William Alleman mentioned in Bloomberg Law | “Crypto Firm Wins Judgment Over Confidential Info Posted Online”

• Ex-contractor hired to promote firm failed to appear in court

• Plaintiffs also awarded $39,000 judgment for attorneys’ fees

A former contractor hired to promote ClearCryptos LLC on social media was blocked by a Delaware Chancery judge from posting confidential information about the crypto firm online.

But Vice Chancellor Nathan Cook, ruling from the bench on Thursday, said he won’t order Bradley Cain to stop posting disparaging content about the company, as that’s a matter for a different Delaware court to consider.

“The imposition of injunctive relief with respect to that potentially raises issues of speech,” he said. “To the extent those concerns as to disparaging comments may bleed into claims of defamation, that’s the sort of thing my colleagues in the Superior Court traditionally would handle.”

Cain, of Seneca, S.C., never filed a response to the lawsuit filed in October by Puerto Rico-based ClearCryptos and its parent company, data firm SiriusIQ Mobile LLC. Cook had ordered Cain to appear in a Wilmington, Del., courtroom to show cause as to why a default judgment shouldn’t be entered against him.

Cain didn’t come to court Thursday, and he didn’t immediately respond to an email seeking comment. No attorney was listed in the court docket as representing him.

The Chancery judge modified the companies’ proposed order for default judgment, including striking language that would have blocked Cain from posting more “disparaging statements” online.

Offending Accounts

Cain was hired in May 2022 “for the purpose of having Cain sponsor and promote ClearCryptos,” which had been developing its own cryptocurrency token, the complaint said. He was paid for two months of work, but his independent contractor agreement was “terminated for cause” before it was scheduled to end Aug. 25, 2022, it said.

When the companies demanded he stop posting about them online, Cain responded with an obscene message that made clear he wouldn’t stop, said the companies’ attorney, William Alleman of Meluney Alleman & Spence LLC.

Details about Cain’s online posts were redacted from the complaint and weren’t discussed in court.

Cain subsequently deleted the offending Twitter accounts and YouTube videos referenced in the complaint, but new social media accounts have continued to post derogatory content alleging the companies are “con artists” and that ClearCryptos’s newly launched token is a scam, Alleman said.

Cain’s ownership of those new accounts hasn’t been confirmed, and they haven’t posted confidential information about the companies, “but we’re concerned he has more and may post more if he feels free to do so,” Alleman said.

While Cain may have created new social media accounts, “it does sound as though the dissemination of confidential information may have slowed or ceased,” Cook said.

“The award of injunctive relief as to no further dissemination of confidential information, or taking down confidential information, provides the key relief to the plaintiffs here,” he said.

Cook also ordered Cain to pay $39,000 in fees to the companies’ attorneys.

The case is SiriusIQ Mobile LLC v. Cain, Del. Ch., No. 2022-0918, hearing 1/26/23.

To contact the reporter on this story: Jennifer Kay in Philadelphia at jkay@bloomberglaw.com

To contact the editor responsible for this story: Alexis Kramer at akramer@bloomberglaw.com