Burton v. Adams

• Decision Date: 20 May 2022
• Docket Number: Index No. 506967/2021
• Citation: 2022 NY Slip Op 31644 (U)
• Parties: RICHARD BURTON, Plaintiff, v. HAYDEN ADAMS, Defendant.
• Court: New York Supreme Court

2022 NY Slip Op 31644(U)

RICHARD BURTON, Plaintiff,
v.
HAYDEN ADAMS, Defendant.

Index No. 506967/2021

Supreme Court, Kings County

May 20, 2022

Unpublished Opinion

DECISION & ORDER

Hon. Larry D. Martin, Judge

Plaintiff RICHARD BURTON commenced this action against Defendant HAYDEN ADAMS, founder and chief executive officer of Universal Navigation, Inc. ("Universal") seeking $ 100 million in damages for breach of contract or restitution for unjust enrichment sounding in quantum meruit in connection with Plaintiffs role in developing "Uniswap," amulti-billion-dollar software used to trade cryptocurrency and digital assets on possibly the largest crypto-asset exchange in the world. Defendant moved to dismiss the complaint pursuant to CPLR § 3211. By December17, 2021 interim decision (the "Interim Decision"), ^[1] this Court found that Plaintiff failed to set forth & prima facie breach of contract cause of action, but had set forth three of the four requisite elements of aprima facie cause of action for unjust enrichment and/or quantum meruit. The Interim Decision granted the parties leave to brief the Court on the proper measure of calculating the value of services in unjust enrichment and/or quantum meruit cases involving cryptocurreney startups, particularly where, as here, no misconduct, malfeasance or statutory violation is alleged, i.e., whether there is a clear and accepted market-place convention for Valuing such services beyond reasonable hourly rate. Now, the case is decided as follows.

1

Background

A. Cryptocurriency

Each unit, of cryptocurrency, "virtual or digital money," is either called a "coin" or a "token." The terms coins (or "convertible coins") and "tokens" are often used interchangeably, however, while coins - the most notable of which is Bitcoin - have a stated or discernible monetary value, ^[2] by contrast, tokens are better thought of as "digital assets" that "fluctuate in value as any commodity would." Sec. & Exeh. Commn. v Telegram Orpine, 448 F.Supp.3d 352, 358 (SDNY 2020). As a practical matter, both coins and tokens are cryptocurrency that "may be used to pay for goods or services[ ] or held for investment."^[3]

Cryptocurrencies operate via a record-keeping technology called "blockchain," which conspicuously (Le., viewable by anyone) and permanently stores every transaction. The hlockchain mechanism allows for the use of crypto-assets as secure stores of value and media of exchange that do not rely on a centralized government or singular -control Cryptocurrency transactions may occur directly between parties via "decentralized cryptocurrency exchanges" (DEX), which allow users to trade one cryptocurrency for another, or for traditional currencies such as U.S. dollars.^[4]

Bitcoin, the first and most popular cryptocurency. is an example of a ciypto-asset that serves primarily as a medium of exchange. Ether-," .another popular crypto-asset "operates on Ethereum. which is a different bloekchain from Bitcoin, and has some additional features, but otherwise functions similarly.

2

B. Factual Background

As the Courtis bound to accept the facts alleged by the non-moving party as true, for purposes of the GPLR § 3211 dismissal motion (JF Capital Advisors, LLC v Lightstone Group, LLC, 25 N.Y.3d 759, 762, 16 N.Y.S.M. 222 citing Leon v Martinez, 84 N.Y.S.2d 83, 87, 614 N.Y.S.2d 972 [1994]), Plaintiff Burton is a software developer, designer and entrepreneur, and the founder of "Balance," an Ethereum bloekchain wallet startup. Defendant Adams is founder and CEQ of "Uniswap," a DEX software that "improves the functionality" of trading on the Ethereum bloekchain's platform. While Uniswap is currently the largest DEX on Ethereum, when the parties met in 2018, Uniswap was "little more than an idea." Burton loaned Adams money and office space within Balance's offices to support Adams in creating Uniswap, including "technical and design advice," and $25, 000 for software development, rent, and other costs.

As consideration for Burton's assistance, the parties orally agreed that Burton would be given the option to be an early investorin Uniswap...