Stock image, for illustration only. Not related to the actual events.
DNA Holdings Venture co-founders Brock Pierce and Scott Walker face a lawsuit alleging they operated illegal poker games in Puerto Rico and ran pump-and-dump schemes, according to court documents filed in March that request a jury trial.
The suit accuses Pierce and Walker of hosting two illegal high-stakes poker games in Puerto Rico in October and December 2021, each requiring a minimum buy-in of $100,000 plus a one-bitcoin entrance fee. A portion of the proceeds was allegedly intended for donation to a Puerto Rican charity called Integro, according to the lawsuit.
Following the December game, one participant reportedly discovered his iPhone had been hacked through the wifi network created for players, with his SIM swapped to give attackers access to his email and social media accounts, the suit states. Winners allegedly never received their payouts, and an individual identified only as “Jacob” reportedly claimed to have stolen the money, saying he planned to give it to his family and commit suicide, according to the complaint.
The lawsuit alleges that millions of dollars were never recovered, “Jacob” was never identified, and the charity Integro never received any donation.
Investor losses and unfulfilled promises
Beyond the poker allegations, plaintiffs claim that for every dollar invested in DNA Holdings funds, only $0.70 was returned. The suit alleges Walker kept investors engaged with talk of a “reverse merge transaction” with a company called SRAX that would deliver “immense value,” but the merger reportedly never happened.
Instead, according to the complaint, Pierce and Walker launched new funds presented as vehicles for early-stage venture capital investments. The lawsuit alleges the money was actually invested into White Fiber, a publicly listed company majority-owned by Bit Digital, where Pierce sits on the board.
Pierce and Walker also allegedly promised to inject a stake in Tether, supposedly worth $300 million, into DNA Holdings to capitalize the funds. While a portion was reportedly added, the suit claims Pierce and Walker have since made the Tether equity unavailable or encumbered it.
Disclaimer acknowledged pump-and-dump warning
In an unusual admission, the plaintiffs acknowledge that Pierce and Walker posted a disclaimer on the DNA website warning of practices consistent with a pump-and-dump scheme. The disclaimer page stated that the company would “sell the shares we hold while we tell investors to purchase during the campaign” and noted that “investors should consider the Information to be one-sided and not balanced, complete, accurate, truthful or reliable.”
The disclaimer concluded that “if an investor relies on the information in making an investment decision it is highly probable that the investor will lose most, if not all, of his or her investment.”
The lawsuit brings eleven counts against Pierce and Walker, including alleged RICO violations, breach of fiduciary duties, and breach of the duty of candor and full disclosure. Pierce and Walker’s legal representatives filed a motion to dismiss on August 3, and plaintiffs have not yet responded.
Pierce, a former child actor turned cryptocurrency entrepreneur, has faced legal scrutiny in the past. In 2000, three former employees of Digital Entertainment Network filed a lawsuit against Pierce and Marc Collins-Rector alleging they provided plaintiffs with drugs and pressured them for sex when Pierce and one plaintiff were still teenagers, according to reports at the time.
This article reports on allegations and legal proceedings as described by the cited source. Any charges or accusations mentioned are unproven, and all individuals are presumed innocent unless and until found guilty in a court of law.
Key questions answered
What was the minimum buy-in required for the alleged illegal poker games in Puerto Rico?
Each poker game required a minimum buy-in of $100,000 plus a one-bitcoin entrance fee.
What happened to one participant after the December 2021 poker game?
One participant discovered his iPhone had been hacked through the wifi network created for players, with his SIM swapped to give attackers access to his email and social media accounts.
Did DNA Holdings include a disclaimer about their investment practices?
Yes, Pierce and Walker posted a disclaimer on the DNA website warning that the company would sell shares while telling investors to purchase during the campaign and that investors would highly probably lose most or all of their investment if they relied on the information provided.
What was the alleged return rate for investors in DNA Holdings funds?
The lawsuit alleges that for every dollar invested in DNA Holdings funds, only $0.70 was returned.