Billionaire businessman Priven Reddy is staring down a court challenge by investors in his Cryptocurrency venture Kryptoro who want it declared bankrupt over a 77,000 dollar debt.
The Warrasally Family Trust, which represents the investor, filed a liquidation application in the Pietermaritzburg High Court in July.
A cryptocurrency exchange is a custodial financial service which allows users to deposit money to buy and trade various cryptocurrencies or sell their digital assets back for local currency.
At the core of the legal dispute is a profit-sharing agreement which the trust had entered with Kryptoro in 2018.
According to court papers, seen by Times Select, the relationship soured when the company failed to pay the trust their regular profit dividends, and when lawyers demanded the return of the capital investment in full, Reddy hesitated to pay up.
The flamboyant businessman, renowned for his love for sports cars, vowed to defend himself against the court bid, describing it as “baseless and ridiculous”.
“I don’t mind them coming to view our books, and they are welcome to do that. They lied and said they have asked to see the books, and we denied them that.” He said.
According to a profile on him done by entrepreneur.co.za, Mr Reddy manages five companies and employs over 380 people; He has a net worth of over 4billion rand. (USD 259M) Public records also reveal that he is a nominee director in 17 companies.
An affidavit signed by businessman Mohamed Warrasally narrates the business relationship between the trust and Reddy’s company.
According to the affidavit, The trust had handed over their capital investment in July 2018 with an assurance from Mr Reddy that Kryptoro would begin in September.
Kryptoro would pay the trust 1% of their declared profits in quarterly tranches for five years, and in terms of the agreement, the trust would be able to view Kryptoro’s books.
“Despite more than three quarters having lapsed, Kryptoro has failed to share profit with the trust as contemplated in the agreement,” the affidavit reads.
“In addition to the above, despite me making numerous requests, Kryptoro has refused to allow me to view their books of accounts.” The Businessman says.
In March, Warrasally voided their contract with Mr Reddy, and Mr Reddy agreed to reimburse the trust’s cash injection.
“Reddy advised that the Kryptoro is unable to perform the terms of the agreement and the Kryptoro would refund the capital and the agreement would be terminated,” he wrote.
Warrasally held that Kryptoro, through attorneys, consented to pay back the R1.2m (77000USD) in portions while they waited for funds from “other sources”.
Unimpressed, the trust instructed Grant and Swanepoel Attorneys to go ahead with a liquidation application.
Speaking to Times Select, Mr Reddy rubbished the idea that Kryptoro was bankrupt, and said it was disappointing that his disagreement with investors was bound for court.
He said the launch of Kryptoro had been delayed by security matters and the stalling of the launch deterred the company from turning a profit and per the agreement, paying dividends to the trust.
“If we were hacked, we could have lost millions of dollars in crypto, and we decided to develop a system where we use a third-party custodian, and that would be to protect our clients. Other exchanges don’t do it because it’s expensive, and as a tech company we need to foresee [and guard against] cyberattacks,” he said.
“Each day we postponed the launch we lost money and was detrimental to our financial growth as a company, but we made that decision for the security of all our clients,” he added.
Mr Reddy who appears to be in a fighting mood, says he agreed to mutually end the investment contract as a favour, something he usually would not have done.
“They [Warrasally and the Trust] came to me in March wanting to cancel the contract because they had made some other bad investments, and I didn’t want to lock them in. I called them and said I will cancel the contract and pay them out in tranches.
“The exchange needs to pay not me personally and a lump sum would have put a massive financial strain on the exchange,” he added.
He said the company was solvent and that debacle was an unfortunate breakdown in their relationship.
“It’s not as though I don’t have the money to pay him. That is not the case. This is a breakdown in a relationship, and now we’re having to defend this application in court.
“I don’t want to jeopardise my companies for such a small amount of money. They tried to strongarm us with a court threat, and we have been forced to defend it,” he says.
It remains to be seen how this fight will end.