Toronto-based Paycase files $500 million lawsuit against TMX Group

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Toronto-based Paycase, which works with financial institutions to provide infrastructure for cryptocurrency offerings, has filed a lawsuit with the Ontario Superior Court seeking $500 million in damages from the TMX (the firm that operates the Toronto Stock Exchange), and its subsidiary Shorcan Digital Currency Network.

The lawsuit is in response to alleged terminations of two 10-year commercial agreements.

In March 2018, Paycase and the TMX’s Shorcan Digital Currency Network, TMX’s cryptocurrency brokerage, announced a partnership to launch a joint cryptocurrency brokerage. Shorcan DCN would use the expertise of Shorcan Brokers, its subsidiary providing Canadian clients with brokerage services, and Paycase’s cryptocurrency data aggregation platform.

The lawsuit is in response to alleged terminations of two 10-year commercial agreements. The agreements called for the join creation of a cryptocurrency brokerage desk and related products providing retail and institutional clients Bitcoin and cryptocurrency access, according to Paycase. The $500 million is based on Paycase’s revenue forecasts discussed with TMX before entering into the contracts, and damages incurred.

“It would have been one of the biggest moves forward and a landmark Canadian partnership for the global financial and cryptocurrency industries,” said Joseph Weinberg, founder and CEO of Paycase Global. “A partnership that enabled institutional and retail consumers to interact with cryptocurrencies via TMX/Paycase platforms, and a comprehensive system that would have offered cutting edge products and services to a global market.”

Paycase offers several verticals with cryptocurrency and blockchain services, including Paycase Markets, which allows users to buy and sell large volumes of cryptocurrency safely, and Paycase Financial, which helps financial institutions integrate blockchain technology into their own platforms.

The startup alleges that TMX had performed intensive due diligence on Paycase as “a critical supplier and strategic vendor,” and the parties had engaged in extensive negotiations. In December 2018, Paycase claims that the TMX informed Paycase that the ventures would no longer be pursued, and that no events justified the right of termination under the contracts, “nor had any been alleged by TMX to have occurred.” Paycase alleges it had fulfilled its obligations and complied with TMX’s ongoing requests.

“Shorcan DCN and Paycase were working together to try to find a viable and mutually-agreeable business solution,” a TMX spokesperson told BetaKit in response to the lawsuit. “We are very disappointed that Paycase has chosen to go this route. TMX disputes the claims made and we plan to defend ourselves vigorously.”