‘All sizzle and no steak’: 2 rival crypto firms duke it out in a court case

If you haven’t heard, there’s a huge court battle playing out between two HR and payroll services rivals, Rippling and Deel (they’re both suing each other). 

So, what does this have to do with our industry? Well, there’s a separate ongoing court case happening between two crypto companies. It’s a little complicated, so bear with me. 

In December of last year — so before Rippling filed its suit — Toku accused its rival firm, Liquifi, and its new general counsel, Benjamin Snipes, of stealing thousands of files containing sensitive business information after Snipes left Toku on not-so-pleasant terms. The lawsuit claims that Snipes wanted a promotion at Toku but didn’t get it, so he quit to work for a firm outside of crypto, only to pop up at Liquifi a couple of months later.

(In Snipes’s affidavit, he confirmed he temporarily left crypto after Toku, calling it a “toxic work environment.”)

Coincidence? Toku doesn’t seem to think so. And, from what I’ve heard, these firms operate in a very small subsection of crypto. There are four big players: Toku, Liquifi, Magna and Pulley. Then there are a few smaller firms that may have some overlap. 

Toku is a platform built for tax and payroll compliance through a crypto lens, while Liquifi seeks to automate token vesting (in their words, building the “Carta of crypto”) so you can see where the two compete. 

On one hand, we have Toku arguing that it found — through an investigation — that Snipes downloaded company documents before his “heated departure.” Since then, Toku alleges that the two have used the information for their business and engaged in “a campaign of outright lies about Toku in the marketplace.”

A person familiar with the sector told me that Benjamin Snipes also applied for a demo at Magna back in September of last year, which would have been right before Snipes joined Liquifi. According to his LinkedIn, Liquifi officially onboarded Snipes in October 2024. 

Snipes confirmed that to me. He added that the demo happened before he spoke with Liquifi, explaining that he was just consulting at the time. 

According to court documents, Snipes was “terminated” from Liquifi in the wake of the lawsuit. Toku, he said, “hurt” his reputation, which has since made it difficult for him to find work. 

Liquifi, meanwhile, says that Toku’s “claims are all sizzle and no steak.”

Instead, it says that it was once a takeover target for Toku, but the relationship soured after those talks fell through.

Now here’s the thing: The case, while filed back in December, is still in discovery (which is when both sides exchange relevant information ahead of a potential trial to prepare for arguments). 

But Toku was handed a defeat on Friday when a judge denied its motion to grant a preliminary injunction, which would have essentially handcuffed Liquifi. However, the case is still ongoing. 

“The court’s verdict speaks loudly: It rejected outright all of the relief sought by Toku against Liquifi at this preliminary injunction stage, validating and confirming what we have always known. Liquifi has always stood for fair competition and innovation over litigation,” Liquifi told me. 

“For months, we remained silent out of respect for the legal process. The court has now seen through Toku’s storytelling and we are pleased to move forward and stay focused on our product, customers and partners.”

Meanwhile, Toku told me: “The allegations presented in this filing are disturbing and provide shocking documentary evidence of Liquifi and Deel’s behavior in this matter. It’s even more troubling that this information only scratches the surface as we are in early stages of litigation. We will continue to learn about what happened and how files stolen from Toku were used in a failed attempt to destroy our business.”

“The fact that LiquiFi and likely their partners at Deel are attempting to declare victory over a preliminary ruling that does not impact the material details of this case — where they stole 29,000 documents, which include customer data, personal information of our employees and customers, proprietary information, source code, and more — is absurd. The true nature of their unethical and appalling actions has still not been fully uncovered. We take the protection of our trade secrets and confidentiality very seriously and are committed to pursuing the appropriate steps to deliver justice as the process moves forward,” a Toku spokesperson told me.

Prior to the court decision on Friday, Toku — in its attempt to convince a judge to rule in its favor on the motion — filed a 74-page brief bringing another player into the mix. This is where Deel comes into play. Liquifi and Deel entered into a partnership last year, the court documents claimed. 

“Liquifi is one of the vendor options for the small percentage of Deel’s customers that require token management, a service we do not offer. Working with a skilled vendor to provide complementary services to our product suite is not only standard industry practice, but good business sense,” a Deel spokesperson told me. 

Deel and Toku are unlikely competitors: competing not on the crypto level, but as employer of record service providers (which is when a service provider acts as the legal employer for a company’s employees when they’re based in a different country and the company doesn’t have a legal entity). 

Deel, according to the filings, sought to “crush” Toku. The alleged spy, Keith O’Brien, was also mentioned in the filing after reportedly applying to work at the firm four times. 

“O’Brien’s quest for a Toku position halted approximately when he began his ‘spying’ at Rippling on behalf of Deel,” the filing said. 

I asked Deel about O’Brien and its mention in the ongoing case, to which a spokesperson told me: “We cannot comment on another company’s litigation but understand that the court denied Toku’s request for a preliminary injunction last Friday.”

“Liquifi has many other partners. This is clearly an attempt to attach a months-old lawsuit to a completely unrelated news cycle. And it’s worth noting that Quinn Emmanuel, the law firm in this case, also represents a company in active litigation against Deel,” they added.

Liquifi, in its response document, didn’t dispute that Deel wanted to “crush” Toku, but noted in a footnote it didn’t mean that Liquifi would use confidential information to do so. 

And, according to the filings, “the parties entered into a search-and-destroy Protocol that will wipe all Toku documents from Liquifi’s systems, meaning that there is no risk of Liquifi accessing any documents on a going-forward basis.​​”

As for how this case plays out, it’s early yet. But I’ll be monitoring it over on Empire. 

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