Gala Games CEO Eric Schiermeyer has filed a lawsuit against the company’s co-founder, Wright Thurston, alleging the theft of 8.6 billion GALA tokens worth $130 million in early 2021.
In addition to alleging theft, the lawsuit claims that Thurston has a history of founding companies that end up insolvent, bankrupt, or in litigation.
Schiermeyer’s lawsuit was filed on August 31, and reported on by The Block on Sunday.
In response to Schiermeyer’s filing, Thurston has filed his own lawsuit, accusing Schiermeyer of taking control of Gala Games for personal use, including for the financing of a private jet.
A so-called GameFi Web3 startup, Gala Games was co-founded by Thurston and Schiermeyer in 2019, with each holding a 50% ownership stake.
The company recently launched Champions Arena, a mobile turn-based RPG game, and also operates in blockchain-based music, film, and digital collectibles.
Token theft held company hostage
Schiermeyer alleges that Thurston’s theft of GALA tokens in effect held Gala Games hostage, since going public with the theft could potentially lead to a collapse of the entire GALA ecosystem.
To mitigate the situation, Gala Games issued Gala v2 tokens in May 2023.
However, Schiermeyer claims the tokens were designed to make Thurston’s GALA tokens obsolete while keeping the rest of the ecosystem intact.
Thurston’s lawsuit, in return, accuses Schiermeyer of mismanagement and self-dealing in a way that damaged Gala Games’ reputation and assets to the tune of “hundreds of millions of dollars.”
Notably, Thurston has faced legal issues before, including a lawsuit from the US Securities and Exchange Commission (SEC) related to Green United LLC, which allegedly misled investors into a fraudulent “green” crypto project.
Likely as a result of the lawsuits, the price of GALA has fallen by some 18% in the past 7 days days and 31% in the past 30 days, and some analysts are already asking if the GALA price could go to zero.
Ranked 85 by market capitalization, the token is the worst performer among the top 100 tokens by market cap on a 7-day basis, per CoinGecko’s ranking.