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Protego Holdings Corp. has accused Texas-based Blackie Capital Inc. of reneging on a $200 million investment crucial to launching its cryptocurrency bank, resulting in the collapse of its rare conditional approval from the U.S. government.

The Washington-based company filed a lawsuit alleging that Blackie pledged the massive investment in January 2023 but repeatedly stalled with empty promises and failed to deliver, causing irreparable damage to Protego.

"Blackie's failure to satisfy the requirements of the note purchase agreement has damaged Protego in an amount dwarfing even Blackie's original $200 million commitment," the lawsuit states.

OCC Approval Falls Apart Amid Funding Delays

Protego was among the few entities granted conditional approval by the Office of the Comptroller of the Currency (OCC) in February 2021 to operate as a national bank handling cryptocurrency deposits and withdrawals.

By the time of the deal with Blackie, Protego had already raised over $80 million and believed Blackie, which presented itself as a billion-dollar family trust, could quickly provide the funds.

Instead, Blackie reportedly failed to produce the capital, knowing that time was critical. The suit details a pattern of delays and bizarre excuses from Blackie, including a claim that six tornadoes in Texas prevented its CEO from discussing the transaction.

"One might expect a delay of a few days if this were the case," Protego argued. "Instead, the entire matter was dropped, and Blackie returned to square one."

Unfulfilled Promises and Unconventional Excuses

Protego said it relentlessly pressed Blackie for the funds even after the OCC ruled in March 2023 that the company had lost its conditional approval due to lack of capital. Blackie allegedly continued to make false assurances that the money was forthcoming.

The lawsuit recounts multiple abandoned financing plans, including one hinging on a rare gem sale in Florida and another involving assets from a Native American tribe associated with a Blackie officer. None of these promises materialized, and Blackie eventually ceased communication, the suit alleges.

Legal Battle Expands Beyond Blackie Capital

Protego’s lawsuit names multiple defendants beyond Blackie Capital, including its executives, law firm Akerman LLP, Texas-based accountant Sherri R. Scheffer, Egan-Jones Rating Co., and Arthur W. Wood Co. The suit accuses these entities of misleading Protego into believing Blackie could fulfill the investment.

A representative for Egan-Jones declined to comment. Other named parties did not immediately respond to requests for comment.

Legal Representation

Protego is represented by Ari Y. Brown of the Law Offices of Ari Brown PLLC, along with Richard D. McCune, Michele M. Vercoski, and Yasmin N. Younessi of McCune Law Group.

Counsel for the defendants was not immediately available.