‘Desperate attempt’: Stake.com founders hit with $580 million lawsuit

The Australian founders of the world’s biggest cryptocurrency casino are being sued in the US for $US400 million ($580 million) in damages by a former associate who alleges he was cut out of the hugely successful business.

But the Stake.com founders, Ed Craven – who recently purchased the most expensive house in Melbourne – and Bijan Tehrani, have dismissed the legal action as “utterly frivolous” and “provably false”.

Stake.com is a homegrown export with its headquarters in Melbourne. Credit: Matthew Absalom-Wong

An investigation by The Age and Sydney Morning Herald in late 2021 revealed that cryptocurrency casino Stake.com, which was believed to be an offshore enterprise, was actually founded in Melbourne in 2017 by Craven and Tehrani. Stake.com, which is the lead jersey sponsor of English Premier League soccer team Everton and also counts Canadian pop superstar Drake as its main brand ambassador, has grown into an operation estimated to be worth up to $1 billion.

Craven recently made headlines in Australia after his $80 million purchase of a home in Toorak broke Melbourne’s house price record. Earlier this year interests linked to Craven bought another home in Toorak for $38 million.

Christopher Freeman, currently based in Florida, has launched civil court action in the Southern District of New York seeking $US400 million ($580 million) in punitive damages and payment for his initial investment in a precursor company of Stake.com, alleging he was misled into not participating in the formation of Stake.com by the two young Australian-based casino operators.

Bijan Tehrani is one of the founders of Stake.com.Credit: Facebook

Stake.com is also named as a defendant in the case. In a statement the company’s lawyers described the allegations as “frivolous” and “provably false”. It said it would defend the claim if the case wasn’t thrown out of court.

Craven’s property purchases are mentioned in the claim filed by Freeman as evidence of the significant success of Stake.com. The casino, which operates much like an ordinary casino except that it only deals in cryptocurrency rather than traditional currencies, claims to have processed $US100 billion in bets across its casino and sports betting businesses.

Freeman says in his court complaint that he was a childhood friend of Tehrani and attended the same primary school and high school in Connecticut as the Stake.com founder. He says in 2013 he and Tehrani decided to set up a casino business, Primedice, with Craven while they were still in university.

Freeman claims he initially held a 20 per cent stake in Primedice while Tehrani and Craven both held 40 per cent, an arrangement that reflected their initial investment in the business.

Freeman alleges that within nine months of the establishment of Primedice, his shareholding was reduced to 14 per cent to reward other senior members of the development team.

Freeman alleges this share transfer occurred despite the trio having an agreement that Primedice would only provide equity to people who had put money into the business.

As cryptocurrency took off, Freeman alleges he raised the idea of a cryptocurrency casino with his business partners in 2016, but Tehrani and Craven were not interested in his idea given the potential issues with regulation.

That same year, Freeman alleges he was dissuaded from joining Tehrani and Craven’s new business venture, allegedly Stake.com, after being told he could only participate if he moved to Australia and that the new venture would only deal in fiat currencies such as the US dollar or the Euro.

“Freeman, who was committed to and comfortable with online gambling concepts, believed a fiat money casino was the wrong direction to go (online gaming facilitated by fiat is a widespread, big business),” court documents allege.

“He reasoned it was highly competitive and presented personal risks which he was not prepared to accept, and he did not want to be forced to move to Australia to pursue a fiat-based gambling business”.

Freeman alleges that despite their previous statements about a cryptocurrency casino being too expensive to run and concerns about regulation, Tehrani and Craven launched their cryptocurrency casino Stake.com.

He also alleges that when he questioned Tehrani and Craven, he was given assurances by the pair before having his system privileges revoked.

“Later, when Stake.com launched as a virtual casino which included a competing online dice game and many other features Freeman had proposed and helped design, Tehrani and Craven affirmatively tried to assuage Freeman’s dismay at having been misled by affirming that he still retained his stake in Primedice.”

“Eventually, Freeman’s access to the Primedice account was blocked and never returned.”

Freeman’s lawyers did not respond to requests for comment.

Stake.com said in a statement: “The complaint filed by Chris Freeman contains allegations that are internally inconsistent, intentionally misleading, and provably false.” The company described the claim as a “desperate attempt to spread false information”, adding Freeman had no claim to the money he said he was owed.

It added the founders of the company do not intend to cave to Freeman’s demands “and are confident that these utterly frivolous allegations will be dismissed by the court in due course.”

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