In Re: Coinmint, LLC

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

In re COINMINT, LLC. ) C.A. No. 2019-0983-MTZ

ORDER GRANTING JUDGMENT IN FAVOR OF RESPONDENT AND
VACATING STATUS QUO ORDER

WHEREAS, the Court, having considered Petitioner Mintvest Capital Ltd.’s

(“Petitioner” or “Mintvest”) claims and the record developed at trial, as well as the

parties’ briefing and various motions, it appears as follows:1

A. This action concerns the governance and domestication of Nominal

Respondent Coinmint, LLC (“Coinmint” or the “Company”). Coinmint is a private

Bitcoin mining firm that operates one of the largest digital currency centers in the

world.2 It was founded by two childhood friends, nonparties Prieur Leary and

Ashton Soniat.3 Leary and Soniat formed Coinmint as a Delaware limited liability

company in August 2016.4 At the time of formation, Leary and Soniat agreed to be

1
Citations in the form of “PTO —” refer to the Joint Pre-Trial Stipulation and Order,
available at Docket Item (“D.I.”) 207. Citations in the form of “SQO —” refer the
Status Quo Order entered in this matter, available at D.I. 67. Citations in the form of
“Am. Compl. —” refer to the Amended Complaint, available at D.I. 16. Citations in the
form of “Last Name Tr. —” refer to the trial testimony of the identified witness, available
at D.I. 235 and D.I. 236. Citations in the form of “JX —” refer to joint exhibits in the trial
record. And citations in the form of “Op. Agr. —” refer to Coinmint’s Limited Liability
Company Agreement dated November 21, 2016, available at JX 11.
2
See Leary Tr. 10; JX 60 at COINMINT_157338, -157357.
3
PTO ¶ 12.
4
Id. ¶¶ 9, 13.

1
Coinmint’s equal 50% owners.5 They memorialized this understanding in, and made

it subject to, the terms of Coinmint’s Limited Liability Company Agreement dated

November 21, 2016 (the “Operating Agreement”).6

B. Leary and Soniat hold their interests in Coinmint via their respective

entities: Mintvest and Respondent Coinmint Living Trust (“Respondent” or

“CLT”). Leary is president of Mintvest, a Delaware corporation and Coinmint

Member.7 Soniat is the owner and controller of CLT, a Puerto Rican entity and

Coinmint Member.8 Mintvest and CLT are and always have been Coinmint’s only

Members.9 While holding the right to vote on certain major decisions,10 the

Company’s Members have no “authority or power to act for or on behalf of the

Company.”11

5
Id. ¶ 16; JX 4 at COINMINT071041 (acknowledging the agreement that Soniat and Leary
“will start out with a 50/50 equity split” and “equally contribute (50/50) capital to the
business for the near term”); JX 7 at COINMINT_157136 (explaining the financial terms
of Leary and Soniat’s initial investments).
6
See Op. Agr.; PTO ¶ 14; see also JX 7 at COINMINT_157137 (“Mintvest will be
matching the contribution that Ashton made, to the extent that it can. After that point, it
will face dilution pursuant to the agreement.” (emphasis added)); JX 4 at
COINMINT071042 (acknowledging that “at some point,” Soniat would contribute more
capital and that Leary “agreed” to “accept equity dilution as th[at] happens, in a manner
that is directly related to the capital put in”).
7
PTO ¶¶ 7, 10.
8
Id. ¶¶ 8, 11.
9
Id. ¶ 9.
10
See Op. Agr. § 4.6.
11
Id. § 3.9.

2
 C. Rather, Coinmint is manager-managed with a Board of Managers (the

“Board”), and all actions and decisions taken by the Company flow through the

Board.12

a. Section 4.3(f) states that “any Board action shall require the

approval of a Majority of the Managers then serving on the Board.”13

b. Sections 4.3 through 4.6 of the Operating Agreement describe

(1) how the Managers may take action on the Company’s behalf, including at a

formal meeting or by written consent, and (2) what vote is required to take such

action, including when majority Board approval and majority Member approval are

needed.14

c. Despite these requirements, the parties did not follow the

Operating Agreement’s formalities, and instead mutually pursued a fast-and-loose

course of operations and documentation.15 As Leary explained, “our meetings were

12
See PTO ¶ 15; Op. Agr. §§ 3.9, 4.3.
13
Op. Agr. § 4.3(f).
14
See id. §§ 4.3, 4.4, 4.5, 4.6.
15
See, e.g., JX 28 at 1 (stating with respect to Mintvest’s dilution that “[Leary] [did not]
think we would actually need any further paperwork on this,” as he was “not aware of
either Ashton or [him]self wanting to change what it is now,” and that this was “[j]ust
[Leary’s] 2 cents for minimizing documentation, and as we are working on the big
enchilada now, there is a very likely chance that within 30 days, we will need to make
changes again,” and questioning “[w]hy paper something now that has been as it is for
months, and then do it again shortly?”); JX 79 at MINTVEST00001945 (stating that Leary
thought “it would have been much easier to have one doc that says the monies sent in from
Dorado would be treated as a loan, unless there was an agreement to the contrary” because
that “[w]ould avoid all of this paperwork,” with Soniat responding that he believed “we

3
. . . like this[:] Ashton and I would get together and agree on certain things and then

do them.”16 Soniat corroborated this statement:

need a clean history of loans”); Leary Tr. 110 (conceding that the Company did not adhere
to formalities); id. 120 (“She asked me to sign loan documents. She asked me to sign all
kinds of documents. And usually it wasn’t frequent, which is why I answered the other
question like I did. It was more infrequent. Like, a few times a year I was given a pile of
papers or a pile of documents to sign, and just instructed to sign these, don’t worry about
them. And, again, Ashton was my friend. I just trusted Kathleen was doing everything
right.”); Soniat Tr. 236–37 (referring to Leary’s comments regarding minimizing
paperwork in JX 28, and stating: “I would say that summarizes the way Leary liked to do
business. He did not like to document things, he did not like to sign things, and liked to do
it very, very casually. And when, whether it was Kathleen or Mr. Carlton tried to, you
know, have him sit down, have a meeting, get things documented, it was always pushed
back, and that he’s too busy running around the world, working. He’s working 16 hours a
day. He doesn’t have time for this, to sign these things or go over these housekeeping
issues. So that’s a pretty good summary of the way the business was run.”); Carlton Tr.
335 (“Mr. Soniat was being more of a passive investor, I would say, who was simply
funding things. Mr. Soniat wanted things done right, but was largely deferring to Mr. Leary
to kind of set the priorities for me and others. Contrary to kind of how I would normally
like to do things, Mr. Leary hated formalities, and it was almost impossible to get focused
on administrative matters. He’d schedule calls with us and other attorneys and not show
up. Overall, he was extremely resistant to prioritizing internal items and structural items.
Whether it was him being overwhelmed or something more nefarious, it was almost
impossible to get him to sign or respond to things on those fronts. He’d actively push us
to demote, avoid, delay, or not prioritize such items. Mr. Soniat was a little easier to get in
touch with, but was also hard to chase down at times.”); id. 336 (“We seemed like we were
always trying to catch up and trying to document things after the fact simply because we
weren’t getting the information ahead of time. And given the personalities involved, trying
to document things even after the fact proved very difficult.”); Schneider Tr. 406 (stating
that Leary’s unwillingness to formally document Company actions was “typical”).
16
Leary Tr. 110.

4
 I think it’s pretty clear how things were run. It was run casually. And
we had to act very quickly, as displayed in the WhatsApp messages,
where he was on the ground, either in China or Upstate New York, and
would tell me that, you know, “we need money fast. Sorry for the last
notice, but, you know, I can buy $500,000, a million dollars’ worth of
machines, but if we don’t wire the money tomorrow they may not be
there.”

And so it was a very fluid process, quick, where we had to act. And, as
I said, we were on the phone hours and hours per day. So I mean, if he
ever wanted to have an official meeting, I would probably find that
bizarre, but I would have agreed, for sure.17

Leary never complained about the internal lack of formal process at Coinmint, and

instead advocated for eschewing formalities and praised the outcomes.18 It is

undisputed that the Company has had no formal Board meetings where minutes were

created.19 And except for written consents executed in November and December

2019 (the validity of which Mintvest disputes), the Board never executed a written

consent in lieu of a meeting to authorize Company action.20

D. Under Section 4.1(b) of the Operating Agreement, Mintvest appointed

Leary to serve as a Manager and its Board designee; CLT appointed itself to serve

as a Manager and Board designee.21 Under Section 4.2(a), those Managers could be

17
Soniat Tr. 276.
18
See, e.g., id. 276–77.
19
PTO ¶ 28.
20
Id. ¶ 29.
21
Op. Agr. § 4.1(b) (stating that the “Coinmint Designee shall be [CLT]” and that the
“Mintvest Designee shall be Prieur Leary”); PTO ¶¶ 17, 18.

5
removed, “with or without cause, only by the Member who designated such Manager

to serve on the Board.”22

E. Since formation, the parties agreed that Leary would run Coinmint’s

day-to-day operations, and he did so.23 While Leary contributed labor and know-

how, Soniat and CLT, either directly or through affiliates, contributed significant

capital.24 The parties dispute how certain CLT cash infusions should be classified

(i.e., whether they are capital contributions or loans under the Operating Agreement)

and whether those cash infusions diluted Mintvest’s stake in the Company.25

a. The Operating Agreement contemplates that cash infusions may

take either the form of a loan or capital contribution.26 Critically, cash infusions in

the form of loans do not have dilutive effect.27 Capital contributions do.28 Dilutive

capital contributions affect each Manager’s voting power, which is determined by

its appointing Member’s respective equity stake:

22
Op. Agr. § 4.2(a).
23
PTO ¶ 20.
24
Id. ¶ 26. Soniat’s company Dufossat Capital also provided accounting services to
Coinmint. See id. ¶¶ 21–24.
25
Id. ¶ 27.
26
See Op. Agr. §§ 3.2, 3.5, 3.6.
27
See id. §§ 3.5, 3.6(f).
28
See id. §§ 3.2, 3.6.

6
 Each Manager shall have the voting power equivalent to the Sharing
Ratio of the Member that appointed such Manager and, unless
otherwise expressly stated in this Agreement, all actions by or requiring
the consent or approval of the Board shall require the consent or
approval of a Majority of the Board.29

b. Importantly, the Operating Agreement compels the Board to

follow certain formalities to effectuate a capital adjustment, and the parties do not

meaningfully dispute those formalities. Section 3.2(a) of the Operating Agreement

contemplates that if there are “insufficient Available Funds to cover operating

deficits or other capital needs of the Company, the Board shall notify the Members

in writing of such deficits and other cash needs,” after which each Member is

required to make an additional capital contribution to the Company.30 In other

words, the Board must determine that a capital call is required, vote to make the

capital call, and approve written notice to the Members.31 The Board must do so in

compliance with the Operating Agreement’s procedural requirements.32 Thereafter,

the Board must send advance written notice of the call to the Members.33

29
Id. § 4.3(e). The “Sharing Ratio” refers to Mintvest and CLT’s respective ownership
percentages in accordance with Section 3.7 of the Operating Agreement, which “may
change from time to time as provided in th[e] [Operating] Agreement.” Id. § 1(rrr). The
Sharing Ratio is subject to Section 3.2, which governs dilution. See id. §§ 3.2, 3.6, 3.7.
30
See id. § 3.2(a).
31
See id.
32
See id. § 4.4 (stating that Board action must be taken at a meeting or by written consent).
33
See id. § 3.2(a).

7
 c. Each Member has the right to match its counterpart’s capital

contributions to avoid dilutive effect. If a Member fails to make a required capital

contribution, the other Member may make that contribution, and the parties’

respective equity percentages will be immediately adjusted to reflect the disparate

contributions.34 Such adjustments shall be “effective as of the date the amount

requested under [Section 3.2(a)] was due,” and “shall be made by the Board in good

faith.”35 The Board should provide notice of any adjustment to the diluted Member,

but failure to do so does not nullify the dilution.36

F. From the outset, the parties anticipated that Soniat and CLT would

contribute more cash to the Company over time, diluting Mintvest’s ownership. For

example, Leary stated to Soniat,

At some point, given your financial resources are great[er] than mine,
it is contemplated you will contribute more. It is agreed that I accept
equity dilution as this happens, in a manner that is directly related to
the capital put in. Long story short, it is my hope that this is a big
success and I am a minority interest holder here.37

34
See id. § 3.2(a)(1)–(2) (discussing the consequences of a Member’s failure to make any
required additional capital contribution, namely a “Failed Contribution”).
35
Id. § 3.2(a)(2).
36
See id.
37
JX 4 at COINMINT071042; Leary Tr. 77; see also JX 5 at COINMINT065914 (“We are
equal as long as our contributions are equal. If one contributes more, then the other will
have the option to match it. If no match, then dilution will occur. My suggestion is to have
meetings at least quarterly (or more often by request) to effect dilution, meet strategically
on company direction, and decide distributions.”); JX 7 at COINMINT_157137 (“Mintvest
will be matching the contribution that Ashton made, to the extent that it can. After that
point, it will face dilution, pursuant to the agreement.”).

8
As Coinmint expanded, Leary requested from Soniat, and Soniat provided, funds to

support the Company’s operations;38 neither Mintvest nor Leary provided funds

aside from an initial contribution.39 By the end of 2016, Soniat’s capital

contributions diluted Mintvest’s interest to 5.5%.40 By early 2017, it was reduced

even further.41 But consistent with the Company’s internal practice of disavowing

formal procedures, there exist no Board minutes reflecting a Board vote authorizing

a capital call; no written consent in lieu of a meeting authorizing a capital call; and

no notice of a capital call sent to Members.42

G. Throughout 2017, Leary and Soniat negotiated Mintvest’s equity

stake.43 Leary felt that Mintvest should not have been diluted so significantly

because Leary had contributed significant “sweat equity.”44 Soniat agreed, and the

parties discussed an adjustment over the next several months.45 In October 2017,

38
See, e.g., JX 1 at 1386, 1390, 1397, 1398, 1420, 1425, 1426, 1437, 1465, 1473, 1504,
1534, 1542; Leary Tr. 95–97, 107–08; Soniat Tr. 211–12, 217, 290.
39
See Leary Tr. 77; Soniat Tr. 211–12.
40
See JX 15 at COINMINT_157205; JX 64A at COINMINT_157468.
41
See JX 124 at 2.
42
See PTO ¶¶ 28–29.
43
See Leary Tr. 118.
44
Soniat Tr. 223; see also Leary Tr. 118; Carlton Tr. 336–37.
45
See, e.g., Soniat Tr. 223; Leary Tr. 118; Carlton Tr. 336–38.

9
the parties agreed to “peg” Mintvest’s interest at a higher percentage.46 Soniat

proposed to “suspend the rebalancing of equity and peg ownership at 85/15.”47

Leary pointed out that the last equity statement he received showed Mintvest’s

equity “at 18.x%” and that he “reviewed it and it seemed accurate.”48 Leary stated

that “if it is accurate, I would prefer 18% to 15%.”49 Leary was “fine with the

concept of pegging equity permanently,” but the parties “just need[ed] to finalize the

amount.”50 Thereafter, Leary and Soniat agreed to peg Mintvest’s equity stake at

18.2%,51 and Soniat agreed that he would only fund the Company with loans going

forward, so as to avoid Mintvest’s further dilution.52 Leary expressed his satisfaction

with this arrangement.53

46
See JX 27 at COINMINT155291 (“We are going to suspend the rebalancing of equity
and peg ownership at 85/15.”); JX 28 at 1–4 (reflecting that the parties extensively
discussed pegging equity at 85/15).
47
JX 28 at 3; JX 27 at COINMINT155291; see also Carlton Tr. 340–41, 343–44.
48
JX 28 at 1.
49
Id.
50
Id. at 4.
51
See, e.g., JX 25; JX 32; Leary Tr. 135–36; Soniat Tr. 222–24, 232, 235–36; Schneider
Tr. 406–07.
52
See Soniat Tr. 227–28.
53
See id.; see also JX 1 at MINTVEST00001473 (stating in a text from Leary to Soniat
that Soniat’s lending money to the Company “is really invaluable”).

10
 a. In keeping with Leary’s general distaste for paperwork, Leary

said that the agreement did not need to be documented.54 Nonetheless, the parties

memorialized this agreed-to equity split in a Statement of Changes in Partners’

Equity backdated to August 31, 2017 (the “October 2017 Agreement”).55 Leary

signed the October 2017 Agreement, and did not suggest or demand that a Board

meeting was required to make the 18.2% equity split official.56 Thus, as with every

other Company decision, no formal board meeting or written consent was executed

memorializing the October 2017 Agreement.

b. A series of documents executed after the October 2017

Agreement reflect the agreed-to 81.8% to 18.2% equity split.57 Leary admits that he

received these documents and did not protest Mintvest’s equity pegged at 18.2%.58

54
JX 28 at 1 (“I don’t think we would actually need any further paperwork on this. . . . Just
my 2 cents for minimizing documentation . . . . Why paper something now that has been
as it is for months, and then do it again shortly?”).
55
See JX 25; see also JX 32; Schneider Tr. 406–07.
56
See Leary Tr. 115 (admitting that he never requested a formal Board meeting with
Soniat); id. 120–22 (admitting that he felt “Ms. Schneider was a bit of a pain in the ass”
because she was asking him to sign documents); id. 135–36 (admitting that he signed the
documents reflecting Mintvest’s 18.2% ownership and never requested a Board meeting to
make it “official”); Soniat Tr. 275 (explaining that “the word ‘board meeting’ was never
mentioned until he sued me in Delaware”); see also Carlton Tr. 335 (explaining that “Leary
hated formalities”); Schneider Tr. 406 (stating that it was “very normal” for Leary to forego
formalities).
57
See JX 30; JX 31; JX 59; JX 64A; JX 97; JX 301; JX 302.
58
E.g., Leary Tr. 137–40, 146–48.

11
 c. Mintvest’s 18.2% ownership was also confirmed through the

Company’s 2018 financial statements. In performing an audit, the Company’s

accountants realized that Leary and Mintvest never made a particular equity

contribution of 14.001 Bitcoins with a market value of $155,143.68.59 Without that

contribution, Mintvest’s equity would be further diluted to approximately 10.69%.60

The accountants asked Leary about the “[e]quity question” to complete the audit.61

Leary responded on May 2, 2019: “With regards to the equity, it is the same as the

spreadsheet that Kathleen prepared, that I sent you a few days ago (18.2% for

Mintvest, the rest in Ashton’s entity).”62 The referenced “spreadsheet” was a version

of the October 2017 Agreement.63 The accountants adjusted the Company’s books

to support Mintvest’s 18.2% ownership.64

59
See JX 85 at COINMINT_158126.
60
See JX 124 at 2.
61
JX 88 at COINMINT000025 (referring to the outstanding “equity question”); JX 85 at
COINMINT_158126 (evidencing that the “equity question” referred to Mintvest’s further
dilution).
62
JX 88 at COINMINT000024; see also JX 87.
63
Leary Tr. 147–48 (discussing JX 87 and JX 88). JX 87 reflects that Leary forwarded
Kathleen Schneider’s October 18, 2017 email containing the October 2017 Agreement to
the auditors on April 29, 2019, four days after they inquired about Leary’s equity
contributions. Compare JX 87 at COINMINT_158101, with JX 85 at
COINMINT_158126.
64
See JX 88 at COINMINT000020–000023.

12
 d. On August 9, 2019, Leary once more confirmed that he was

“100% comfortable with” Mintvest’s equity pegged at 18.2%.65 He also recognized

that, compared to CLT, Mintvest “do[es]n’t have as much skin in the game, in terms

of capital value . . . (in terms of percentages),” and that “there can be only one boss,

and that is [Soniat].”66 Twelve days later, Leary once more recognized Mintvest’s

18.2% stake and attempted to use it as leverage: after further discussions, Leary

proposed that he be given an option to exit his position as “a minority equity

holder.”67 Yet, in this litigation Mintvest seeks equitable relief in this Court based

on the assertion that Mintvest continues to hold 50% of the Company.68

H. Wielding its purported 50% interest, Mintvest also seeks an order

declaring that Coinmint was invalidly converted to a Puerto Rican entity and an order

nullifying the conversion.69 On or about January 19, 2018, the Company filed a

Certificate of Conversion with the Delaware Secretary of State and the Secretary of

State (the “Conversion”).70 On January 25, Coinmint domesticated in Puerto Rico.71

65
JX 99 at COINMINT011920; see also Leary Tr. 155 (testifying that, as of early August
2019, he believed that Mintvest held 18.2% and was content with that percentage).
66
JX 99 at COINMINT011920.
67
JX 101 at COINMINT130734.
68
See Am. Compl. ¶¶ 102, 111, 123.
69
See id. ¶¶ 102–06.
70
PTO ¶ 30; JX 48.
71
PTO ¶ 30; JX 49.

13
As of that date, Coinmint became and was thereafter operated as a Puerto Rican

entity.72 Mintvest contests the Conversion, pushing that Leary was unaware of the

Conversion until September 2019 and that the Conversion is invalid because Leary

never authorized it on Mintvest’s behalf.73 Contrary to his assertion that he was

unaware of the redomestication until “around September of 2019,”74 the record

demonstrates that Leary was fully aware of the Conversion.75

72
See JX 48; JX 49.
73
See PTO ¶ 30 (“Petitioner contests whether the Conversion was properly authorized.”);
Leary Tr. 58 (testifying that he was unaware of the Conversion until September 2019
“when [he] started kind of questioning a lot of the things that were going on in the
company”); Am. Compl. ¶ 103 (“Neither Mr. Leary nor any other representative of
Mintvest ever authorized the conversion.”).
The Operating Agreement does not specify a manner of authorizing a conversion.
Therefore, pursuant to 6 Del. C. § 18-216(b), a conversion “shall be authorized in the same
manner as is specified in the limited liability company agreement for authorizing a merger
or consolidation that involves the limited liability company as a constituent party to the
merger or consolidation.” Section 4.6 of the Operating Agreement requires “consent of a
Majority of the Members” to approve a merger. Op. Agr. § 4.6(c). This is consistent with
the default rule under the LLC Act, which provides that, if the relevant operating agreement
does not address approvals for conversions or mergers, “the conversion shall be authorized
by the approval by members who own more than 50 percent of the then current percentage
or other interest in the profits of the domestic limited liability company owned by all of the
members.” 6 Del. C. § 18-216(b).
74
Leary Tr. 58 (“Q. . . . Are you aware, sir, currently, that in January 2018, Coinmint was
converted from a Delaware LLC to a Puerto Rican LLC? A. I am now. Q. When did you
first become aware of that? A. I’m not exactly sure of the time. I believe it was around
September of 2019 when I started kind of questioning a lot of the things that were going
on in the company.”).
75
See, e.g., id. 58–59 (“Q. Were there discussions in 2017 about having Coinmint take
advantage of certain Puerto Rico tax laws? A. Yes.”); id. 192–93 (confirming Leary had
received documents evidencing the Conversion prior to September 2019, and conceding
that he never protested in any way Coinmint’s redomestication as a Puerto Rican entity
before filing this action); Schneider Tr. 412 (“A. When I look back, it was always known

14
 a. As early as February 2017, Leary was engaging with Puerto

Rican tax counsel.76 Thereafter, Leary was actively involved in the Company’s

efforts to gain Puerto Rican tax protections.77 In conjunction with those tax efforts,

the Company considered redomestication as a Puerto Rican entity; Leary was

actively involved in that process, participating in numerous discussions with the

accountants and lawyers.78

that Coinmint was going to eventually move to Puerto Rico. Whether it was going to be
an Act 20 company or not was not decided initially. I think there was a lot of tax reviews
done by external consultants. But, officially, it did become clear that they decided to move
forward with it, and the final decision came in around December or November 2017. And
then it actually officially happened in January of 2018. Q. Who was spearheading the
efforts for the Puerto Rican conversion? A. Back early on, I was doing a lot of legwork
with it, as far as getting the external tax advisors organized. And then the actual
conversion, Mr. Leary took over the lead, and I just was the support background.”).
When faced with this record, Leary attempted to maintain that he was unaware of
Coinmint’s Conversion and redomestication in Puerto Rico until September 2019. The
paper record, as well as the testimony of credible witnesses, undermine Leary’s position.
Accordingly, I do not find Leary’s testimony credible as to the Conversion.
76
See JX 20; Leary Tr. 58–59, 162–63.
77
E.g., JX 38; JX 40; JX 41; JX 53; JX 56; JX 57; JX 59; JX 61; JX 68; JX 69; JX 71.
78
See, e.g., Carlton Tr. 339–40 (“The idea was that Coinmint was going to relocate to
Puerto Rico and become a Puerto Rican entity, and that it would seek to minimize taxes
there under a favorable tax provision known as Act 20. And North Country Data Center
would handle much of the New York operations. There were substantial discussions about
whether that could be done and how do it appropriately. Mr. Soniat was somewhat
cautious. He wanted legal opinions from large, respected law firms and CPA firms. Mr.
Leary was more kind of in ‘damn the torpedoes’ mode. He wanted the conversion to the
Puerto Rican entity done immediately and the Act 20 application done as quickly as
possible. In particular, he wanted it done before we did a securities token offering that they
were planning.”); id. 349 (“I had multiple discussions with Mr. Leary and Mr. Soniat about
the Act 20 application, the redomestication in Puerto Rico, which were related to one
another. We had numerous conversations with Deloitte and other kind of larger law firms
or CPA firms. Mr. Leary participated in those discussions and, in many instances, fought

15
 b. Leary participated in April and May 2018 discussions with tax

professionals, which explicitly acknowledged that “based on Coinmint’s facts, as

they stand today, the Puerto Rican company has a US trade or business, meaning

that any income from its business operations would be subject to US income

taxation,”79 and that “Coinmint Puerto Rico filed an election to be taxed as a

partnership for US tax purposes.”80

c. And in June 2018, Leary received a memorandum from the

Company’s tax advisors that reiterated the 81.8%-18.2% equity split and contained

an extensive discussion about “Coinmint’s Re-domiciliation to Puerto Rico.”81

d. Throughout 2018 and 2019, Leary was also spearheading the

preparation of an Offering Memo, or “White Paper,” to be used in conjunction with

with those attorneys and CPAs. I also had multiple one-on-one conversations with Mr.
Leary and Mr. Soniat. Mr. Leary, in particular, wanted the company to be a Puerto Rican
entity and was kind of pushing for that to be done ASAP. The process of doing the filings
dragged out because of delays with the service we hired to complete it. Mr. Leary
continually, and sometimes daily, was asking if the domestication had been completed yet,
and how we could speed it up or light a fire. Mr. Leary was also planning to move to
Puerto Rico.”).
79
JX 56 at COINMINT_157229 (identifying Coinmint as a Puerto Rican entity in April
2018) & COINMINT_156296 (showing that Leary responded to the email identifying
Coinmint as redomesticated); see also JX 53 at COINMINT_158462 (stating in a March
2018 email delivered to Leary that “tax counsel told us that going from one jurisdiction
(DE) to another (PR), did not require a new EIN”).
80
JX 57 at COINMINT_157305; accord JX 59 at COINMINT_157313, -157315.
81
JX 59 at COINMINT_157312, -157317–157328; see also Leary Tr. 170–71.

16
a proposed offering of bitcoin tokens.82 The White Paper, dated August 2018,

expressly states under the heading “Corporate Structure & Ownership” that

“Coinmint, LLC was formed as a Delaware limited liability company in 2016 and

reorganized as a Puerto Rican Puerto Rico limited liability company in early 2018.”83

e. In spring 2018, on behalf of the Company, Leary negotiated a

collaboration agreement.84 Both the draft agreement and the final version Leary

signed on Coinmint’s behalf state that Coinmint is a Puerto Rican limited liability

company.85

f. In July 2019, Leary, acting and signing as President of Coinmint,

caused the Company to file a Form D with the Securities and Exchange Commission

in connection with a proposed exempt offering of securities.86 The Form D provides

that the “Jurisdiction of Incorporation/Organization of Coinmint, LLC” is

“PUERTO RICO.”87

82
See JX 60; Leary Tr. 170–72; Soniat Tr. 245.
83
JX 60 at COINMINT_157348; see also Leary Tr. 172.
84
See Leary Tr. 182.
85
See JX 303 at COINMINT118537 (stating in a draft of the collaboration agreement
attached to an email from Leary that Coinmint is a “Puerto Rican limited liability
company”); JX 304 at COINMINT145499 (stating in the final collaboration agreement
attached to an email from Leary that Coinmint is a “Puerto Rican limited liability
company”).
86
See JX 97 at 1, 2, 5.
87
Id. at 1.

17
 g. Finally, in November 2018, Leary received an email from an

attorney representing the Company.88 That email asked whether Leary “originally

organize[d] Coinmint as a Delaware LLC,” and went on to explain, “That is what

the contract says and also the PR certificate of incorporation is dated as of January

2018, so I guess you converted to a PR entity. If that is so, please confirm and send

me a copy of the conversion documents.”89 Leary thereafter confirmed the

Conversion, asking the Company’s controller to forward a copy of the requested

conversion documents; she did, copying Leary.90

I. Leary and Soniat’s relationship deteriorated over time, taking its toll on

Coinmint. By 2019, Leary and Soniat disagreed as to how the Company should be

run and managed.91 Soniat believed that Leary was struggling to keep things afloat

and therefore installed a CFO and COO to ensure the Company would be managed

more professionally.92 Leary did not respond well to these changes.93 At the same

time, Soniat learned about other problems related to Coinmint’s business and

88
See JX 73; Leary Tr. 189–90.
89
JX 73 at COINMINT000056.
90
See id.
91
See Soniat Tr. 249–51.
92
See id.
93
See id.

18
management, including, inter alia, that Leary had been hiding the Company’s bills

from management and others.94

J. Accordingly, on December 2, 2019, CLT, as Coinmint’s 81.8%

Manager and 81.8% Member,95 approved resolutions (i) amending the Operating

Agreement to provide that “[a] majority of the members shall determine the

composition of the Board, and that “[a]ny Manager may be removed from the Board

with or without cause by a Majority Vote of the Members”;96 (ii) removing Leary

from the Board under those amended terms;97 and (iii) designating CLT as

Coinmint’s sole Manager.98

K. CLT and Mintvest, via Leary and Soniat, are not able to continue

working together on day-to-day tasks going forward.99

L. Petitioner filed this action against Respondent in December 2019.100

On March 2, 2020, Petitioner filed the operative Amended Complaint, seeking to

94
See id. 251–52, 269–70, 272–73; see also JX 99 at COINMINT011920; JX 101 at
COINMINT130734; JX 102 at COINMINT000030–000031.
95
See JX 108 at COINMINT_157544 (indicating that CLT effectuated the resolution with
“81.8% Voting Rights”); JX 109 at COINMINT_157545 (same); JX 110 at 1 (same).
Under the Operating Agreement, each Manager’s voting power is the same as the equity
interest of the Member who appointed that Manager. Op. Agr. § 4.3(e).
96
JX 109 at COINMINT_157545.
97
JX 108 at COINMINT_157544; PTO ¶ 31.
98
JX 110 at 1; PTO ¶ 31.
99
PTO ¶¶ 32, 33.
100
See D.I. 1.

19
nullify Coinmint’s conversion to a Puerto Rican entity; determine Coinmint’s proper

Managers pursuant to 6 Del. C. § 18-110; and dissolve Coinmint and appoint a

liquidating trustee.101 Respondent moved to dismiss, asserting in part that this Court

lacked jurisdiction over Coinmint as a Puerto Rican entity.102 I cautiously denied

Respondent’s motion, pointing out that “the factual and legal findings and ruling on

the conversion claim and the related ownership claim are the gatekeepers for whether

the alternative claim seeking dissolution of a Puerto Rican entity is even reached,”

and that “it would be inappropriate for me to dismiss that claim when it’s possible

that the gatekeeping claims will be found to result in a Delaware entity over which

this court does have subject matter jurisdiction.”103 Respondent answered the

Amended Complaint, asserting as affirmative defenses, inter alia, that Petitioner’s

claims are barred by unclean hands; that Petitioner’s claims are barred by waiver and

estoppel; and that the Court lacks jurisdiction over the Company.104

M. I entered a status quo order on May 19, 2020 (the “SQO”).105 Taking

Mintvest’s allegations in the Amended Complaint as true, and following the practice

101
See Am. Compl. ¶ 1. Count I seeks to nullify the Conversion. See id. ¶¶ 100–06.
Count II seeks dissolution pursuant to 6 Del. C. § 18-802, or alternatively, equitable
dissolution. See id. ¶¶ 107–17. Count III seeks a declaration of the Company’s proper
managers pursuant to 6 Del. C. § 18-110. See id. ¶¶ 118–28.
102
See D.I. 20; D.I. 34.
103
See D.I. 55 at 57–58.
104
See D.I. 46 at 52–53.
105
See generally SQO.

20
of retaining the apparent incumbent in managerial control pending resolution of a

control dispute,106 the SQO keeps Leary at Coinmint’s helm beside CLT during this

litigation. It requires, among other things, that the parties comply with the terms of

the Operating Agreement.107 It also provides that, “upon a showing of good cause,”

the Court may modify the SQO’s terms,108 and that the SQO shall remain in full

force and effect “until such time as this Court specifically orders otherwise.” 109

Throughout the action’s pendency, both parties filed several motions to enforce the

SQO.110 Those motions invoked recurring themes, behaviors, and legal issues;

required that the Court repeatedly chastise the parties for contumacious behavior;

killed many trees; and sapped the Court’s time and resources. Many motions were

well-founded; Soniat struggled to observe corporate formalities in funding the

Company’s operations, and Leary divulged confidential Company information and

interfered with Company operations in an attempt to steer the Company in his

preferred direction.

106
See Pharmalytica Servs., LLC v. Agno Pharm., LLC, 2008 WL 2721742, at *3 n.6 (Del.
Ch. July 9, 2008) (“As the label suggests, status quo orders, in the usual case, provide for
incumbents to continue in office.”).
107
See SQO ¶ 1.
108
Id. ¶ 6.
109
Id. ¶ 7.
110
E.g., D.I. 299; D.I. 297; D.I. 292; D.I. 293; D.I. 274; D.I. 261; D.I. 232; D.I. 231;
D.I. 214; D.I. 212; D.I. 209; D.I. 206; D.I. 200; D.I. 195; D.I. 177; D.I. 176; D.I. 174;
D.I. 165; D.I. 155; D.I. 148; D.I. 146; D.I. 141; D.I. 140; D.I. 134; D.I. 131; D.I. 128;
D.I. 123; D.I. 116; D.I. 108; D.I. 103; D.I. 102; D.I. 93; D.I. 88; D.I. 81.

21
 N. The matter proceeded through discovery to trial, which I held on

February 2 and 3, 2021.111 The parties submitted post-trial briefing,112 and I heard

post-trial argument on April 20.113

O. With the matter close to resolution, the parties’ spats over the SQO

continued. Respondent moved to enforce the SQO and thereafter to modify it.114 In

response, Petitioner opposed those motions, and also moved to enforce the SQO

against Respondent.115 On May 7, I heard argument on the competing SQO

motions.116 I granted Respondent’s motion and denied Petitioner’s motion, but took

the requests to modify or vacate the SQO under advisement.117 In a two-step

intended to expedite finality and steady the Company, I am issuing this order in

advance of a post-trial opinion setting forth more detailed findings of fact and

conclusions of law, and a final order of judgment.

IT IS HEREBY ORDERED this 18th day of May, 2021:

1. Judgment will be entered in Respondent’s favor on all counts. The

preponderance of the evidence establishes that Mintvest was legally, validly, and

111
See D.I. 235; D.I. 236.
112
See D.I. 270; D.I. 278; D.I. 282; D.I. 823.
113
See D.I. 298.
114
See D.I. 261; D.I. 274.
115
See D.I. 291.
116
See D.I. 303.
117
See id.

22
voluntarily diluted to an 18.2% minority Member in October 2017. While the parties

did not adhere to the Operating Agreement’s formalities in effectuating that dilution,

Leary actively waived Mintvest’s right to avail itself of those protections.118 As a

result of Mintvest’s minority status, CLT had the authority to amend the Operating

Agreement; remove Leary as Manager; and install CLT as Coinmint’s sole Manager.

Further, the record demonstrates that the Conversion was valid pursuant to Section

4.6 of the Operating Agreement, and that Leary was an active participant in

executing the redomestication plan. Coinmint became a Puerto Rican entity.

Petitioner has failed to establish a basis to support the extreme remedy of dissolution.

A forthcoming opinion will set forth the legal underpinnings of these conclusions.

118
The Operating Agreement’s “No Waiver” provision does not preclude this outcome. It
reads:
No waiver, express or implied, by any Member of any breach or default by
any other Member in the performance by the other Member of its obligations
hereunder shall be deemed or construed to be a waiver of any other breach
or default under this Agreement. Failure on the part of any Member to
complain of any act or omission of any other Member, or to declare such
other Member in default irrespective of how long such failure continues,
shall not constitute a waiver hereunder. No notice to or demand on a
defaulting Member shall entitle such defaulting Member to any other or
further notice or demand in similar or other circumstances.
Op. Agr. § 11.13. Petitioner tortures the plain reading of this provision to secure an
unsupported outcome. Leary did not sit idly by and “fail[] to complain” about the parties’
noncompliance with the Operating Agreement’s terms. To the contrary, he was an active
participant in shirking those terms and spearheaded the intra-Company campaign against
formalities.

23
 2. The Status Quo Order is hereby VACATED. “Once [a] status quo

order is in place, the party seeking modification bears the burden of showing why it

should be modified.”119 The SQO binds the parties until this Court enters a final

judgment in the matter or specifically orders otherwise upon good cause shown. 120

As with the decision to enter a status quo order, the decision to order otherwise is

“within the discretion of the trial judge.”121

In deciding whether to modify or vacate a status quo order, it is proper
for the court to assess whether the facts or circumstances justifying the
initial restraint have changed. This includes whether there is a basis to
reconsider the court’s initial determination that the plaintiff
demonstrated . . . a . . . likelihood of success on the merits.122

“This result, in my view, is driven by commonsense as well as our law,” as “[s]tatus

quo orders routinely provide for modifications, implying that circumstances in the

company’s operation or management may change during the progress of litigation

and that such changes properly should be reflected in the Order.”123 It is

119
R&R Cap. LLC v. Merritt, 2013 WL 1008593, at *8 (Del. Ch. Mar. 13, 2013) (citing
Conn. Gen. Life Ins. Co. v. Pinkas, 2010 WL 4925832, at *2 (Del. Ch. Nov. 18, 2010)).
120
See Eagle Force Hldgs., LLC v. Campbell, 235 A.3d 727, 743–45 & n.85 (Del. 2020);
R&R Cap., 2013 WL 1008593, at *8; Frankino v. Nat’l Auto Credit, Inc., 1999 WL
959188, at *1 (Del. Ch. Sept. 28, 1999); see also SQO ¶¶ 6–7.
121
R&R Cap., 2013 WL 1008593, at *8.
122
Germaninvestments AG v. Allomet Corp., 2019 WL 2236844, at *10 (Del. Ch.
May 23, 2019) (footnote omitted) (citing United Bhd. of Carpenters Pension Plan v.
Fellner, 2014 WL 1813280, at *1 & *2 (Del. Ch. May 1, 2014)), aff’d in part, rev’d in part
on other grounds, 225 A.3d 316 (Del. 2020).
123
Frankino, 1999 WL 959188, at *1.

24
unreasonable “to treat the status quo order as akin to a document of legal title,” as

such orders simply “identify the [managers] who shall manage the company as a

means of reassuring shareholders and markets that someone has the legal right to

manage the daily affairs of the company until the Court of Chancery resolves the

§ [18-110] action.”124 The SQO “is a practical instrument intended to operate in a

practical manner.”125

3. Here, trial has shown that Mintvest was lawfully diluted and therefore

lost its authority to make outcome-determinative decisions for the Company. CLT,

as the Company’s majority holder, was within its rights to remove Leary as Manager

in December 2019. The facts and circumstances justifying the initial restraint have

changed; the record has eviscerated the influence and weight previously afforded to

the Amended Complaint’s allegations, which formed the basis for maintaining the

status quo as Leary believed it to be. In view of my post-trial finding that Leary has

no rightful claim to Coinmint’s management, there is good cause to vacate the SQO

before entry of a final judgment, as it would be improper to permit Leary to retain

managerial power of which he was lawfully and validly divested. And the record to

date, including CLT’s recent and well-founded claims that Leary continues to violate

the SQO, supports the conclusion that allowing Leary to retain control via the SQO

124
Id.
125
Id.

25
risks irreparable harm to Coinmint; rewards his continued contemptuous actions and

effort to disrupt Coinmint’s business; and flies in the face of the record established

at trial. Accordingly, even though the SQO will expire on its own terms upon entry

of a final judgment, the SQO is VACATED.

/s/ Morgan T. Zurn
Vice Chancellor Morgan T. Zurn

26