In a significant legal escalation within the cryptocurrency sector, publicly-traded digital asset wallet provider Exodus Movement, Inc. (NYSE: EXOD) has filed a lawsuit against Web3 Consulting, Inc. (W3C) and its CEO, Garth Howat. The complaint, filed in Delaware Chancery Court, seeks to compel the completion of a $175 million stock purchase agreement first announced in November 2024.
The lawsuit alleges a concerted effort by W3C and Howat to sabotage the acquisition. Central to the dispute is an $80 million loan Exodus provided to W3C after the agreement was signed, with court documents stating $10 million was paid directly to Howat. The suit contends that Howat later asserted this loan did not require repayment, a claim Exodus disputes.
Further allegations include document falsification and unauthorized executive firings. The complaint states W3C falsified dates on documents submitted to regulators and that Howat unilaterally terminated W3C's own CEO and CFO. This action directly violated the stock purchase agreement, which prohibited such changes without Exodus's consent. Exodus argues this was a scheme to install associates favorable to Howat's position and gain operational control to derail the deal.
The proposed acquisition was a strategic move for Exodus, a leading non-custodial wallet provider for assets like Bitcoin and Ethereum, to integrate W3C's Web3 and DeFi consulting expertise. Its failure impacts Exodus's growth strategy and places the $80 million loan in jeopardy. Legal experts note the case's potential to set important precedents for merger enforcement and corporate governance in the crypto industry, with the court likely to examine whether the alleged actions constitute a material breach warranting specific performance or significant damages.
