Stake founders Ed Craven and Bijan Tehrani sued by Christopher Freeman for $US400m
An ex-business partner suing Australia’s youngest billionaire, Ed Craven, and his Stake.com co-founder Bijan Tehrani allege the pair are allowing illegal crypto gambling on their online casino.
An ex-business partner suing Australia’s youngest billionaire, Ed Craven, and his Stake.com co-founder Bijan Tehrani allege the pair are allowing illegal crypto gambling on their online casino.
Mr Craven, who last year paid about $120m for two Toorak mansions in Melbourne, and Mr Tehrani, an American who plans to become an Australian citizen, are being sued in the US for $US400m ($588m) in damages by a former business associate.
Christopher Freeman, a childhood friend of Mr Tehrani in Connecticut who went on to work with him and Mr Craven at their first online foray almost a decade ago, cryptocurrency dice gambling website Primedice, alleges the Stake duo cut him out on what has gone on to become the biggest crypto casino in the world.
Mr Freeman had launched civil court action in New York last August, seeking $US400m in damages and alleging he was misled into not taking part in the formation of Stake by Mr Craven, 27, and Mr Tehrani in 2017.
In an amended complaint filed in the Southern District of New York last week, Mr Freeman has outlined further details of how he believes he was excluded from Stake despite claiming to be at the forefront of developing technology for its precursor Primedice.
He has also alleged Mr Craven and Mr Tehrani are allowing customers in jurisdictions such as the US to gamble with crypto, and actively encouraging the use of technology to circumvent crypto gambling bans for US citizens.
In court documents obtained by The Australian, Mr Freeman also claims he would not have encouraged the flouting of online gambling bans if he had stayed involved with the business and he had a long-held concern that Mr Craven and Mr Tehrani were “too loose” on compliance issues.
He describes himself in the court documents as “the last bulwark against Craven and Tehrani’s illegal schemes for Primedice, and eventually Stake”.
Lawyers for Stake declined to comment. Mr Craven and Mr Tehrani have previously said Mr Freeman’s court action is “utterly frivolous” and “provably false” and will defend the case.
Mr Craven and Mr Tehrani revealed the huge success of Stake in The Weekend Australian Magazine in October, showing customers bet an average $US400m each day using cryptocurrency on casino games and slot machines on their website. The business, the duo said, was set to make $1bn in profits by the end of 2022.
The pair operate from premises in Melbourne’s CBD, though crypto gambling is also banned in Australia. Mr Craven burst into the headlines when he shelled out $88m for a “ghost mansion” in Melbourne’s Toorak last August, a few months after paying $38.5m for a nearby house months earlier.
His wealth is underpinned by Stake, which he and Mr Tehrani claim accounts for about seven per cent of total bitcoin transactions around the world daily. “People have been trying to find the killer application for cryptocurrency,” Mr Tehrani said in the October interview. “Well, it’s gambling.”
While the Stake founders live in Melbourne, their business is regulated through the tax haven of Curacao in the Caribbean and operates mostly in so-called “grey” or pre-regulation markets. They told The Australian they had plans for Stake to apply for licences to run sports betting sites in regulated markets and also want to run a sports betting site in Australia.
Mr Freeman alleges that he should also share in the success of Stake given its origins in Primedice, which he says he helped Mr Craven and Mr Tehrani form and was in partnership with them at.
“Freeman is entitled to no less than a 20 per cent share in Stake.com in addition to the amounts past due to him from Primedice and in various alternative cryptocurrencies, which total an amount not less than $US200m,” his complaint reads.
Mr Craven and Mr Tehrani say they sank “several million worth of crypto” into combining casino games with Primedice’s provably fair mathematical algorithm and launching it in 2017.
Mr Freeman claims he raised the idea of a crypto casino with them in 2016. He says Mr Craven and Mr Tehrani were more interested in running a fiat currency casino in Australia – something he did not want to move “halfway around the world” for.
Mr Freeman claims that despite a prohibition on cryptocurrency gambling in the US, Mr Craven and Mr Tehrani target customers in the US by marketing Stake.com through its Stake.us subsidiary website – currently a “social casino” on which games are played for fake prizes. He alleges a “cottage industry” has developed “with Tehrani and Craven’s knowledge and support” to continue accessing the US market, including online explanations and videos on how to use a VPN and mirror sites to access Stake’s website.
Mr Freeman also alleges that Stake.us users can purchase gold coins for use in the social casino games on that website and are then rewarded with “Stake cash” that can be exchanged for cryptocurrency winnings if they win games using the gold coins.
“Not only is Stake.com availing itself to the markets in the U.S. and New York, but in its effort to penetrate those markets, it is apparently unconcerned with taunting regulators who want to prevent illegal online gambling in the United States,” Mr Freeman writes.
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