Chamani v. Quasar Mining Group Inc.

Background

Roni Chamani sued Quasar Mining Group, Inc., Nicholas Gubitosi, and Paul Tyree. Quasar was formed to mint and sell cryptocurrency tokens. Chamani alleged that she invested $200,000 and signed an agreement providing that investors would receive a proportional share of remaining money if Quasar dissolved.

According to the opinion, Chamani alleged that Quasar used investor funds to pay Gubitosi and Tyree, paid substantial sums for legal and auditing work, purchased unsuitable computer equipment, paid rent for a luxury apartment, and transferred money to an account in Asia without explanation. She also alleged that Quasar continued paying the individual defendants after announcing its dissolution and required investors to sign a broad release before receiving distributions. The defendants characterized the arrangement as offering investors an earlier distribution if they signed a release.

Chamani asserted direct claims for a declaration that the release was void and for violating Rule 10(b)(5), as well as derivative claims on Quasar’s behalf for unjust enrichment, negligence, and breach of fiduciary duty. She moved for a preliminary injunction seeking, among other things, to stop spending of money that would otherwise be paid to her, freeze Quasar’s assets, and require an accounting.

Jurisdiction and Venue

Although the defendants had not filed a transfer motion, they argued that Nevada lacked personal jurisdiction over them and that venue was improper. The court considered transfer under 28 U.S.C. § 1631, which permits transfer when the original court lacks jurisdiction if transfer serves the interests of justice. The court also stated that it could raise improper venue on its own when the defense had not been waived.

The court found no general personal jurisdiction in Nevada. Gubitosi and Tyree were identified as New York residents, and the court found no allegations showing connections between them and Nevada. Quasar was described as a Delaware corporation with its principal place of business in New York. The court concluded that solicitation of investments by non-party William Alex Foxen among professional poker players was not enough to make Quasar effectively based in Nevada.

The court also found no specific personal jurisdiction. It focused on whether Chamani’s claims arose from the defendants’ activities connected to Nevada. The court noted that Foxen solicited Chamani’s investment but was not a defendant, and Chamani did not allege that Foxen personally engaged in wrongdoing. Instead, her claims were based on alleged conduct by Gubitosi and Tyree, including Quasar’s mismanagement, inflated salaries, failure to mint cryptocurrency, and unnecessary spending. The court found that none of that conduct occurred in Nevada.

The court separately held that venue was improper. It noted that Chamani was a South African national, the investment agreement was governed by New York law, the defendants were based in New York as described in the opinion, and the relevant conduct occurred in New York. It concluded that the evidence and witnesses could be accessed more conveniently and inexpensively in New York. The court identified Foxen’s solicitation of potential investors as the only fact supporting Nevada venue, while also noting that Chamani did not accuse Foxen of wrongdoing.

Disposition

The court ordered that the matter be transferred to the United States District Court for the Southern District of New York. The opinion does not state that the preliminary-injunction motion was granted or denied; it transfers the case instead. The judge’s name is not fully clear in the supplied opinion text: the signature and footer appear to reference C. Mahan, while the supplied case metadata identifies Naomi Buchwald.