The background is that Caseres previously ran Lemon, a digital wallet start-up that was later sold to LifeLock at the end of 2013. Casares and most of the Lemon team became LifeLock employees. LifeLock claims that Casares started Xapo by “using a product developed by Lemon employees, in Lemon’s facilities, on Lemon’s computers, and on Lemon’s dime.” Casares initially pushed to have the case thrown out, but a judge in Silicon Valley disagrees, and the lawsuit against current Xapo CEO will move forward.
The case could have serious ramifications for Xapo, who are considered one of the hottest Bitcoin start-ups in the country. Casares is arguing that LifeLock originally had no interest in Lemon’s Bitcoin-related assets. He claims to have a letter from a LifeLock executive which testifies to this effect, but whether this will stand up in court as a significant legal defense remains to be seen.
Xapo has made a name for itself by providing innovative solutions in relation to the cold storage of bitcoins, as well as having a CEO that is well-known as one of the early evangelists for Bitcoin, even being credited with the first major bull run by New York Times writer Nathaniel Popper.
Casares has until the 24th to reply to the initial charges against him, and it is unclear at this time whether he intends to proceed and fight it out in court or simply settle now for reasonable damages. This all could go from bad to worse if a drawn out legal dispute reflected negatively and scared off investors, or if Casares lost and the damages were much higher than a settlement might otherwise be.
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