Aaron Greenspan, the founder of Think Computer, creator of the FaceCash mobile payment system and (according to him) co-founder of Facebook, has been giving Mark Zuckerberg headaches for many years now, and the software entrepreneur is not resting easy.
According to documents filed on 6 May, Think Computer has initiated a lawsuit against a slew of Internet companies and some of Silicon Valley’s most prominent investors and entrepreneurs.
“This event was off the charts”
Gary Vaynerchuk was so impressed with TNW Conference 2016 he paused mid-talk to applaud us.
More specifically, Greenspan is targeting ‘money services businesses’, many of which are fledgling digital payment and cash-transfer companies, and a number of professional investment firms and business angels that have financially backed said startups.
The list of defendants includes Facebook, Airbnb, Y Combinator, Andreessen Horowitz, Dwolla, Square, Coinbase, Sequoia Capital, A-Grade (the fund co-founded by actor-investor Ashton Kutcher), Kleiner Perkins Caufield & Byers, DST Global and Sequoia Capital, among others.
We’ve been able to get a hold of the complaint, which is a whopping 146 pages long. We’ve embedded the whole thing below, but here’s the gist (emphasis ours):
1. Plaintiff brings this action under California Business & Professions Code § 17200 primarily due to myriad violations of the California Money Transmission Act (“MTA”) and the Bank Secrecy Act (“BSA”) and various other statutes and stemming from unlawful, unfair, fraudulent and deceptive business activities based thereupon.
2. Broadly speaking, Defendants are Money Services Businesses (“MSBs”), also known as “money transmitters,” and private investors in such MSBs. In California, MSBs are subject to federal laws and regulations governing MSB activity, as well as the California MTA and money transmission laws (“MTLs”) of other states.
3. The California MTA was enacted in 2010 and made effective on January 1, 2011, as then-Article 3 commencing at then-Section 1810, Chapter 14, Division 1 of the California Financial Code. The MTA is now Division 1.2, Sections 2000-2172 of the present California Financial Code. The MTA is presently enforced, at least in theory, by the California Department of Financial Institutions (“DFI”).
4. The MTA requires MSBs to obtain a money transmission license from the DFI in order to conduct any operations related to money transmissions. Plaintiff operated a successful MSB under the FaceCash trademark prior to July 1, 2011, when the MTA went into effect and began to regulate domestic money transmissions in California. Plaintiff attempted to comply with the MTA by meeting with DFI personnel as required to begin the license application process prior to the deadline, but encountered insurmountable difficulties with the DFI’s unwritten and arbitrary policies that led to a federal lawsuit against the DFI pending in this Court, Case No. 5:11-cv-05496-HRL.
5. Given the increasingly public difficulty associated with proper compliance with the MTA, Defendants decided to simply break the law while growing their businesses “under the radar,” knowing that the likelihood of being caught was low, and in many cases fully aware that their activities would violate both state and federal law.
Their investors either supported them in this regard, or were willfully negligent of the implications of funding unlicensed money transmitters.
If you want to learn more about the specifics of the suit in question, you should start at page 11 (‘factual background’). The rest is mainly statutory texts and pieces of evidence of wrongdoing by the defendants, at least presented as such by Greenspan. Either way, it offers a fascinating read on many levels, and we’re pretty sure a lot of people who work in the Bay Area will be reading the documents closely today.
We’ve reached out to Greenspan earlier today, but he declined to comment any further, stating that the complaint speaks for itself.
Greenspan has in the past also sued the likes of Google, the State of California, Sony Pictures, author Ben Mezrich, Random House, Robert Venchiarutti (a deputy commissioner at the Department of Financial Institutions’ Money Transmitters division), and others.
In a March 2012 essay, Greenspan wrote the following:
“Does that make me litigious? Yes, it certainly does.”
He has previously written about why he’s ‘furious with Silicon Valley’.
It’s fair to say we would have gotten that particular message even if he hadn’t been so outspoken about it on his website.
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