The takeover of a Vancouver company known for creating and selling non-fungible tokens (NFTs) turned out not to be what it seemed, the co-founder claims.
Thanh Khiet (Jason) Nguyen filed his lawsuit on April 6 against Looking Glass Labs Ltd. and Peter Michael Nguyen, among a number of other individuals and businesses.
Jason Nguyen claims that Peter Michael Nguyen approached him in 2021 to promote the idea of selling HOK Technologies Inc. (House of Kibaa) to Looking Glass. The former held a 60 percent stake in the House of Kibaa at the time.
But Jason Nguyen claims in legal filings “long-time acquaintance” Peter Michael Nguyen had ulterior motives and failed to disclose his stake in Looking Glass.
Jason Nguyen claimed House of Kibaa had generated $500,000 in revenue by June 2021 through affiliate programs for the company’s products. He told Peter Michael Nguyen about his success and that he expected to make millions of dollars in NFT sales in the coming months, which Jason Nguyen claims set him a target for a scheme.
This scheme, according to the lawsuit, allegedly involved placing several individuals in high-ranking positions at a number of “apparently unrelated companies,” who would then issue fees for “apparently arm’s-length consulting contracts and/or engage in apparent arm’s-length share purchase agreements/acquisitions with the others co-conspirators in the group.”
On the surface, it looked like a company was experiencing a downturn due to bad business decisions, according to Jason Nguyen’s lawsuit. But he claims that the emptying of the company’s assets would later prove to be effectively self-dealing for affiliated companies.
According to Jason Nguyen, Looking Glass had no business before the acquisition and only had a few thousand dollars in cash. And he claims Looking Glass bought House of Kibaa at a low price based on its cash value before millions of dollars in sales of NFTs.
He claims his former attorney, defendant Matthew Fish, told him to go ahead with the acquisition at the lower price, saying it could be adjusted after the deal was done. Jason Nguyen was told the NFT sale and subsequent metaverse land sale would be forwarded to him as well, but he was never paid, according to the lawsuit.
Jason Nguyen claims the company was drained of its assets and value in the year after the acquisition, diluting the more than 11 million shares he was supposed to receive as part of the deal.
And while Jason Nguyen claims he was supposed to receive those shares immediately, when the company’s share price was 96 cents, he never received the shares until October 2022. By then, the share price had dropped to between 10 and 20 cents, according to the lawsuit.
Last week the share price was around three øre.
Looking Glass’ assets shrank from $7.16 million in October 2021 to $308,035 in July 2022, despite generating an additional $2.5 million in metaverse land sales in the spring of that year, according to Jason Nguyen.
None of the defendants has submitted an answer at press time, and the allegations have not been proven in court.
