A Wyoming company that pledged artwork and gemstones to back a digital currency is suing the company that issued the digital currency.
Axtra, in a lawsuit filed in U.S. District Court, claimed the company that issued the digital currency, AXIA, changed the terms of its deal with Axtra, leaving Axtra unable to get any return on its investment.
“After years of pledging and encumbering its assets to AXIA, and allowing AXIA to benefit from holding those assets in its Reserve to, among other things, build and promote the entire AXIA project and attract millions of dollars of public purchases of AXC, Axtra has been foreclosed from monetizing in any way the consideration it received from its contribution of assets to AXIA,” said the lawsuit, filed last week.
According to the lawsuit, Axtra worked with AXIA to back its cryptocurrency with actual assets, a type of digital currency designed to be more stable in its value because it is backed by hard assets.
Axtra said it pledged an undisclosed amount in artwork, gemstones and other hard assets to secure the currency for AXIA. The lawsuit said Axtra and other companies pledged a total of $30 billion.
In exchange, the companies were given AXIA coins, valued at $13.43 as of Tuesday, and options to buy more.
In promoting the AXIA coin, also called the AXC, AXIA cited the fact it had assets to back its currency, the lawsuit said.
“AXIA used (Axtra’s) assets, comprising a significant part of AXIA’s ‘Reserve,’ for nearly two years to attract many millions of dollars of public purchases of AXC,” the lawsuit said.
After the AXC was launched in July 2021, AXIA changed the structure of its currency from a reserve to a “treasury” structure that no longer required Axtra’s assets for backing.
Axtra’s assets were released, but Axtra said restrictions were placed on its ability to sell its options and the coins it held were demoted to a type that does not earn interest. Axtra’s holdings were also devalued by a split in the coin’s value that Axtra was not allowed to take advantage of, the lawsuit said.
“It appears to be AXIA’s position that since AXIA purportedly will no longer utilize (Axtra’s) assets to support AXC after using those assets for two years to support and build the AXIA project, Axtra is no longer entitled to the consideration Axtra received in the form of AXCs and options to AXCs under its contracts with AXIA,” the lawsuit said.
Axtra is seeking damages to be determined for allegations against AXIA for breach of contract and failure to live up to its obligation of good faith and fair dealing.
The lawsuit asks the court to force AXIA to honor its split as far as Astra’s holdings, release all of Axtra’s options on AXC and to allow Axtra to sell or transfer its options to AXC.