Two crypto investors and close friends from Denver have had a $25 million falling out.
James Hilliard, who lives in Park Hill, and Michael Dupree of Sunnyside met in 2014, when bitcoin was valued at a few hundred bucks and Dupree ran the Denver Bitcoin Center.
“Hilliard spent months living, working and sleeping at Dupree’s nonprofit bitcoin community center,” according to legal documents Dupree filed this month. “They traveled to dozens of countries together and entered into many various endeavors as friends and part of the crypto community. For many years, this involved spending more months together than separately.”
Among those various endeavors was EasyBit, a company Dupree founded that operated bitcoin ATMs.
“The biggest challenge with operating bitcoin ATMs is the need for liquidity,” Hilliard, who, like Dupree, is an engineer, said in an affidavit last year. “Because of this, Michael would occasionally ask to borrow bitcoin from me. I loaned bitcoin on multiple occasions in 2015 and 2016. Michael would usually pay me back within the agreed upon time frame.”
Dupree remembers it differently. “James Hilliard and I exchanged BTC hundreds, if not thousands, of times,” he explained in a March 3 affidavit. “In none of those transactions did I ever memorialize any debt in a written instrument or have any agreed-upon terms.”
But a six-page contract does exist. Dated Jan. 8, 2018, and seemingly signed by both Dupree and Hillard, it memorializes an unpaid loan of 69.8 bitcoins from Hilliard to EasyBit.
By that point, one bitcoin was worth about $15,000.
“On multiple occasions, I have asked Michael to begin paying me back for the bitcoin I loaned him,” Hilliard’s affidavit states. “In response, Michael has either ignored my request entirely or has declined to pay me back. To date, Michael has not paid back a single bitcoin for the loans specified in the agreement. I believe any additional request to repay the loan is futile.”
Hilliard’s attorney, Stan Garnett of Garnett Powell Maximon Barlow & Farbes, sent a demand letter to Dupree in September and then filed a lawsuit with the American Arbitration Association. It demands $7.8 million for the 70 bitcoins — bitcoin was worth $112,000 then, near the all-time high — plus $16.4 million in interest and a 5% premium, for a total of $25.4 million.
Since the letter was sent, the value of bitcoin has dropped sharply, to about $70,000 as of Tuesday.
Dupree, meanwhile, says there is a good reason he ignores the loan contract: It’s a fake.
“(Dupree) can prove that the contract which was purportedly created and signed by him is a fabrication,” his lawyers wrote March 3. “The contract has a signature extracted from a prior document that (Dupree) signed, which is alarming, considering that on the date the contract was allegedly signed, the parties were in the same house together, and together all day.”
Dupree and Hilliard were living together in 2018. Dupree says he has video footage from his house on Jan. 8, 2018, that shows they were together all day and not signing contracts. Dupree claims that all EasyBit contracts are reviewed by his father — the company’s lawyer — and that he has never personally guaranteed a business agreement or loan in his life.
Dupree is asking Denver District Judge Heidi Kutcher to put an end to the dispute.
“The risk to the plaintiff putting his case into the hands of arbitration are too great, and the lack of remedies too scary, not to ask this court to hold an evidentiary hearing to flush out the fraud in this matter,” according to a motion by his lawyer, Matt Buck of Red Law in Denver.
Hilliard’s lawyers — Garnett, Natalie Klee and Kate Leisner — declined to comment on that.
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