1460 Broadway Street, Rte 400
New York, New York 10036
(212) 418-1188 | C: (516) 712-7784
kmargolis@castleplacement.com

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