Co-founders of a digital asset issuer and an associated crypto organization seek to shed a lawsuit accusing them of conspiring to improperly extract over $100 million from an open-source artificial intelligence coalition, arguing Wednesday that a Manhattan federal court doesn't have jurisdiction over the Romania- and Germany-based defendants or the decentralized organization.
In a Wednesday dismissal bid, Ocean Protocol Foundation Ltd. co-founders Bruce Pon, Christina Pon, and Trent McConaghy told U.S. District Judge Dale E. Ho that the proposed investor class action they're named in fails to show that they should have to face claims in New York or anywhere else in the U.S.
According to the founder trio, they all live outside the U.S. The Pons, who are citizens of Singapore, live in the Romanian capital of Bucharest, and McConaghy lives in his native Germany. Despite those facts, the suit asserts in "conclusory fashion that 'defendants' interacted with 'the United States market,'" the trio said.
By relying "primarily on globally accessible online materials that neither mention New York nor target any forum audience," the founders said, the suit fails to include allegations showing their contact to New York.
In a separate Wednesday dismissal bid, Ocean Expeditions Ltd., which described itself as a successor in interest to OceanDAO, a purportedly decentralized group of those holding the nonprofit Ocean Foundation's tokens, also argued that it didn't have sufficient ties to New York to face claims there.
"The complaint does not allege any actions taken by OE or OceanDAO in New York or any connection whatsoever to New York," Ocean Expeditions argued, adding later that the suit doesn't "make any actual allegations of wrongdoing against OE or OceanDAO."
"The inclusion of OE and OceanDAO in this litigation is a bad faith attempt to sue as many defendants as possible," Ocean Expeditions said.
The individual defendants also argued the claims didn't show actionable misrepresentations or support an inference they'd intentionally misled anyone with their alleged misrepresentations.
The Wednesday dismissal bids follow Ocean Foundation's own Feb. 10 motion to dismiss, in which the nonprofit, which described itself as based in Singapore, argued that the claims are "devoid of any New York-specific fact involving Ocean Foundation."
The nonprofit also asserted that the suit failed to show certain statements it made were false and didn't show how investors had been injured.
The suit was filed in November by Fetch Compute Inc., Seth Ian, Greg Graves, and Victor Larivee, who described themselves as holders of certain tokens that were driven down in value by the alleged scheme.
According to the complaint, the defendants made an agreement with two other token issuers, Fetch.ai and SingularityNET, to form a group they called the Artificial Superintelligence Alliance, which purportedly had the shared goal of "developing decentralized AI in an ethical and acceptable manner."
"Unfortunately, rather than supporting this altruistic objective, defendants utilized the alliance as a vehicle to defraud not only the members of the alliance, but the public writ large who supported its mission," the suit said.
The alleged fraud involved a so-called token merger, which saw Ocean and Singularity token holders convert their tokens into Fetch tokens. This was "critical to provide defendants with the liquidity needed to later dump their tokens for a windfall," the suit said.
This step occurred when Ocean incorporated Ocean Expeditions Ltd. in the Cayman Islands in June and transferred 660 million purportedly restricted "community" Ocean tokens that were to be used to incentivize open-source AI developers, the suit says.
The defendants then converted these tokens into Fetch tokens, dumped the Fetch tokens into the market, and exited the alliance, according to the suit.
The defendants further announced after leaving the alliance that all Ocean tokens that had not been converted into $FET tokens could be freely traded in an attempt to drive up the price of Ocean tokens and further drive down the value of $FET tokens, the suit alleges.
"While Ocean has taken steps to hide the movement and dissipation of these tokens, defendants likely have reaped over $100 million of ill-gotten gains, and the class members have been left holding tokens whose value has been significantly depressed by defendants' wrongful conduct," the suit said.
Representatives for the parties did not immediately respond to requests for comment Thursday.
Fetch Compute Inc. and individual plaintiffs Greg Graves, Seth Ian, and Victor Larivee are represented by Steven L. Caponi, Edward Dartley, Thomas A. Warns, and Kendall Huennekens of K&L Gates LLP.
Individual defendants Trent McConaghy, Bruce Pon, and Christina Pon are represented by Stephen D. Palley and Daniel L. Sachs of Brown Rudnick LLP.
Ocean Protocol Foundation Ltd. is represented by Joseph B. Evans, James A. Pardo, Lisa Gerson, and Daniel H. Kaltman of McDermott Will & Schulte LLP.
Ocean Expeditions Ltd. and OceanDAO, for which Ocean Expeditions is a successor in interest, are represented by Jason Gottlieb, Michael Mix, and Emma McGrath of Morrison Cohen LLP.
The case is Fetch Compute Inc. et al. v. Pon et al., case number 1:25-cv-09210, in the U.S. District Court for the Southern District of New York.
Feb 26
Deal Summary
