Lawsuit dropped for Denver Cannabis Tech Company accused of securities fraud
After two years of legal battle, a civil lawsuit alleging securities fraud by CannaRegs, a Denver cannabis technology company, was voluntarily dropped.
CannaRegs, acquired for $10 million in 2020 by a Chicago-based digital marketer Fyllowas sued by investors the same year.
Investors, Lester Firstenberger and Sathya Rajavelu were also executives at CannaRegs – an internet service that monitors regulatory changes affecting the cannabis industry.
Investors alleged that Amanda Ostrowitz, founder of CannaRegs, encouraged them to sell their shares in the company while hiding her plans to acquire Fyllo.
In the lawsuit, filed in 2020the investors alleged that Ostrowitz convinced them to sell their nearly 12% stake for $178,000 “when he knew Fyllo was willing to pay for a much higher valuation”.
The The Fyllo takeover was completed for $10 million and Firstenberger and Rajavelu argued they were entitled to over $1 million in damages.
“Since the filing of this lawsuit, a discovery has revealed that the plaintiffs were mistaken in believing that discussions related to the sale of Regs Technology preceded its divestiture,” Ostrowitz said.
“In light of this, the plaintiffs have decided in good faith to dismiss the lawsuit. I am thrilled that the day has finally come and the case is over,” Ostrowitz wrote in an email by MJBiz. .
“If you are a contractor in the United States, you will eventually be sued for something, even if you play by all the rules,” she added.
Image by Benzinga