Blockchain startup SolidX Management has sued its former partner VanEck Securities Corporation of a breach of contract regarding a BTC exchange-traded fund (ETF). The startup claims that the New York-based asset manager cut ties with it only to launch a BTC ETF of its own.
SolidX was the first company to file a BTC ETF with the U.S. Securities and Exchange Commission (SEC) back in 2016. A year later, VanEck filed a similar application. However, the watchdog shot down both attempts. The two firms came together in 2018 to merge forces and develop one BTC ETF product that would hopefully receive regulatory approval.
The two New York companies’ most recent BTC ETF application with the watchdog was in 2019. However, in September of that year, they withdrew their application and then ultimately parted ways in August 2020. Four months later in December, VanEck revealed it had filed an application with the SEC for a BTC ETF on its own.
According to a lawsuit filed by SolidX, this was a “bad faith termination of their agreement.” As Law360 reports, the company believes that VanEck was working on the ETF behind its back, even when the two companies were in a partnership. VanEck started announcing new products just weeks after the contract termination. These products compete directly with SolidX, and this may be the reason VanEck wanted to terminate the contract.
In addition, SolidX asserts that the VanEck application is quite similar to its own, claiming that the asset manager plagiarized the application.
The lawsuit stated: “Using SolidX’s work and work product to compete with it is bad enough, but the registration statement VanEck filed would be called plagiarism in any other context: the structure of VanEck’s proposed Bitcoin ETF is substantively identical, or virtually so, to the structure for which SolidX sought SEC approval.”
While it has had no luck with the SEC, VanEck has already launched a similar product in Europe. In November 2020, the asset manager launched a physically-backed BTC exchange-traded note on Germany’s Deutsche Börse Xetra trading platform.