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Hellmuth-Promoted Bitcoin Latinum Faces Lawsuit

Written by Jennifer Newell
Last updated on
Jennifer Newell

Phil Hellmuth is a walking brand. He promotes himself at all times. Sometimes, though, he promotes others, like the Aria Casino, PokerGO, Breinfuel, and Bitcoin Latinum. For the better part of 2021, he carried a bottle of Breinfuel and wore a Bitcoin Latinum hat. No one can say he doesn’t know how to promote products.

There appears to be a bit of an issue with Bitcoin Latinum. Three people filed a lawsuit this week against Bitcoin Latinum and one person affiliated with the company, Kevin Jonna. Hellmuth is not mentioned in the lawsuit whatsoever.

What is Bitcoin Latinum?

The Bitcoin Latinum website states that it is a “next generation, insured asset-backed cryptocurrency.” It claims to be greener, faster, and more secure than others in the Bitcoin ecosystem, and it claims to offer the lowest transaction fees. It uses a “Proof of Stake consensus algorithm.”

It is a blockchain-based token in the crypto world, able to handle large transaction volume. It says that it is governed by the community and future-enabled, the latter meaning that the network is scalable and sustainable.

Its target markets are media, gaming, telecommunications, and cloud computing. With increased speed and capacity, as well as security via on-chain storage, Bitcoin Latinum wants to leave a mark on these markets. They company may have believed that Hellmuth would be their key to part of the gaming world.

When Hellmuth signed on to promote the brand, he told US Poker that the company was backed with $1B in trust assets. He said that 80% of transaction fees go directly into the trust, which increases token values. Of course, he also made clear that his representation of the company didn’t constitute investment advice.

Lawsuit Claims Securities Fraud

Raymond Jonna, Simon Jonna, and Farid Jamardov are the plaintiffs in the case. They filed it in the US District Court for the Eastern District of Michigan, demanding a jury trial.

They are suing Kevin Jonna – a cousin of two of the plaintiffs – and Bitcoin Latinum. The nature of the lawsuit is securities fraud. The plaintiffs accuse the defendants of diverting and misappropriating investment funds for personal use. In doing so, they committed securities fraud and wire fraud via their “purported” sale of Bitcoin Latinum tokens to the plaintiffs. They claim that the defendants offered and sold unregistered securities, which violates federal and state laws.

The counts in the document filed with the court are:

-Count 1: Unregistered offer and sale of securities in violation of Sections 5 and 12a of the Securities Act (against both defendants)

-Count 2: Unregistered offer and sale of securities in violation of California Corporations Code Sections 25110 and 25503 (against both defendants)

-Count 3: Securities fraud in violation of Section 10b of the Exchange Act and Rule 10b-5 (against both defendants)

-Count 4: Securities fraud in violation of California Corporations Code Sections 25401 (against both defendants)

-Count 5: Rescission under Section 29b of the Exchange Act (against both defendants)

-Count 6: Fraudulent concealment (against both defendants)

-Count 7: Fraudulent Inducement (against Kevin Jonna)

-Count 8: Fraudulent misrepresentation (against both defendants)

-Count 9: Breach of contract (against Kevin Jonna)

-Count 10: Unjust enrichment (against both defendants)

-Count 11: Conversion (against both defendants)

-Count 12: Intentional tort of wire fraud in violation of 18 USC § 1343 (against both defendants)

-Count 13: Securities fraud in violation of Section 10b of the Exchange Act and Rule 10b-5 and California Corporations Code Sections 25401 (against both defendants)

-Count 14: False advertising in violation of Business and Professions Code Section 17500 et.seq (against both defendants)

-Count 15: Unfair competition in violation of Business and Professions Code Section 17200 et seq (against both defendants)

What Does That Mean?

Essentially, the plaintiffs invested a total of $541,045 in tokens. But when they asked Bitcoin Latinum to show evidence of their ownership of said tokens, the defendants refused to do so. The plaintiffs also requested their money back due to a lack of evidence of token ownership, and the defendants failed to do that, as well.

They claim standing in this case based on the Howey test, a result of the US Supreme Court ruling in SEC v W.M Howey in 1946. This test indicates that a transaction is an investment contract if it involves an investment of money, there is an expectation of profits from the investment, the investment is in a common enterprise, and profits hail from the efforts of a promoter or third party. Thus, the investment in tokens via Bitcoin Latinum should be considered an investment contact (a security).

What Do They Want?

First and foremost, the plaintiffs want a jury trial.

Obviously, they also want their $541,045 back. That may involve an order or injunction officially rescinding the contracts. They also want “any and all damages” sustained by the plaintiffs, as well as plaintiffs’ costs and reasonable attorney fees pertaining to this case. Further, they want punitive and exemplary damages as determined at trial, as well as any equitable relief.

Press Release Response

Bitcoin Latinum issued a response two days after the lawsuit filing this week. It claims that the accusations have no merit. The company says it had no relationship with the plaintiffs or received any investments from them.

Further, Bitcoin Latinum plans to countersue each plaintiff, their attorneys, and their associated law firms and partners. They plan to sue for defamation, tortious interference with a business relationship, and fraud. And the company will sue for no less than $1B each for reputational and punitive damages. Further, they will ask the court to sanction and possibly disbar all attorneys involved in the lawsuit against them.

As far as Hellmuth is concerned, he continues to wear the Bitcoin Latinum hat proudly, most recently at two photo shoots.

 

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