TMT Investments Sues Legionfarm CEO for Fraud

News | April 11, 2024 By:

On Monday, March 18, 2024, the venture capital company TMT Investments Plc filed a lawsuit against the video game coaching startup Legionfarm Inc. and its CEO and majority shareholder Alexey Belyankin.

TMT, which has invested $1.65 million in Legionfarm since 2019, alleges extensive misconduct and fraud by Belyankin. The lawsuit claims that Legionfarm’s core business was never viable and that Belyankin fabricated customer and revenue figures to mislead investors and raise further funds. It also accuses Belyankin of spending company money lavishly on personal expenses like housing, a Mercedes car, and bonuses for himself without board approval.

According to the court documents, Legionfarm was actually generating the most revenue from boosting player accounts – having professional gamers play on others’ accounts to improve stats and rankings. However, boosting’s legality was questionable, so Belyankin portrayed to investors that the company’s on-demand coaching service would be the main business.

The lawsuit states that starting in mid-2021, at Belyankin’s instruction, fake customers making payments were created to improperly inflate revenue figures in reports to investors. Additionally, marketing and other expenses were underreported. On one occasion, a $500,000 investment from a new investor was completely misbooked as revenue for a single month.

The filings also claim Belyankin funneled over $400,000 out of the company through unauthorized loans and payments, some involving cryptocurrency. He is accused of blocking any oversight attempts and even unilaterally overhauling Legionfarm’s board and corporate rules last year to avoid scrutiny of his actions.

TMT is seeking damages and argues a custodian may need to be appointed to run Legionfarm, citing concerns over how it is being operated as a “fiefdom” by Belyankin. The lawsuit provides further evidence of the risks and governance issues that can arise even in well-funded startups if founders abuse their control. It remains to be seen how the Delaware court will proceed with the allegations of serious mismanagement and deception.

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