Lawsuit of the Week: Vancouver NFT creator claims company takeover was a sham

The takeover of a Vancouver company known for creating and selling non-fungible tokens (NFT) turned out not to have been what it seemed, its co-founder claims.

Thanh Khiet (Jason) Nguyen filed his April 6 lawsuit against Looking Glass Labs Ltd. and Peter Michael Nguyen, among a slate of other individuals and businesses.

Jason Nguyen claims Peter Michael Nguyen approached him in 2021 to float the idea of selling HOK Technologies Inc. (House of Kibaa) to Looking Glass. The former had a 60 per cent stake in House of Kibaa at the time.

But Jason Nguyen claims in legal filings “long-time acquaintance” Peter Michael Nguyen had ulterior motives and failed to disclose his ownership stake in Looking Glass.

Jason Nguyen claimed House of Kibaa had generated $500,000 in revenue in June 2021 through membership programs for the company’s products. He told Peter Michael Nguyen of his success and that he expected to make millions of dollars in NFT sales in the coming months, which Jason Nguyen claims put a target on him for a scheme.

That scheme, according to the lawsuit, involved allegedly positioning several individuals in high-ranking positions of a variety of “seemingly unrelated corporations,” which would then issue fees for “seemingly arms-length consulting contracts and/or engage in seemingly arm’s length share purchase agreement/acquisitions with the other group co-conspirators.”

On the surface, it looked like a company was experiencing a downturn due to bad business decisions, according to Jason Nguyen’s lawsuit. But he claims the draining of the company’s assets would later turn out to effectively be self-dealing to associates’ businesses.

According to Jason Nguyen, Looking Glass had no business prior to the acquisition and only had a few thousand dollars in cash. And he claims Looking Glass bought House of Kibaa at a low price based on its cash value prior to millions of dollars in sales of NFTs.

He claims his former lawyer, defendant Matthew Fish, told him to go ahead with the acquisition at the lower price, saying it could be adjusted after the deal was done. Jason Nguyen was told the NFT sales and subsequent metaverse land sales would be forwarded to him as well, but he never was paid out, according to the lawsuit.

Jason Nguyen claims the company was drained of its assets and value in the year after the acquisition, diluting the more than 11 million shares he was set to receive as part of the deal.

And while Jason Nguyen claims he was supposed to receive those shares immediately, when the share price of the company was 96 cents, he never received the shares until October 2022. By then, the share price had sunk to between 10 and 20 cents, according to lawsuit. 

Last week, the share price stood at about three cents. 

Looking Glass’s assets shrank from$7.16 million in October 2021 to $308,035 in July 2022, despite generating another $2.5 million in metaverse land sales in the spring of that year, according to Jason Nguyen.

None of the defendants have filed responses as of press time and the allegations have not been proven in court.