Bahamas provider slams $20m crypto ‘fraud’ claim

• Deltec brands ‘sabotage conspiracy’ lawsuit ‘baseless

• Says Bahamas-based token offerer should blame itself

• Digital assets plummeted 93% within 90 days of listing


Tribune Business Editor


A Bahamian financial institution and its affiliate yesterday slammed a $20m damages claim against them as “baseless”, denying they participated in a “conspiracy to sabotage” a virtual token issue.

Deltec Bank & Trust, in response to Tribune Business inquiries, asserted that Bahamas-incorporated Dreamr Labs was seeking to blame itself and others for its own failings after the value of its virtual tokens crashed by 93 percent within 90 days of being listed on the Bittrex Global crypto currency exchange.

Responding to the lawsuit filed against it last week in the eastern New York federal court, the New Providence-based institution branded the allegations against it as both “unfounded and unsubstantiated”, and “frivolous and vexatious” given that it is not directly involved in the digital assets/crypto currency space.

However, the Dreamr complaint also names Deltec’s Bahamian blockchain and digital assets affiliate, Delchain, as a defendant together with the latter’s Florida-based chief executive, Bruno Macchialli. It claims they worked with two other defendants, Suisse Finance Holdings and Richard Iamunno, to undermine its digital token offering and cause $20m worth of losses.

Making allegations including breach of contract, fraudulent inducement and fraud, Dreamr claimed: “Defendants, individually and collectively, caused Dreamr to lose more than $20m. Dreamr retained and paid each defendant to provide certain advisory services concerning Dreamr’s attempt to launch and list Dreamr’s DMR crypto-tokens on a recognised crypto currency exchange, namely among others Bittrex Global.

“Rather than support Dreamr’s endeavour, each defendant instead conspired against Dreamr and sabotaged Dreamr’s crypto token launch by, among other things, causing a delay of the release of Dreamr’s tokens; preventing and stalling the transfer of Dreamr’s tokens out of its own bank accounts; and coercing Dreamr into an unjustified settlement agreement in exchange for additional compensation.”

Accusing Deltec, Delchain and the others of breaching their fiduciary duty to provide advisory and consulting services for the offering, Dreamr asserted that all knew “there was no legitimate reason to delay the release” of the tokens but did so in order to extract more fee income.

“Unbeknownst to Dreamr, defendants had pre-existing, complex, interlocking relationships, which defendants failed to disclose. As a direct result of defendants’ actions, Dreamr’s tokens crashed 93 percent in the first 90 days,” the lawsuit alleged.

In response, Deltec hit back by arguing was Dreamr was misplacing the blame for this valuation crash. “The launch of the Dreamr token on the Bittrex crypto exchange crashed 93 percent in 90 days, and they have chosen to blame others for the failure in their complaint,” the Bahamian financial institution said.

“It is important to note that Deltec does not directly engage in crypto-related services or deal directly with digital assets as part of its service offering. Therefore, the allegations against Deltec are not only unfounded and unsubstantiated, but they are also frivolous and vexatious.

“At no time did Deltec enter into an advisory agreement with the plaintiff in relation to the launch or issuance of any crypto tokens. We will vigorously defend Deltec in this matter, including as to the proper forum for any such claims to be heard, and will assert any and all legal rights and remedies afforded to us under the law.”

While incorporated as a Bahamian company, Dreamr’s offices are based in Brooklyn, New York, which likely explains why the lawsuit was filed there. Deltec’s reply, though, indicates it will likely seek to have the action thrown out on jurisdictional grounds. It is understood that the agreements between the parties require any dispute to first go to arbitration under Bahamian law.

Deltec only seems to have been named as a defendant based largely on its connection to Delchain. The only actual involvement it had, according to the lawsuit, was opening a bank account for Dreamr and providing it with e-banking “and electronic channel services”.

However, Dreamr alleged that its relationship with Delchain began when the two sides entered into a financial advisory agreement on January 12, 2021. The latter was to advise on a virtual token offering that would raise $5m and be listed on a crypto currency exchange.

It entered into similar agreements with Suisse Finance Holdings and Atlantic International Capital, where Mr Iamunno was based, to also assist the offering. Delchain was alleged to have earned $80,000 for its role in just over a year.

“Pursuant to recent telephonic recordings, to which Macchialli consented, Macchialli agrees that Dreamr bears no responsibility for the botched launching and listing of the Dreamr tokens,” the lawsuit alleged of the Delchain chief. “The clunky and unsuccessful launch and listing of the Dreamr tokens falls squarely on all defendants.”

Dreamr alleged that the tokens were scheduled to launch on August 31, 2021, but that this was delayed until September 7. It claimed that, after paying Bittrex a 130,000 Swiss francs listing fee, Delchain’s Macchialli halted the launch “with press releases ready to go” because of “additional due diligence concerns, which had already been addressed and resolved during the nine months prior”.

“Macchialli decided the Dreamr token launch had to be delayed, even though Bittrex had already approved a market open date for the Dreamr tokens,” Dreamr claimed. “Macchialli wanted to funnel certain assets through Delchain before listing on the Bittrex exchange. It was not necessary to funnel certain assets through Delchain in order to launch and list the Dreamr Tokens.

“Macchialli’s unilateral decision to halt the launch and listing process caused Dreamr and the Dreamr token to lose momentum, interest and, ultimately, value.... The delay in listing the Dreamr token cost Dreamr approximately $10m. All defendants had confirmed that a proper and well-publicised launch of the Dreamr tokens would push the Dreamr tokens to $1 per token – well over $100m in total.”

Further complications then arose on November 17, 2021, when Dreamr asked Delchain to release the tokens held in “lock-up” via accounts at Delchain. Deltec was said to be the custodian. These are tokens held by a company’s founder, which are normally released between 90-120 days after a listing has taken place.

“According to Tradingview.com, in or around November 17, the Dreamr tokens held in Dreamr’s account at Delchain and Deltec were valued at $0.12 cents per token or roughly $21.793m in total,” Dreamr alleged.

“For more than seven days, however, Delchain, Deltec and Macchialli refused to release the Dreamr tokens under various false pretenses. Macchialli first claimed that Delchain and Deltec needed to schedule a video conference before the Dreamr tokens could be released and listed. Macchialli had never advised that such a video conference would be necessary.”

It is understood that Delchain asked for a video conference because it was concerned that all the tokens held in lock-up were being released at one time. The situation was then further muddied by allegations of fraud made against Dreamr.

“Macchialli, Delchain and Deltec next claimed that they had received a letter from a third-party alleging fraud on Dreamr’s part and certain other irregularities,” Dreamr alleged. “Based exclusively on the third-party letter, Delchain, Deltec and Macchialli refused to release the Dreamr tokens.

“Dreamr demanded that Delchain, Deltec and Macchialli forward the third-party letter to Dreamr. Delchain, Deltec and Macchialli refused to forward the third-party letter. Dreamr demanded that Delchain, Deltec and Macchialli reveal the identity of the third-party making the allegation(s) of fraud.”

That, too, was refused. It is understood Delchain hit the pause button until its compliance department had fully investigated the fraud allegations, with the probe completed on November 26 last year.

“On or about November 26, 2021, when Delchain and Deltec agreed to release the Dreamr tokens, the value of the Dreamr tokens had dropped from $0.12 cents per Token to $0.06 cents per Token – representing a loss of more than $10m,” Dreamr alleged.

“While Delchain, Deltec and Macchialli refused to release the Dreamr tokens, they were aware that certain other parties, including all defendants, were selling certain Dreamr tokens that were already on the market. Certain parties, including all defendants, profited from the sale of certain Dreamr tokens, while other Dreamr tokens remained ‘hostage’.”

Dreamr alleged that Suisse Finance Holdings was revealed as the entity that made the fraud allegations after it demanded compensation for its losses. While the nature of the claims was not specified, Dreamr claimed that the Bahamian institutions acted “in cahoots” with it to damage its interests and profit from the sale of its tokens at a higher price.


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