According the suit, the TinBu founders were approached by Lottery.com – known then as AutoLotto Inc. – in 2017 regarding a potential acquisition of the business.
The suit alleges that the two parties reached a written agreement by 2018, in which Brier and Tu were supposed to receive millions of dollars in cash, a number of cryptocurrency token investments in AutoLotto and a guaranteed five-year employment contract to continue working for the post-merger combined entity.
The plaintiffs, who are represented by Morgan & Morgan, said that – following the closing of the deal – Lottery.com failed to make the first of many promised payments. They also said that the business failed to deliver the promised tokens, making that aspect of the deal worthless.
“Our clients built a business from the ground up, but instead of being rewarded for their hard work, they had their company essentially stolen out from under them,” read a statement from the plaintiff’s lawyers John Morgan, Roger Brown and Benjamin Webster. “We hope to recover what Mr. Brier and Mr. Tu are owed and hold other companies like this accountable.”
Breach of contract
Following a number of attempts to resolve the dispute through modified agreements, which the suit alleges Lottery.com also failed to honour, the two parties eventually agreed to a new settlement and employee agreements.
The suit further alleges that Lottery.com continued to breach its contract, leaving more than $10m unpaid to Brier and Tu – despite the acquisition now being years in the past and Lottery.com having used the company to attract new investment.
The suit also makes reference to Lottery.com’s more recent issues, arguing that the business defrauded them and other investors by including “material misrepresentations” about the financial status of the company. These dated back to before the company went public in November 2021.
In addition to naming the TinBu subsidiary and Lottery.com, the suit also places blame on former company president, treasurer and chief financial officer Ryan Dickinson, as well as former chief revenue officer and director Matt Cleminson.
According to Brier and Tu, these defendants had the power to control the contents of the businesses SEC filings, press releases and other market communication.
“Because of their positions with Lottery.com, and their access to material information available to them but not to the public, the individual defendants knew that the adverse facts specified herein had not been disclosed to and were being concealed from plaintiffs, and that the positive representations being made were then materially false and misleading,” reads the suit.
Inside story
The filing also makes allegations relevant to a number of past incidents in which Lottery.com admitted to failings in its financial records and accounting. On 15 July, the business disclosed in an SEC filing that Cleminson had resigned effective immediately, with the organisation also stating that an internal investigation had found that the business overstated its cash balance by $30m.
The suit also says that the plaitiffs discovered after the fact that this falsely declared balance was the result of a scheme orchestrated by Cleminson, where he arranged for the money to be briefly deposited in the account in order to mislead auditors.
Original article: https://igamingbusiness.com/legal-compliance/lottery-com-sued-by-tinbu-founders/
