Veritaseum Sued Coinbase Over Patent Infringement, Seeks $350 M For Settlement

Coinbase gets into trouble with another lawsuit of patent infringement, among its other legal issues. A blockchain-based fintech software company in New York, Varitaseum Capital LLC, sued the crypto exchange for infringing its patent transfer technology for several exchange services.

Reggie Middleton, the founder of Veritaseum, filed the patent infringement case against Coinbase in Delaware Federal court on Thursday. He alleged that Coinbase had used his patent, developed for secure digital transactions, in its Pay, Cloud service, wallet, website, and App.  

Related Reading: Pentagon Taps Inca Digital To Examine Crypto Risks To National Security

The plaintiff highlighted in the case that U.S. Patent and Trademark Office awarded him the patents in question in 2021. The recently filed complaint reads;

Reginald Middleton (“Mr. Middleton”) has invented novel devices, systems and methods enabling parties with little trust or no trust in each other to enter into and enforce value transfer agreements conditioned on input from or participation of a third party, over arbitrary distances, without special technical knowledge of the underlying transfer mechanism(s) and was awarded a Patent by the U.S. Patent and Trademark Office (“USPTO”), namely U.S. Patent No. 11,196,566 (the “’566 Patent”) (see Ex. 1).

The company reached out to Coinbase to settle this issue without running any legal dispute in the courts. But the crypto exchange was “uncooperative,” told Carl Brundidge, attorney at Veritaseum Capital. And now, Middleton and its company seek the court to get it granted $350 million in return for the damages, make Coinbase plead guilty, and stop the platform from using these patents in its services. 

Bitcoin’s price is currently trading above $19,000. | Source: BTCUSD price chart from TradingView.com
Veritaseum Faced Charges Of Running A ‘Fraudulent Scheme’ By SEC In 2019

Notably, the plaintiff firm Veritaseum also faced charges of running a fraudulent scheme by the Security and Exchange Commission (SEC) in 2019. The authority accused the firm of misleading the community about the market value of its token VERI to promote its sale. In addition, SEC alleged the platform manipulated the token’s price from 2017 to 2018. 

The Veritaseum and its founder Middleton initially claimed in Brooklyn Federal court that the company didn’t make false statements with the intention of fraud and that its native tokens were not securities. And further added that trading the token with an issue was “actually an effort by Mr. Middleton to test out a new online cryptocurrency exchange.”

Related Reading: Singapore’s DBS Bank Expands Its Crypto Trading Service For 100K Customers

But finally, the company and its founder agreed to settle the deal paying SEC more than $9.4 million in total. However, they spent 1 million extra as a penalty for Middleton to settle fraudulent scheme charges against him.

Veritaseum, as per its website, is a software-making company that develops peer-to-peer and blockchain-based capital markets allowing anyone to participate around the globe. It prevents the need for any third-party counter to operate and enables one with an internet connection to interact with the market on a peer-to-peer or one-on-one basis.

Featured image from Pixabay and chart from TradingView.com