throbber
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
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`WORKCO, INC. d/b/a TOKU,
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`Plaintiff,
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`LIQUIFI, INC. and BENJAMIN
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`SNIPES,
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`V.
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`Defendants.
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`C.A. No. 2024-1334-JTL
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`REDACTED PUBLIC VERSION
`EFILED: December 27, 2024
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`VERIFIED COMPLAINT
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`Plaintiff WorkCo, Inc. d/b/a Toku ("Toku"), by its undersigned
`attorneys,
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`hereby files this Complaint against Defendants LiquiFi, Inc. ("LiquiFi") and
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`as follows: thereof, alleges Benjamin Snipes ("Snipes"), and in support
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`NATURE OF THE ACTION
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`1. This action arises from an attorney's staggering betrayal of his client's
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`trust, up to and including taking reams of that client's most confidential and
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`privileged information to work as General Counsel to its biggest competitor. It also
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`arises from that competitor's desperation to save its failing business by deliberately
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`soliciting its rival's confidential and trade secret information from an attorney it
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`knew full well was obligated not to share it.
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`2. Snipes is a lawyer and an active member of the bar in at least the District
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`of Columbia.
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`He owes a fiduciary duty to his clients, and is subject to, and on
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`information and belief fully aware of, the professional responsibilities of an attorney,
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`EFiled: Dec 30 2024 09:16AM EST
`Transaction ID 75332590
`Case No. 2024-1334-JTL
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`including the obligation to safeguard his clients’ confidential information. As an
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`attorney, he served as Toku’s Head of Legal from June 2023 to July 12, 2024. In
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`this role, he gained access to Toku’s most confidential and sensitive trade secrets
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`and customer and business information. Toku provided Snipes with this sensitive
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`information so he could provide legal advice and otherwise fulfill his responsibilities
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`as the company’s lawyer. When Snipes was turned down for a promotion to general
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`counsel, he resigned in a rage and made clear his desire for Toku to fail. Three
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`months later, in October 2024, LiquiFi—a floundering start-up whose products lag
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`far behind Toku’s—hired Snipes as its new general counsel. Since his heated
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`departure from Toku, Snipes has repeatedly betrayed the trust Toku placed in him
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`as its counsel, seemingly in a malicious effort to bring about his expressed desire for
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`Toku’s failure.
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`3.
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`Toku has recently learned that on his way out the door, and even after
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`his official exit, Snipes unlawfully downloaded more than 25,000 Toku files,
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`including a treasure trove of the company’s most valuable and commercially
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`sensitive crown-jewel trade secret documents and customer information. The
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`documents Snipes stole also include privileged information to which he had access
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`because of his role as the company’s lawyer.
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`4. Worse, contemporaneous with Snipes’ theft of these documents and
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`employment discussions with LiquiFi, LiquiFi worked with Snipes to obtain Toku’s
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`trade secrets and other confidential strategies. Specifically, LiquiFi provided Snipes
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`with a written document entitled “LiquiFi x Ben Snipes Prompt” consisting of a
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`series of five questions that appeared designed to elicit Toku confidential
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`information and trade secrets. For instance, LiquiFi asked Snipes how it could
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`launch products and execute business strategies that it lacked but that Toku had
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`already developed and executed. The treasure trove of files Snipes unlawfully
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`downloaded from Toku contained details about these very products and business
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`strategies. On information and belief, LiquiFi knew or at least hoped that Snipes
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`would respond to its question by disclosing Toku confidential information and trade
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`secrets. Snipes did just that in providing detailed answers to LiquiFi’s questions,
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`describing how Toku structured these products and carried out these strategies.
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`Snipes’ answers reflected and signaled his in-depth knowledge of Toku’s
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`confidential and proprietary information and trade secrets and his willingness to
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`leverage that knowledge for LiquiFi’s benefit. On information and belief, LiquiFi
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`hired Snipes largely because his responses showed he had reams of Toku
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`confidential information and was willing to share it—professional, ethical, legal, and
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`contractual obligations be damned.
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`5.
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`Yet worse, Snipes shared his responses to the LiquiFi prompt with a
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`current Toku employee who reported directly to Snipes before he left the company.
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`On information and belief, Snipes did so after submitting his responses to LiquiFi,
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`suggesting that he sent his answers to his former direct report to get more recent and
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`updated confidential and proprietary information about Toku and its business
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`strategies. On information and belief, Snipes intended to and did share this updated
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`information with LiquiFi. This employee suddenly resigned two weeks ago—and
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`Toku’s subsequent forensics analysis confirmed he stored the LiquiFi prompt
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`document on his company drive. Toku’s investigation also confirmed that this
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`employee wiped his company laptop—in direct violation of his employment
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`agreement and in what appears to be a naked attempt to obstruct Toku’s discovery
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`of the true extent of LiquiFi and Snipes’ activities.
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`6.
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`If stealing his client’s confidential information was not enough, Snipes
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`(and LiquiFi) also recently began spreading outright lies to potential customers about
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`Toku’s product and capabilities. Toku welcomes open competition on a level
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`playing field. But it cannot tolerate the unlawful tilt in that playing field caused by
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`its own attorney stealing tens of thousands of its most confidential documents,
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`taking them with him to a competitor in an effort to clone Toku’s business, and lying
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`about Toku to customers. Toku brings this lawsuit to hold LiquiFi and Snipes
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`accountable.
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`*
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`* *
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`7.
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`Toku, founded in 2020 and led by Dominika Stobiecka and Kenneth
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`O’Friel, identified a critical, unmet need in the market: compensation, tax,
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`compliance, and payroll solutions that would enable cryptocurrency companies to
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`seamlessly manage token-based compensation throughout the world. Over years of
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`tireless efforts and millions of dollars of investment, Toku developed cutting-edge
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`confidential, propriety, and trade-secret algorithms and operational strategies that
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`have culminated in a high-caliber compensation, payroll, and tax compliance
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`solutions for the cryptocurrency market.
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`8.
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`LiquiFi originally emerged as Toku’s chief competitor but is now
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`struggling. On information and belief, LiquiFi’s original “smart contract approach”
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`offerings did not work for cryptocurrency companies because, among other reasons,
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`LiquiFi did not offer capabilities for cash-constrained crypto startups to compensate
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`their employees or providers for services in tokens. LiquiFi also could not
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`dynamically pay taxes on tokens—which tax rates are complicated and constantly
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`changing across the globe. In other words, LiquiFi’s products failed to meet the
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`basic needs of the cryptocurrency companies that make up its potential customer
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`base. As a result, on information and belief, LiquiFi’s business has stagnated over
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`the past year, along with its revenues and fundraising ability.
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`9.
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`Facing this harsh reality and desperate to develop effective products
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`that serve the practical needs of crypto companies in this fast-paced market, LiquiFi
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`resorted to the blatant copying of Toku’s business model, products, and business
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`strategies earlier this year. But limited to public information about Toku’s products
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`and services, and with its business struggling, LiquiFi resorted to desperate measures
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`to learn Toku’s secrets. On information and belief, to further its scheme to clone
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`Toku’s business, LiquiFi systematically contacted Toku’s current and former
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`employees (having already hired Toku’s first salesperson Patrick Kim), hoping to
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`recruit them to join LiquiFi and bring with them the secrets to Toku’s success.
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`10. Around the same time, in June 2024, Toku passed Snipes over for a
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`promotion from Head of Legal to general counsel. Snipes desperately wanted the
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`promotion and believed he was entitled to it, even going so far as to falsely tell others
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`he was already Toku’s general counsel. (To this day, his LinkedIn profile falsely
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`claims he held that title at Toku.) But his performance as Head of Legal showed that
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`he simply could not perform at a general-counsel level for Toku. Toku originally
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`hired Snipes in June 2023 to manage its legal department, and Toku entrusted him
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`with nearly complete access to every aspect of the company’s business operations,
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`including valuable confidential, proprietary, privileged, and trade secret information
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`regarding Toku’s products and customers. In exchange, Snipes executed two
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`contracts promising to guard that information. But by the end of June, Snipes was
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`looking for another job. He resigned on July 1 and formally separated from Toku
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`on July 12, 2024.
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`11. Toku knew Snipes was upset about not being promoted; as noted, he
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`had already been misrepresenting himself as Toku’s “general counsel” to third
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`parties. But after Snipes resigned, he went ballistic, stating that he wished the
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`company would fail in a vicious tirade to Toku’s cofounder. At the time, Toku
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`thought Snipes was just venting his frustrations. Subsequent events showed that
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`Snipes was deliberate and resolute in his desire to see Toku fail—and willing to flout
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`his legal, contractual, and ethical obligations to make that happen.
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`12. On October 31, 2024, just three months after leaving Toku, Snipes
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`posted on LinkedIn that he had, in fact, become “general counsel”—of LiquiFi.
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`Toku was alarmed. Toku’s chief competitor had been trying to clone Toku’s
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`business for months, and Snipes had intimate knowledge of Toku’s most confidential
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`and trade secret information. Given this disturbing alignment, Toku investigated to
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`see if its former attorney had taken any confidential information on his way out.
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`Toku uncovered a nearly unthinkable worst-case-scenario: their Head of Legal
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`Snipes had unlawfully downloaded over 25,000 unique files from an IP address in
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`Snipes’ hometown in the weeks and days surrounding and immediately after his
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`resignation and last day. Those files contain Toku’s trade-secret operational
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`methodologies for managing clients, trade-secret tax software and algorithms,
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`customer information, trade-secret pricing strategies, and trade-secret automated
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`“tax engine,” among other proprietary information. They also contain attorney-
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`client privileged information with which Snipes was entrusted so he could do his job
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`as counsel to Toku. Snipes had no legitimate business reason to access—let alone
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`download—these files on his way out. If Snipes brought that information to LiquiFi,
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`it would represent a significant threat to Toku’s business, because it would allow
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`LiquiFi to gain an unlawful head start by piggybacking on Toku’s years of effort and
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`investment to immediately compete in the crypto compensation services market at
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`the highest level without having to spend the time and money itself.
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`13. Snipes’ theft of Toku’s trade secrets was just the tip of the
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`iceberg. Forensic evidence Toku recently uncovered shows that Snipes prepared a
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`document titled “LiquiFi x Ben Snipes Prompt”—dated October 3, 2024, just fifteen
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`weeks after Snipes left Toku and shortly before he joined LiquiFi. On information
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`and belief, this Prompt was an interview assignment from LiquiFi that memorialized
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`a series of five questions LiquiFi had posed to Snipes asking how LiquiFi could “up-
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`level” its services by copying and launching products and business strategies that it
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`lacked but that Toku had already mastered. In response to LiquiFi’s questions about
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`pivoting its business model (to match Toku’s), Snipes provided pages of detailed
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`answers demonstrating he had information LiquiFi could use to launch and replicate
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`Toku’s proprietary pricing model and tax systems. Snipes had access to Toku’s
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`proprietary information on pricing and tax specifications while at Toku, and he had
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`downloaded that information on his way out—including Toku’s “
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`” spreadsheet and “
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`” recording. Toku
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`uncovered the LiquiFi prompt document because Snipes shared it, on information
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`and belief before he started at LiquiFi, with Snipes’ former direct report and then-
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`current Toku employee—who deleted the document and then abruptly left Toku.
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`That employee also wiped his company laptop before returning it.
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`14.
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`If Snipes and LiquiFi’s theft of Toku’s confidential information was not
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`enough, they have now begun a campaign of outright lies about Toku in the
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`marketplace. On December 5, 2024, prospective customers informed Toku that
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`LiquiFi and Snipes are willfully spreading false information about Toku’s business
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`and products. Despite having deep knowledge of Toku’s products and operations,
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`Snipes and other LiquiFi executives (including another former Toku employee) have
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`knowingly made false and misleading statements to prospective customers about
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`Toku’s integration capabilities and compensation services. For example, they have
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`stated that Toku does not support Section 83(b) elections (tax disclosures for equity
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`holdings), when they know full well it does, to unfairly steer prospective customers
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`away from Toku. That is classic unfair competition and deceptive trade practice.
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`Worse, Snipes is using his status as Toku’s former lawyer to lend credence and
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`credibility to the outright falsehoods he is telling about his former client. The veneer
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`of credibility this gives Snipes’ lies makes them even more egregious and harmful
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`to Toku. And in at least once instance, LiquiFi’s and Snipes’ misinformation
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`appears to have succeeded in scaring a prospective customer away from Toku. Toku
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`has no way of knowing today—but will learn through discovery in this action—how
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`many other prospective and current customers it may have lost to its own former
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`attorney’s lies on behalf of his new employer.
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`15.
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`Toku’s investigation of LiquiFi and Snipes is ongoing. It is imperative
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`to learn the extent to which Snipes has disclosed Toku’s trade secrets and
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`confidential information to LiquiFi and the extent to which LiquiFi has used Toku’s
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`property to unfairly compete in the marketplace. Toku reserves the right to amend
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`this pleading to pursue any further claims against LiquiFi and Snipes, including for
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`trade secret misappropriation and other wrongs. In the event Toku confirms its belief
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`that LiquiFi sought and has ingested Toku’s confidential, proprietary, trade secret,
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`and customer information in the files Snipes downloaded, and is using that
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`information to unlawfully clone Toku’s products and business strategies, LiquiFi
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`will be liable for significant monetary damages. But judicial intervention is
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`necessary to put a stop to—and hold LiquiFi and Snipes accountable for—the
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`unlawful actions known to Toku as of this date.
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`PARTIES
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`16. Toku is a Delaware corporation with its principal place of business in
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`Wilmington, Delaware.
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`17. LiquiFi is a Delaware corporation with its principal place of business
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`in San Francisco, California.
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`18. Snipes is a natural person who, on information and belief, is domiciled
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`and resides in New Jersey. Snipes is an attorney barred at least in the District of
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`Columbia. From June 30, 2023 until July 12, 2024, Snipes was an employee of Toku
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`and lived in New Jersey. During his employment with Toku, Snipes held the title of
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`Head of Legal. He now, on information and belief, holds the title of General Counsel
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`for LiquiFi.
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`JURISDICTION AND VENUE
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`19.
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`The Court has subject matter jurisdiction over the claims set forth in
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`this Complaint pursuantto 10 Del. C. § 341.
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`20.
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`This Court has personal jurisdiction over LiquiFi because LiquiFi is
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`incorporated in Delaware.
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`21.
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`This Court further has personaljurisdiction over Defendants pursuant
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`to 10 Del. C. § 3104, 3111.
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`22.
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`This Court has personal jurisdiction over Snipes under 10 Del. C. §
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`3114(b)(1) because Snipes served as the Head of Legal at Toku and nowservesas
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`General Counsel at LiquiFi. As Toku’s Head of Legal, Snipes reported directly to
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`Toku’s CEO, Ken O’Friel. His responsibilities at Toku included:
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`e Managingthe existing legal team:
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`e Scoping, building, and managingrelationships with external counsels
`and other advisors that will work with the in-house legal team on
`complex, jurisdiction-specific matters;
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`e Ensure corporate and product compliance with applicable U.S. and
`international laws and regulations;
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`e Develop, execute, and continually evaluate legal strategy inlitigation
`and/or regulatory matters; and
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`e Build and maintain an extensive network in the ecosystem to inform
`Toku legalstrategy.
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`As such, Snipes served as Toku’s Chief Legal Officer, pursuant to 10 Del. C. §
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`3114(b)(1). As General Counsel for LiquiFi, Snipes serves as LiquiFi’s Chief Legal
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`Officer, pursuant to 10 Del. C. § 3114(b)(1).
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`23. This Court also has personal jurisdiction over Snipes under 10 Del. C.
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`§ 3104(c)(1)–(4) because Snipes contracted to supply services for a Delaware
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`company; negotiated that part of his compensation be paid via options to purchase
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`shares of Toku’s common stock, which is issued pursuant to Delaware law; and
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`signed contracts on behalf of Toku using its Delaware address—including, for
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`example, a contract with a Delaware-based customer, which document Snipes later
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`downloaded from Toku as part of the conduct giving rise to this complaint.
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`24. This Court’s exercise of personal jurisdiction over Snipes is proper for
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`two additional reasons. First, under the governing law provision in the Mutual
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`Nondisclosure Agreement dated June 5, 2023, by and between Snipes and Toku (the
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`“Nondisclosure Agreement”), Snipes irrevocably submitted to the laws of the State
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`of Delaware for disputes related to the Nondisclosure Agreement. Nondisclosure
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`Agreement § 14. Pursuant to that provision, Snipes expressly agreed that all “
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`” Ibid. Second,
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`Snipesdirected the tortious acts that give rise to Toku’s claimsinthis action at Toku,
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`a Delaware company with its principal place of business in Delaware, and the
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`resultant harms werefelt by Toku in Delaware. Moreover, certain of Snipes’ tortious
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`acts described below,
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`including his post-employment misrepresentations about
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`Toku’s products to Toku’s customers were made on behalf of and for the benefit of
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`Snipes’ new employer, LiquiFi, a Delaware company.
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`STATEMENT OF FACTS
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`I.
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`Toku and LiquiFi Are Competitors in Cryptocurrency Compensation
`and Compliance Services
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`25.
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`Toku was founded in 2020, and led by Kenneth O’Friel and Dominika
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`Stobiecka, to addressa critical need for companies operating in the cryptocurrency,
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`blockchain, and virtual token markets. Many of these crypto companies grant
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`employees cryptocurrency or other virtual tokens as compensation or additional
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`incentive awards (similar to how traditional startups grant employees equity awards
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`in the form of stock, options, or restricted stock awards). Compensating personnel
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`in tokens, rather than traditional government-backed currencies, creates unique
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`payroll and compliance challenges for crypto companies.|
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`And crypto companies also employ globally dispersed teams, creating immediate
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`compliance, tax, and regulatory challenges across multiple jurisdictions. Traditional
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`providers of employment and compensation compliance solutions do not address
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`these unique compliance challenges facing crypto companies.
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`26. By 2021, O’Friel and Stobiecka had focused Toku on developing
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`customized employment and compensation compliance solutions specifically to
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`serve the then-nascent crypto market. Toku built the world’s first comprehensive
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`Employer of Record (“EOR”), Professional Employer Organizations (“PEOs”), and
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`payroll infrastructure capable of managing compensation compliance for any form
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`of virtual compensation. Over the next two years, Toku expanded the international
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`reach of its compliance solutions to cover nearly 100 tax jurisdictions. To
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`accomplish this, Toku raised money from investors and spent millions of dollars in
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`legal fees to obtain world-class compliance counsel for each jurisdiction in which it
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`offered services. By August 2023, Toku had built and deployed a platform that
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`allows crypto companies to track and manage the payment and vesting of
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`blockchain- or token-based compensation.
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`27. LiquiFi was founded in 2021. LiquiFi entered the market with a “smart
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`contract” product
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`for cryptocurrency companies
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`to automate employee
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`compensation; such contracts use blockchain technology to define specific
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`conditions within a digital contract, making payments and other incentives
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`“automatic.”
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`28. Not only was LiquiFi’s product inferior to Toku’s, its pricing and
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`market strategy was also less effective. Toku adopted a novel approach to
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`structuring its contracts with early-stage crypto companies, whereby Toku accepted
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`payment in the form of those customers’ own tokens or cryptocurrency through
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`token warrant agreements. Accepting tokens in exchange for services allowed Toku
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`to partner with cash-constrained crypto startups and aligned Toku’s incentives with
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`those of its high-potential customers. In contract, LiquiFi operated, on information
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`and belief, using solely a “cash-based” services model in which it did not accept
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`payment in tokens.
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`29. The market for crypto employment and compensation compliance
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`solutions has proliferated as Toku and LiquiFi have competed. The annual growth
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`rate for companies using blockchain technology—companies that may require
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`crypto-specific employment and compensation compliance products—is projected
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`at 86.3% from 2023 through 2030. By 2024, the public had come to recognize
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`Toku as the leading service provider poised to capture the crypto industry’s needs
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`amidst this dynamic growth, with LiquiFi as its primary-but-increasingly distant
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`competitor. Toku has raised
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` in venture-capital funding to
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`date (the majority in 2023); LiquiFi has raised only $5 million (the majority in 2022).
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`30. LiquiFi has lagged behind Toku because, based on information and
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`belief, unlike Toku, LiquiFi’s products have not addressed the needs of its
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`prospective crypto customers, including compliance with global tax regulations and
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`flexibility for cash-constrained crypto company startups, among other features. The
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`market has noticed and rewarded Toku—showering Toku’s with millions in venture-
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`capital funding and interest from prospective customers. On information and belief,
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`the opposite holds true for LiquiFi.
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`31. Having failed to effectively compete with Toku, on information and
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`belief, LiquiFi has become desperate to stay afloat. To get ahead, on information
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`and belief and as explained further below, LiquiFi tried to pivot to adopt Toku’s
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`business model and strategies. It also, on information and belief, started
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`systematically contacting Toku’s former and current employees with access to
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`Toku’s most valuable trade secrets. LiquiFi, on information and belief, was largely
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`unsuccessful, until it found Toku’s now-ex-Head of Legal, Benjamin Snipes.
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`II. As Head of Legal, Snipes Received and Accessed Toku’s Trade Secrets
`and Other Highly Confidential Information
`32.
`Toku hired Benjamin Snipes as Head of Legal in June 2023. Snipes is
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`an attorney barred at least in the District of Columbia. He is bound by the D.C.
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`Rules of Professional Conduct.1 As the Head of Legal for Toku, Snipes was Toku’s
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`attorney. Snipes has an ethical obligation to protect and refrain from disclosing
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`confidential client information.2
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`33.
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`Snipes had a background in traditional financial planning, tax, and
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`payroll/compensation; he had not previously worked in the crypto industry. While
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`Snipes wanted to be general counsel of Toku, Toku believed he needed time in the
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`Head of Legal role to assess whether had the skills to take on that more senior title
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`and responsibilities.
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`34.
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`Toku was clear with Snipes in his offer letter that Snipes was accepting
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`employment with a Delaware corporation and that Snipes’ role was “highly cross-
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`functional and dynamic: from working with functional leaders, ensuring they are
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`acutely aware of our top customers’ priorities and needs to align with our sales team
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`and directing the best customer experience.”
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`1 Ex. A. Exhibit A is an excerpted version of the D.C. Rules of Professional Conduct.
`The complete set of rules are accessible at https://www.dcbar.org/for-lawyers/legal-
`ethics/rules-of-professional-conduct.
`2 Id. Rule 1.6.
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`35. To that end, Toku hired Snipes to provide legal guidance to and
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`participate in strategic business decisions with other senior members of Toku’s
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`leadership team regarding new product offerings, country-specific launches, and
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`changing regulatory controls; to manage, mentor, and uplevel the existing legal
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`team; to build and maintain scalable legal, compliance, and risk management
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`frameworks; to ensure compliance with U.S. and international laws; and to provide
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`practical guidance to Toku’s Business Development, Operations, Product, and
`
`Engineering teams on day-to-day issues. That included “speak[ing] regularly in
`
`public as the voice of Toku,” “collabora[ting] closely with senior leadership,” and
`
`“building and maintaining an extensive network in the [crypto] ecosystem.” In this
`
`role, Snipes reviewed and executed contracts on Toku’s behalf with Toku’s
`
`customers—many of which are Delaware-based companies—and, in those
`
`contracts, expressly stated the company’s Delaware address as the primary address
`
`at which to contact Snipes.
`
`36. To function in his role as one of Toku’s most-trusted legal advisors,
`
`Snipes was permitted nearly unfettered access to Toku’s most confidential
`
`information and trade secrets concerning its product development, operational
`
`methodologies, proprietary tax methodology, pricing strategies, and customer
`
`information. And as a senior leader and legal counsel, Snipes regularly participated
`
`19
`
`

`

`in executive meetings where he was privy to Toku’s most confidential financial
`
`information and performance information and metrics, as well as customer
`
`information, business plans, and prospects that transcend legal compliance and
`
`extend to Toku’s broader strategic approach to product development and the crypto
`
`marketplace.
`
`III.
`
`Snipes Explicitly Promised to Protect Toku’s Confidential and
`Proprietary Information and Trade Secrets
`37. As a condition of his employment and in exchange for his access to
`
`Toku’s confidential, proprietary, and customer information and trade secrets, Snipes
`
`signed a Confidential Information and Invention Assignment Agreement
`
`(“Confidentiality Agreement”) with Toku, effective June 30, 2023, and governed by
`
`New York law. Confidentiality Agreement § 11(a).3
`
`38.
`
`In the Confidentiality Agreement, Snipes acknowledged that Toku
`
`would provide him with its “Confidential Information,” “
`
`
`
`39.
`
`“Confidential Information” in Snipes’ Agreement includes, among
`
`” Id. § 3(a).
`
`other things, “
`
`
`
`
`
`3 Ex. B (Confidentiality Agreement).
`
`20
`
`

`

`Id.
`
`40.
`
`Snipes agreed that ‘
`
`” Td.
`
`further agreed to hy Toku’s
`Snipes
`41.
`Confidential Information. Jd. § 3(a). He agreed he wouldht
`
`* snda
`
`I 32 bis employment. He agreed
`hewoud
`
`v
`
`* Id.
`
`21
`
`

`

`42.
`
`Snipes also agreed “
`
`
`
`
`
`
`
`”
`
`Id. § 5.
`
`43. As even further protection for Toku’s confidential, proprietary, and
`
`trade secret information, Toku and Snipes had entered into a Nondisclosure
`
`Agreement after Toku’s job offer but before Snipes signed the Confidentiality
`
`Agreement. Under that June 5, 2023 Nondisclosure Agreement, governed by
`
`Delaware law, he likewise had agreed to safeguard Toku’s confidential information,
`
`and he agreed not to use Toku’s confidential information to negatively influence or
`
`solicit the business of any of Toku’s customers, licensors, or licensees.
`
`Nondisclosure Agreement §§ 2, 9.4
`
`IV. Toku Protects Its Confidential, Proprietary, and Customer Information
`and Trade Secrets
`44. As evidenced by Snipes’ agreements, Toku places a high value on its
`
`trade secrets, customer information, and other confidential and proprietary
`
`4 Ex. C. (Nondisclosure Agreement).
`
`22
`
`

`

`information. Toku has implemented a robust infrastructure of agreements, policies,
`
`and technological safeguards to maintain the secrecy of such information.
`
`45.
`
`For instance, Toku requires all employees upon commencing
`
`employment to execute their own confidentiality agreement, mandating that they not
`
`use or disclose any confidential or proprietary information except on behalf of Toku.
`
`46.
`
`Toku also maintains an information security program to ensure Toku
`
`employees effectively safeguard Toku’s information assets. Employees are apprised
`
`of key security information in the Employee Playbook, which is Toku’s company
`
`handbook.
`
`47.
`
`Toku’s information security program includes but is not limited to its:
`
` Acceptable Use Policy;
`
` Information Security Policy;
`
` Data Classification Policy;
`
` Data Protection, Retention, and Protection Policies;
`
` System Access Control Policy; and
`
` Password Policy.
`
`48.
`
`Toku employees are initially trained and annually re-trained with
`
`respect to Toku’s information security policies and must acknowledge that they have
`
`23
`
`

`

`received such training and that they agree to abide by such policies. Snipes most
`
`recently completed the training on November21, 2023.
`
`49.
`
`In addition,
`
`to access Toku’s Google Workspace—a document
`
`repository that houses Toku files containing Toku’s trade secrets and other highly
`
`sensitive confidential information—Toku employees must eel
`
`50. Once in Toku’s Google Workspace, access rights to particular folders
`
`and files are strictly limited to those employees who havea legitimate business
`
`reason for consulting such materials.
`
`51. And Toku’s customers sign nondisclosure agreements to protect Toku’s
`
`confidential information and trade secrets before Toku shares them.
`
`V.
`
`Snipes Is an IIl-Fit for Toku; He Becomes Hostile After Toku Passes on
`Promoting Him and Resigns
`
`52.
`
`Because Toku is a compliance solutions provider, its primary audience
`
`in customer sales meetings is often the customer’s in-house legal counsel. Toku’s
`
`general counsel therefore needs to be uniquely crypto-customer-facing—advisingits
`
`crypto customers on token launches and marketing and managing the regulatory
`
`aspects of Toku’s solutions for customers. Snipes’ vision andskills instead aligned
`
`with traditional management of an in-house legal team, negotiating and redlining
`
`24
`
`

`

`contracts, and occasionally writing thought-leadership pieces. That mismatch
`
`repeatedly became an issue, repeatedly requiring Toku senior leadership and board
`
`members to step in last-minute to attend conferences or interface with customers or
`
`potential customers instead of Snipes.
`
`53.
`
`In March 2024, Toku prepared a thirty-day performance improvement
`
`plan for Snipes, detailing the actions he needed to take in order to be on track for a
`
`promotion to general counsel. But he failed to deliver on nearly all of the actions
`
`outlined in the plan.
`
`54. As a result, and after communicating with Snipes several times about
`
`his deficiencies, Toku had concluded by May 2024 that it could not promote Snipes
`
`to the general counsel role he wanted at Toku. Snipes was frustrated—he had
`
`already been misrepresenting himself as Toku’s general counsel publicly. And by
`
`June 15, 2024, Toku has evidence Snipes was searching for a new position using his
`
`Toku company email.
`
`55. On July 1, 2024, Snipes resigned from Toku, gave his two-weeks’
`
`notice, and stated that he would help to transition outstanding matters and reporting.
`
`Toku understood Snipes was taking a legal position with Range Finance, Inc., a
`
`wealth management provider incorporated in Delaware and based in Virginia that
`
`25
`
`

`

`does not compete with Toku. Snipes’ last day as a Toku employee was July

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