A local blockchain startup is shutting down while still embroiled in a lawsuit.
Hypernet Labs Inc., a Palo Alto-based firm that helps enterprises create blockchain-based applications, is permanently shutting down due to the recent economic downturn, according to a Tweet from Ivan Ravlich, the company's founder and CEO.
"Hypernet was impacted by the same economic headwinds that have touched millions around the world since May," Ravlich wrote in his tweet. "Unfortunately, (Hypernet's) treasury was also held in Ethereum, which disproportionately exacerbated the bear market's impact on our balance sheet."
The Ethereum cryptocurrency took a dive in price in recent months. The token peaked at $3,520 on April 4, then slid down to $1,167 on Sunday, July 10, according to CoinDesk.
The company was founded in 2017 and has about 23 employees, according to PitchBook Data. Hypernet executives did not immediately respond to requests for comment. The company raised $10 million in venture funding from 500 Global and others in 2019, according to PitchBook Data. Ravlich was also named one of Forbes' 30 Under 30 honorees in 2020.
The startup is also still in the middle of a lawsuit filed by man Romein Rostami, who lives in Puerto Rico. In 2018, he gave Hypernet 728 Ethereum tokens to invest in the company's initial coin offering, according to his suit. These offerings, also known as ICOs, were fairly popular among crypto firms during that time, but seem to have declined in frequency.
Hypernet claimed that it would create a way for individuals and companies to lease their devices' extra computing power to others, and pay those individuals and companies for that computing power using a specialized "Hyper Token," Rostami said in his suit. But the company never created that token, nor its marketplace for unused computing power.
"(Hypernet) never created a functional platform nor the Hyper Token," Rostami said in his suit. "Instead, (Hypernet) lied to investors through industry white papers, pay-to-play promotional advertising, and other fraudulent marketing gimmicks to induce investment and utilized the venture as a vehicle to perpetuate fraud for greater financial gain."
Rostami is seeking the return of his 728 Ethereum tokens, according to the suit. Rostami sued both Hypernet and Ravlich, as well as Daniel Maren, an adviser to Hypernet, and Todd Chapman, Hypernet's co-founder and former chief technology officer. Chapman left the company in April, about a month after Rostami filed his suit, according to his LinkedIn profile. Maren does not list Hypernet anywhere on his LinkedIn profile. He previously served as Hypernet's chief financial officer, according to Rostami's suit.
