Digital currency fund manager Digital Capital Management has sued law office Faegre Baker Daniels for giving “erroneous” legal advice.
In a lawsuit filed on December 21, as revealed by Bloomberg Law, Digital Capital Management has stated that Faegre Baker offered “inaccurate analysis and advice” to its predecessor, Crypto Asset Management, with respect to how to register under the Investment Advisers Act.
In September 2018, Crypto Asset Management was charged by the U.S. Securities and Exchange Commission (SEC) for disregarding registration requirements. The SEC stated at the time that Crypto Asset Management and its principal, Timothy Enneking, secured more than $3.6 million in late 2017 and asserted that the company was “the first regulated crypto asset fund” in the U.S.
Enneking and the company at the time neither conceded nor denied the SEC’s discoveries and had consented to a cease-and-desist order and a fine of $200,000.
The lawsuit presently asserts that Faegre Baker advised Crypto Asset Management and Enneking that “Crypto Assets are not securities” and to structure the fund’s business “accordingly.” The advice was actually “erroneous,” the lawsuit says.
The plaintiffs want compensatory damages, including for costs and fees incurred, reputational harm, lost income, and other consequential damages, as indicated by the lawsuit.