Movahedi v. Dfinity USA Research LLC

Background

Mahnush Movahedi alleges that Dfinity USA Research, LLC, Dfinity Stiftung, and Dominic Williams failed to timely release cryptocurrency tokens that had vested as part of her compensation. Dfinity USA hired Movahedi as a senior research scientist in August 2017. She signed an employment agreement with Dfinity USA and a Restricted DFN Agreement with Dfinity Stiftung.

According to the complaint, after the defendants launched the Internet Computer and listed the tokens for public sale in May 2021, Movahedi requested the transfer of 300,000 tokens. Dfinity USA confirmed that 452,083 tokens were vested and eligible for distribution but did not immediately transfer them. Williams later offered to release only 40,000 tokens and allegedly refused to release the rest because of concerns about the tokens’ value and the effect of a sale on the market. Dfinity USA eventually transferred all of the tokens, but Movahedi alleges that their value had substantially decreased by then.

Movahedi asserted claims for breach of contract, breach of the implied covenant of good faith and fair dealing, conversion, and violation of California’s Unfair Competition Law. Each defendant filed a separate motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), which concerns whether a complaint adequately states a claim.

Personal jurisdiction over Williams

Williams argued that the court lacked personal jurisdiction over him because he was a British national residing in Switzerland and lacked sufficient contacts with California. The court rejected that argument. It found that Williams was present in California during the period alleged in the complaint, including when he allegedly refused to release Movahedi’s tokens, and that exercising jurisdiction over him was reasonable. The court therefore found that it had personal jurisdiction over Williams.

Contract and implied-covenant claims

Movahedi brought her breach-of-contract claim against Dfinity USA and Dfinity Stiftung. Dfinity USA did not sign the Restricted DFN Agreement. Movahedi argued that Dfinity USA could nevertheless be liable under an alter-ego theory, which treats related entities as not genuinely separate when the required unity of interest and resulting fraud or injustice are shown.

The court held that the facts pleaded in the complaint were insufficient to establish that Dfinity USA was Dfinity Stiftung’s alter ego. The court therefore granted Dfinity USA’s motion to dismiss the breach-of-contract claim against it with leave to amend.

The court also granted Dfinity USA’s motion to dismiss the implied-covenant claim against it with leave to amend because Movahedi had not sufficiently pleaded an underlying contract with Dfinity USA. In contrast, the court denied Dfinity Stiftung’s motion to dismiss the implied-covenant claim. The court concluded that the claim was not necessarily duplicative because it concerned whether Dfinity Stiftung timely released the tokens, while the contract claim concerned the alleged failure to release them in response to Movahedi’s requests.

Conversion claim

Movahedi brought a conversion claim against all three defendants. Conversion is the wrongful control or taking of another person’s property. The court found that the allegations were sufficient at this stage to infer that Dfinity USA and Williams controlled the tokens because they allegedly refused to release them and later released them.

The court rejected Dfinity Stiftung’s argument that Movahedi improperly grouped the defendants together because Dfinity Stiftung did not adequately develop that argument. The court also rejected Dfinity USA’s argument that the conversion claim was duplicative of the contract claim, reasoning that the contract claim against Dfinity USA had been dismissed and that conversion might be pleaded as an alternative theory.

The court found the conversion claim against Dfinity Stiftung impermissibly duplicative of the contract claim because both claims were based on the same alleged failure to release tokens and Movahedi had not identified a separate duty. The court therefore granted Dfinity Stiftung’s motion to dismiss the conversion claim against it with leave to amend. The court denied Dfinity USA’s and Williams’s motions to dismiss the conversion claim against them.

Unfair Competition Law claim

The court granted all defendants’ motions to dismiss the Unfair Competition Law claim with leave to amend. The complaint stated that the defendants’ conduct was unlawful, unfair, and/or fraudulent but did not distinguish among those separate theories or identify facts specific to each defendant. The court therefore concluded that the claim was not pleaded with the required particularity.

Conclusion

The court granted in part and denied in part the defendants’ motions to dismiss with leave to amend. Movahedi may file an amended complaint by January 23, 2026. The court also ordered that any later motion to dismiss be filed as one omnibus brief because the defendants’ existing briefs contained substantially overlapping arguments.