(Bloomberg) – Franklin Resources Inc. destroyed a blockchain startup for its technology and a “shortcut” in the burgeoning fintech market, a group of investors said in a lawsuit.
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The startup, Onsa, claims to have developed a ‘tokenized’ money market that converts assets into digital tokens – the first of its kind to be approved by the Securities and Exchange Commission. But after taking control of Onsa through an investment, Franklin abruptly fired the startup’s senior executives and coders in 2020 and recruited some to launch his own version of blockchain technology, according to the lawsuit.
Franklin Templeton is now on the cusp of launching the technology it took from Onsa under the Franklin Templeton banner, hoping to change its image as a technological dinosaur and generate huge financial benefits that flow from the technology. innovative innovation, âsaid the Onsa shareholder group. called Blockchain Innovation LLC said in the complaint.
The group claims that Franklin, who manages $ 1.5 trillion in assets, destroyed a business comparable to blockchain companies that recently went public and hit market valuations of $ 1 billion. Shareholders are seeking “possibly billions of dollars” in damages and a court order barring Franklin from deploying its token market fund or its “Benji” mobile app or web platform.
A spokeswoman for Franklin called the trial “misguided.” She said it was the first time Franklin had heard of Blockchain Innovation LLC, “which appears to be an entity that exists only to create litigation against Franklin Templeton.”
If the group had done “due diligence” it would have shown the complaint was unfounded, the spokesperson said.
Jennifer Johnson, who took over as Franklin in 2019, said that year she would use Franklin’s more than $ 8 billion in cash for technology investments and acquisitions to drive growth. In June, Johnson said blockchain was still “underrated” and was a major disruptive force.
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Franklin is accused in the trial of breaching his fiduciary duty. Franklin got control of Onsa through an investment, and although he assured the startup that it would remain an independent company, he hijacked Onsa’s technology and liquidated the company’s assets in the part of a “pseudo-bankruptcy proceeding” that sought to exempt the fund manager from any liability to non-Franklin shareholders, Onsa shareholders said in the complaint.
The case is Blockchain Innovation, LLC v Franklin Resources, Inc., 3: 21-cv-8787, US District Court, Northern District of California (San Francisco).
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