Coinme, a Seattle-based startup that lets consumers buy and sell crypto with cash or a debit card, filed a lawsuit this month alleging that its longtime partner Coinstar misappropriated confidential information and trade secrets to launch a competing product.
Coinstar, the Bellevue, Wash.-based maker of kiosks that turn loose change into cash and gift cards, first partnered with Coinme in 2018 to enable bitcoin purchases at its kiosks.
According to the lawsuit, Coinme provided propreitary APIs and other information to integrate its technology within the Coinstar kiosks. The companies shared revenue from transaction fees charged to consumers who bought cryptocurrency at the kiosks.
Coinstar later developed its own platform called CINQ that lets consumers use cash to buy crypto at its kiosks and via a mobile app. Coinme alleges that CINQ is “virtually identical” to its product, alleging that Coinstar copied its technology and platform.
By “misusing confidential and proprietary information,” Coinstar was “able to develop and deploy CINQ in substantially less time, for less money, and with a higher degree of functionality and quality than they would have otherwise been able to,” according to the suit.
Coinme said Coinstar gives preferential treatment to CINQ at the kiosks, leading to customer confusion and diverting business away from Coinme, according to the suit.
Coinme said its transaction volumes at Coinstar kiosks fell substantially in August, “coinciding with the ongoing rollout of CINQ to Coinstar kiosks across the country.”
It claims Coinstar is using Coinme’s intellectual property beyond the scope of agreements and is not protecting confidential information.
Coinme is seeking damages for lost business, and an injunction preventing Coinstar from using CINQ, among other requests.
Representatives for Coinme and Coinstar both declined to comment when contacted by GeekWire.
The suit was filed in King County Superior Court on Oct. 9.
Coinme has been deployed in about 10,000 Coinstar kiosks across the country and consumers have purchased approximately $1 billion worth of crypto from Coinme at kiosks, according to the suit.
Coinme’s homepage currently features Coinstar’s branding and kiosks, while Coinstar’s website promotes Coinme.
CINQ is powered by Zero Hash, a crypto tech startup.
Founded in 2014, Coinme created the first licensed Bitcoin ATM machine in the country, going on to handle millions of dollars in monthly transactions.
Founded in 1991, Coinstar was previously owned by Outerwall, which was acquired by Apollo Global Management in 2016. Apollo split Outerwall’s three core businesses — Coinstar, Redbox, ecoATM — into separate enterprises.
Read the full suit below.
Crypto startup Coinme alleges Coinstar misused trade secrets for competing product at kiosks by GeekWire on Scribd
https://ift.tt/zlkBdTf October 23, 2024 at 07:54PM GeekWire
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