Blockchain Firms Clash in Court Over $200K in Allegedly Unpaid Debt

News | June 27, 2024 By:

On Thursday, June 13, 2024, Mutual Knowledge Systems, Inc., doing business as MuKn, filed its answer and affirmative defenses to a complaint filed against it by Vulcanize, Inc. in the Superior Court of the State of Delaware.

Vulcanize, a software development and consulting firm that works with blockchain technologies, loaned $200,000 to MuKn in August 2022. MuKn is also a software company that develops blockchain and online payment programs.

According to the complaint, MuKn’s CEO Alexander Smart had assured Vulcanize that MuKn needed the cash to prepare for work it was going to provide to the startup company Laconic under a Master Services Agreement. Smart and MuKn promised both verbally and in writing, including in an invoice, that MuKn would repay the loan when Laconic paid MuKn an initial $400,000 retainer fee.

Vulcanize alleged that Laconic did pay MuKn the retainer fee in November 2022, triggering MuKn’s obligation to repay the $200,000 loan. However, MuKn failed to do so. Vulcanize claimed this amounted to a breach of contract between the companies.

In its answer filed on Thursday, MuKn denied the key allegations in Vulcanize’s complaint. MuKn said there was no enforceable agreement for it to repay the loan. It also denied requesting the loan or making promises of repayment to Vulcanize.

As background, the complaint stated that MuKn had previously provided coding services to Vulcanize in 2021 but failed to send timely invoices as required by their agreement. MuKn did not dispute providing services to Vulcanize that year.

The answer also raised several defenses, including that the venue was improper, as the relationship between the companies was governed by a forum selection clause in a separate agreement specifying jurisdiction in New York. MuKn further argued that any damages suffered by Vulcanize were due to its own acts or omissions.

Additionally, MuKn asserted that Vulcanize’s claims could be barred by the statutes of limitations, laches, estoppel, unjust enrichment, duress, fraud, waiver, or acquiescence. MuKn stated it may raise additional defenses as the case proceeds.

MuKn requested the court to dismiss Vulcanize’s complaint with prejudice and grant attorneys’ fees and costs. MuKn reserved the right to renew its motion that Delaware was an improper venue for the lawsuit.

Please contact BlockTribune for access to a copy of this filing.