Stake.com founders hit with $400m lawsuit from former associate
Lawyers for Ed Craven and Bijan Tehrani slam legal claim as “utterly frivolous” and “provably false”
Stake.com founders Ed Craven and Bijan Tehrani are being sued by former associate Christopher Freeman who alleges he was cut out of the crypto gambling business, estimated to be worth $1bn today.
As reported by WA Today, Freeman has launched the civil court action in the Southern District of New York and wants $400m (£345.85m) in punitive damages and payment for his initial investment in a precursor firm of Stake.com, Primedice, and alleges he was misled into not participating in the formation of Stake.com.
Stake.com has also been named as one of the defendants in the case and, in a statement by the firm’s lawyers, it describes the allegations as “utterly frivolous” and “provably false”.
Freeman claims he initially held a 20% stake in Primedice, while Craven and Tehrani held 40% each, an arrangement that reflected their initial investment in the business.
Freeman goes on to allege that within nine months of the formation of Primedice, his share had dropped to 14% to reward other senior members of the development team.
He argues this arrangement went against the trio’s agreement that equity would only be given to those who invested in the business.
Freeman also claims that when cryptocurrencies began to take off in 2016, he took the idea of a cryptocurrency casino to Craven and Tehrani, but the pair were not interested due to potential regulatory issues.
Later that year, Freeman states he was dissuaded from joining Tehrani and Craven’s new venture, which allegedly is Stake.com, after being told he had to move to Australia and that the new business will deal in flat currencies such as the US dollar and the euro. Online casinos are prohibited by law in Australia.
The court documents state: “Freeman, who was committed to and comfortable with online gambling concepts, believed a fiat money casino was the wrong direction to go.
“He reasoned it was highly competitive and presented personal risks which he was not prepared to accept, and he did not want to be forced to move to Australia to pursue a fiat-based gambling business.”
The documents go on to say: “Later, when Stake.com launched as a virtual casino which included a competing online dice game and many other features Freeman had proposed and helped design, Tehrani and Craven affirmatively tried to assuage Freeman’s dismay at having been misled by affirming that he still retained his stake in Primedice.”
The documents also say that Freeman’s access to the Primedice account was blocked and never returned.
In a statement, Stake.com said: “The complaint filed by Chris Freeman contains allegations that are internally inconsistent, intentionally misleading and provably false.”
The firm has described the claim as a “desperate attempt to spread false information”, adding Freeman has no claim to the money.
Stake.com also added that its founders will not bend into Freeman’s demands “and are confident that these utterly frivolous allegations will be dismissed by the court in due course”.
This is the latest controversy involving the crypto casino operator after a major backlash over its deal with Premier League side Everton, and then got into hot water with the club surrounding its cash drops promotion.
Stake.com used Everton’s players and kits in advertising for the promotion without the Toffees’ permission. As a result, the club have ordered Stake.com not to use these materials in any future marketing.