Ethereum Ventures LLC has filed a lawsuit against Chet Mining LLC to “break the corporate veil”. Ethereum Ventures has also sued Chet Stojanovich, who they say is the only member and manager of Chet Mining. The plaintiff alleges that Chet Stojanovich failed to comply with company formalities and therefore allowed the company to undercapitalize.
Corporations have several advantages over individuals in that they can help with taxation and protect individuals from personal liabilities. From a legal perspective, a company is a person who can be sued, owns property, owns bank accounts, and enters into contracts. Since it is a separate person, the manager cannot be held accountable for the things a company does.
However, in order for it to exist separately from the person, a general set of rules must be followed. A person must pretend to be a separate entity by keeping separate books. In addition, the person must complete company formalities, keep separate financial records and not mix corporate funds with individual funds.
If one person breaks these rules and a problem arises, the other party can argue that the person is the company and therefore is responsible for all things done by the company. This is known as “piercing the corporate veil”. In this case, the defendant is liable, inter alia, for every contract signed by the company.
In the current lawsuit between Ethereum Ventures LLC and Chet Mining, the plaintiff claims to have paid for mining equipment that was not delivered. In addition, the plaintiff has not received a refund either.
In addition, the plaintiff demands that the defendant pay the amount paid by him as well as the damage caused by lost profit. The lost profit damage is said to be just over a quarter of a million dollars ($ 272,000).
This is not the first time a party has been charged for recovering lost profits related to mining equipment. It remains to be seen, however, whether the plaintiff will succeed in penetrating the corporate veil.