Sean A. Meluney and William M. Alleman Jr. mentioned in Law360 | “Data, Crypto Firms Allege Contractor Disparaged Them Online”

Law360 (October 17, 2022, 9:01 PM EDT) -- A cryptocurrency education platform that is planning to launch a crypto token, and its parent company, have sued a former contractor and social media influencer for alleged confidentiality and non-disparagement breaches, seeking an injunction, damages and removal of the offending online content.

SiriusIQ Mobile LLC and its subsidiary, ClearCryptos LLC, are seeking a preliminary and permanent injunction targeting Bradley Cain Jr., described as having worked briefly as a social media contractor for the companies.

According to the complaint filed Friday in Delaware Chancery Court, SiriusIQ retained Cain to promote the crypto venture in June, with the agreement scheduled to end in August. Instead, Cain was terminated for cause partway through the contract, the complaint said. Meanwhile, Cain smeared the companies with statements on his social media accounts, they allege.

"Cain has made clear that the driving motivation behind his statements is to disparage plaintiffs and harm their standing in the crypto market, based largely on the existence of [a] default judgment entered against plaintiffs' principal nearly 20 years ago," the suit said. The statements referred to Glenn Field, SiriusIQ's founder and managing partner, and chief executive officer of ClearCryptos.

Delaware-chartered SiriusIQ describes itself as a platform for "orchestration and automation of data to streamline business processes, conversations, analytics and more." Puerto Rico-chartered ClearCryptos is a subsidiary, with the suit filed in Delaware under a company litigation forum selection provision.

The complaint, while heavily redacted, accuses Cain of damaging ClearCryptos by way of a number of online avenues, some with thousands of followers or subscribers, while working as a contractor earlier this year.

"Cain has recently, and repeatedly, disclosed plaintiffs' confidential information using his social media accounts," the complaint said, alleging he has "disclosed confidential information about ClearCryptos' partnerships with third parties" despite knowing of the potential risk and harm to the business.

Cain wrote in an email late Monday that SiriusIQ's complaint was related to Cain's earlier posting online of a public, $200,000 fraud judgment in 2007 against Field in Sarasota County, Fla., in an investor suit involving an unrelated mobile media company for which Field was CEO.

Cain also noted a past Securities and Exchange Commission settlement involving ClearCryptos finance manager Sarah E. Keck in an unrelated case in 2017 involving her alleged part in an Exchange Act violation as the sole officer of a penny stock company in 2011. The 2017 settlement required disgorgement of an investor's $10,000 payment along with interest and a penalty and barred her from participating in penny stock offerings.

In the SiriusIQ complaint, Cain is said to have made clear his intention to continue the disputed conduct, allegedly saying: "I can start posting more, I got more. That's just the start of it. I got way more."

Cain's online activities include "The Sandstorm," a YouTube channel that identifies itself as "The authority in crypto, hard hitting AMAs [ask me anything]/interviews," with call-in shows and roundtables for influencers and developers.

"Crypto talk, fact based content, open debate is welcome," a Sandstorm page says. "I do not accept payment for shilling, asking the hard questions to get the investors the answers they need! Contact me on Twitter to do an AMA."

After it issued a cease-and-desist demand, SiriusIQ says, an on-air colleague of Cain, "Tequila Pete," suggested "slow-drip," WikiLeaks-style disclosures.

"'Tequila Pete' has separately contacted plaintiffs to demand that plaintiffs pay him to conduct a full security review of plaintiffs' technology," the complaint said. "Plaintiffs declined, and as a result Tequila Pete is also using Twitter and other online forums to make false claims about the security of plaintiffs' software."

The four-count suit asks the court to find that Cain had breached the contract's non-disparagement terms, its prohibition on release of confidential information and restrictions on the use of names and trademarks, and asks for recovery of attorney fees.

SiriusIQ asked the court for an order that would end disclosures of materials that violate Cain's contract and remove them from the web, as well as authorize all third parties, such as Twitter and YouTube, to take down disparaging or confidential content.

Neither SiriusIQ nor Cain immediately responded to a request for comment.

SiriusIQ Mobile LLC and ClearCryptos LLC are represented by Sean A. Meluney and William M. Alleman Jr. of Meluney Alleman & Spence LLC.

Counsel information for the defendant was not yet available.

The case is SiriusIQ Mobile LLC and ClearCryptos LLC v. Bradley Cain Jr., case number 2022-0918, in the Court of Chancery of the State of Delaware.

--Editing by Linda Voorhis.

Update: This article has been updated to include comments from the party named in the suit.