Regulation
Chainalysis Bags Dismissal In $80M Employment Contract Breach Lawsuit
A lawsuit seeking $80 million in damages against the blockchain analysis firm Chainalysis has been dismissed by Manhattan Supreme Court Justice Joel Cohen. The plaintiff, Blake Ratliff, who is a former employee of Chainalysis, claimed that the firm breached an alleged oral agreement to modify the terms of his stock options. However, the court sided with Chainalysis, represented by Skadden, Arps, Slate, Meagher & Flom.
Judge Rules In Favor Of Chainalysis
The Supreme Court judge granted the motion to dismiss due to the failure to state a viable claim and the lawsuit being time-barred. Chainalysis argued that Ratliff’s breach-of-contract claims were filed too late as they were initiated six years after his employment with the company ended. Moreover, Ratliff worked at Chainalysis for less than a year with a focus on Bitcoin tracing.
According to Chainalysis, any alleged oral agreement was unenforceable under New York’s statute of frauds, which requires certain agreements to be in writing. Furthermore, the blockchain company asserted that Ratliff resided in Florida during his employment. The state has a four-year statute of limitations for oral contracts, rather than Tennessee’s six-year period.
However, Ratliff defended himself and claimed to have resided in Tennessee, thereby extending the statute of limitations. Despite this, the court agreed with Chainalysis’s position on the residency issue. Additionally, the court found that Ratliff’s employment agreement explicitly prohibited oral modifications. In addition, it required twelve months of continuous employment before vesting of stock options.
Moreover, Chainalysis highlighted the clear terms of the employment agreement. It stated that Ratliff would be granted an option to purchase 19,200 shares of the company’s common stock with vesting conditions tied to continuous service. The agreement specified that 25% of the option shares would vest after 12 months.
Whilst, the remaining shares vesting monthly over the next 36 months. However, Ratliff’s employment was terminated in 2017, less than a year into his tenure, meaning he did not meet the vesting criteria.
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Ratliff Plans To Appeal
Ratliff argued that Chainalysis co-founders Michael Gronager and Jonathan Levin assured him verbally that his stock options would be guaranteed. They allegedly also ensured that he would continue to advance within the company. He claimed these assurances constituted an amendment to the original employment agreement, effectively modifying the terms of his stock options.
Moreover, Ratliff asserted that he gave up on a salary increase and declined other lucrative job offers based on these promises. In response to the motion to dismiss, Ratliff contended that there were factual issues that required discovery and depositions.
Also, he argued that Chainalysis’ interpretation of the employment agreement was completely flawed and one-sided. Hence, he believes the blockchain firm ignored the substance of his allegations. Ratliff maintained that the statute of frauds argument did not apply because the company could have awarded the stock options within a year.
Despite Ratliff’s arguments, Justice Cohen’s decision to dismiss the $80 million lawsuit reflected the strength of Chainalysis’ position. Ratliff’s attorney, Benjamin Joelson of Akerman, expressed disagreement with the decision and indicated plans to appeal.
He stated, “We believe that Chainalysis wrongfully withheld compensation from Mr. Ratliff and we intend to continue to pursue Mr. Ratliff’s rights,” according to a report by the New York Law Journal. However, the dismissal still marks a significant legal victory for Chainalysis.
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