Crypto Game Project Solicited Funds Without Intent to Deliver, Lawsuit Claims

News | March 1, 2024 By:

On Monday, February 26, 2024, venture capital firm Tenzor Capital filed a complaint against game development studio Riveted Games in the United States District Court for the District of South Carolina Charleston Division.

Tenzor Capital alleges that Riveted Games violated the terms of two Simple Agreement for Future Tokens, or SAFTs, that the two parties had entered into in August 2021 regarding Riveted Games’ cryptocurrency-centered online game CryptoBlades Kingdom. According to the complaint, Tenzor invested $350,000 under the SAFT agreements in exchange for 17.5 million CryptoBlades KING tokens issued by Riveted Games.

However, Tenzor claims that Riveted Games did not undertake the development and marketing of CryptoBlades as promised. A core part of the agreements was a roadmap outlining planned updates and features to be added to CryptoBlades by the fourth quarter of 2021. None of these proposed additions allegedly came to fruition. Documents submitted with the complaint also show Riveted Games had outlined ambitious fundraising goals and exchange listing plans that did not materialize.

With the game seeing little meaningful progress or updates from Riveted Games, Tenzor realized the developer had no plans to fulfill its obligations. The complaint states Riveted Games essentially executed a “rug pull” by soliciting funds to develop CryptoBlades without any intention of doing so.

After sending a demand letter to Riveted Games in January 2023 requesting information and offering to return the first investment in exchange for a full refund, Tenzor claims it received an unproductive response threatening a countersuit.

The complaint brings causes of action for breach of the implied covenant of good faith and fair dealing, unjust enrichment, fraudulent misrepresentation, conversion, fraud in the inducement, and violation of securities laws. Tenzor is seeking damages of at least $350,000 plus punitive damages and attorney’s fees.

This suit marks the latest in a string of legal issues surrounding failed blockchain game projects soliciting investor funds with dubious intentions. It remains to be seen how the court will view the allegations against Riveted Games and its handling of Tenzor Capital’s cryptocurrency investment.

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