Manhattan Supreme Court dismissed an $80M lawsuit by ex-employee Blake Ratliff against Chainalysis over alleged stock option breaches.
Manhattan Supreme Court Justice Joel Cohen has dismissed a lawsuit against the blockchain analysis firm Chainalysis that sought $80 million in damages.
Blake Ratliff, a former employee of Chainalysis, asserted that the company violated a purported oral agreement to alter the terms of his stock options. Nevertheless, the court ruled in favor of Chainalysis, which was represented by Skadden, Arps, Slate, Meagher & Flom.
The motion to dismiss was granted by the Supreme Court judge as a result of the lawsuit being time-barred and the failure to articulate a viable claim.
The company, Chainalysis, contended that Ratliff’s breach-of-contract claims were lodged too late, as they were initiated six years after his employment with the company ended. Additionally, Ratliff was employed at Chainalysis for less than one year, with an emphasis on Bitcoin tracing.
Any purported oral agreement was rendered unenforceable by New York’s statute of frauds, which mandates that specific agreements be in writing, according to Chainalysis. Also, the blockchain company claimed that Ratliff resided in Florida during his employment. The state’s statute of limitations for oral contracts is four years, as opposed to Tennessee’s six-year period.
Nevertheless, Ratliff defended himself and asserted that he had lived in Tennessee, thereby extending the statute of limitations. Nevertheless, the court concurred with Chainalysis’s stance on the residency matter.
Furthermore, the court determined that Ratliff’s employment agreement explicitly forbade oral modifications. In addition, stock options were subject to vesting after twelve months of continuous employment.
Additionally, Chainalysis underscored the employment agreement’s explicit terms. It was specified that Ratliff would be granted an option to acquire 19,200 shares of the company’s common stock, with vesting conditions associated with continuous service. The agreement stipulated that 25% of the option shares would vest after 12 months.
Whereas, the remaining shares will vest every month over the next 36 months. Nevertheless, Ratliff’s employment was terminated in 2017, less than a year into his tenure, indicating that he did not satisfy the vesting criteria.
Ratliff contended that Chainalysis co-founders Michael Gronager and Jonathan Levin verbally assured him that his stock options would be guaranteed. Additionally, they purportedly guaranteed that he would continue to progress within the organization.
He asserted that these assurances amounted to an amendment to the original employment agreement, which in effect altered the terms of his stock options.
Additionally, Ratliff claimed that he relinquished his right to a salary increase and declined other lucrative employment offers as a result of these assurances. Ratliff argued that the motion to dismiss necessitated discovery and depositions due to factual issues.
Additionally, he contended that Chainalysis’ interpretation of the employment agreement was entirely defective and biased. Therefore, he thinks that the blockchain company disregarded the substance of his allegations. Ratliff contended that the statute of fraud argument was inapplicable, as the company could have granted the stock options within a year.
Justice Cohen’s decision to dismiss the $80 million lawsuit was a reflection of the strength of Chainalysis’ position, despite Ratliff’s arguments. Benjamin Joelson of Akerman, Ratliff’s attorney, conveyed his dissatisfaction with the decision and stated that he intends to appeal.
According to a report by the New York Law Journal, he declared, “We think that Chainalysis has wrongfully denied Mr. Ratliff compensation, and we are committed to ensuring that Mr. Ratliff’s rights are upheld.” Nevertheless, the dismissal represents a substantial legal victory for Chainalysis.
