Labor & Employment Law Daily Wrap Up, TORT CLAIMS—D. Nev.: NFT company’s trade secrets misappropriation claims against former CEO proceed, (Aug 1, 2025)

By Saurabh Kashyap, B.A., M.A., LL.B., LL.M.

Court finds plaintiff sufficiently identified trade secrets and plausibly alleged unauthorized use and access by its former CEO, other executives, and affiliated entities.

The federal district court in Las Vegas, Nevada, ruled that Banq, Inc. could proceed with its trade secret misappropriation claims under both the Defend Trade Secrets Act (DTSA) and Nevada’s Uniform Trade Secrets Act (NUTSA) against former CEO Scott Purcell, former executives George Georgiades and Kevin Lehtiniitty, and the affiliated entities Fortress NFT Group, Inc. and Planet NFT, Inc., finding that Banq had sufficiently described the trade secrets at issue and plausibly alleged that the defendants used or disclosed them without authorization. The court also allowed Banq’s claims under the Computer Fraud and Abuse Act (CFAA) and Nevada’s computer crime statutes to proceed against the same individual defendants, concluding that Banq had plausibly alleged that they accessed company systems and data without authorization after resigning, causing loss and impairment of data availability (Banq, Inc. v. Purcell, No. 2:22-cv-00773-APG-DJA (D. Nev. July 29, 2025)).

Background. The plaintiff, Banq, Inc., is a Nevada-based financial technology firm developing blockchain-based infrastructure, particularly in non-fungible tokens (NFTs) and digital wallets. The company built proprietary API-driven systems for embedding NFT wallets into enterprise platforms and explored innovations addressing payment processing, royalty management, and customer engagement in Web3 ecosystems.

The defendant, Scott Purcell, is Banq's former CEO and the founder of two new entities—Fortress NFT Group, Inc., and Planet NFT, Inc. These companies, including former Banq executives George Georgiades and Kevin Lehtiniitty, were allegedly formed using Banq's trade secrets, confidential files, and corporate resources. Fortress and Planet operate in the same blockchain infrastructure space, offering services that mirror Banq's technologies and business strategies.

The intellectual property central to the case involves Banq’s technology stack for blockchain NFT infrastructure. Banq claimed ownership of a cross-chain, API-driven NFT wallet, with a unique "linking mechanism for exchanges" and design innovations addressing persistent NFT wallet issues such as transaction processing and user interface customization.

Banq sued Purcell and other individual defendants after they resigned from the company and allegedly expropriated its trade secrets, personnel, and physical and digital assets to establish Fortress and Planet. Banq claimed that the defendants stole proprietary software and corporate computers, transferred valuable data and seat licenses to themselves, and induced Banq contractors and employees to support the launch of Fortress's competing products. Banq filed the suit alleging violations of federal and state trade secret laws, the Computer Fraud and Abuse Act (CFAA), Nevada's computer misuse statute, common law conversion, fraud, fiduciary breach, and unjust enrichment.

Trade secrets misappropriation. The court refused to dismiss Banq’s federal and state trade secret claims, finding that the complaint adequately described the secret technology with enough specificity to satisfy notice pleading standards. Citing InteliClear, LLC v. ETC Glob. Holdings, Inc., 978 F.3d 653 (9th Cir. 2020), and Autodesk, Inc. v. ZWCAD Software Co., 2015 WL 2265479 (N.D. Cal. May 13, 2015), the court noted that Banq’s identification of proprietary NFT wallet features—including the “linking mechanism” and enterprise API integrations—distinguished its claims from generic or “catchall” allegations.

Further, the court also held that Banq plausibly alleged the economic value of the technology, citing its claimed $968 billion market potential and substantial investment. The court emphasized that more precise trade secret identification could be resolved through discovery and that premature dismissal would short-circuit this iterative process.

CFAA claims. Rejecting arguments that the defendants lawfully purchased Banq’s computers, the court upheld Banq’s CFAA and Nevada computer crime law claims. It found the complaint plausibly alleged that the sales were unauthorized and orchestrated without board approval. Citing Van Buren v. United States, 593 U.S. 374 (2021), the court held that the defendants’ post-employment access to computers and cloud servers constituted unauthorized access.

Banq’s allegations of incurring investigative costs and losing access to critical data due to the improper sale of its systems were sufficient to plead compensable “loss” and “damage” under 18 U.S.C. § 1030(e)(8)-(11). These findings were consistent with precedent from Facebook, Inc. v. Power Ventures, Inc., 844 F.3d 1058 (9th Cir. 2016), and Moonlight Mountain Recovery, Inc. v. McCoy, 2024 WL 4027972 (D. Idaho).

State tort claims partially preempted. Applying NUTSA, the court dismissed Banq’s conversion and unjust enrichment claims to the extent they were based on trade secret theft. However, claims for conversion of physical assets (computers, software, Raiders seat licenses) survived, as they did not rely on the misappropriation of trade secrets. The court cited Frantz v. Johnson, 999 P.2d 351 (Nev. 2000), for the rule that NUTSA preempts only claims that necessarily depend on a trade secret.

Fraudulent misrepresentation and concealment. The court dismissed Banq’s claims for fraudulent misrepresentation and inducement under Rule 9(b), finding that statements made by Purcell—such as promises to pivot to NFTs—amounted to unactionable puffery. The court referenced Bulbman, Inc. v. Nevada Bell, 825 P.2d 588 (Nev. 1992), and In re Alphabet, Inc. Sec. Litig., 1 F.4th 687 (9th Cir. 2021), to hold that vague aspirational language did not constitute fraud.

However, the court allowed Banq’s fraudulent concealment claim to proceed. Because Purcell was Banq’s CEO at the time, he owed the company a fiduciary duty, including full disclosure. The court held that Banq plausibly alleged it would have acted differently had it known Purcell intended to expropriate company assets under the guise of the pivot.

Fiduciary duty. Further, the court also dismissed the fiduciary duty claim where it overlapped with trade secret allegations, but allowed claims involving unauthorized asset transfers, employee poaching, and diversion of corporate opportunities to proceed. Relying on Chur v. Eighth Jud. Dist. Ct., 458 P.3d 336 (Nev. 2020), the court found that these acts plausibly violated the duty of loyalty.

Unjust enrichment. Banq's unjust enrichment claim was allowed to proceed in part. While preempted insofar as it involved trade secrets, the court held that the defendants' use of corporate computers and commercial opportunities could still support an equitable claim. The court emphasized that benefits received directly from Banq could support such a claim, citing Topaz Mut. Co. v. Marsh, 839 P.2d 606 (Nev. 1992).

Aiding and abetting. The court upheld Banq’s claim that Fortress and Planet aided and abetted fiduciary breaches. The companies were allegedly founded by former Banq executives and served as recipients of misappropriated assets and staff. The court distinguished this active participation from mere passive receipt of benefits, relying on Guilfoyle v. Olde Monmouth Stock Transfer Co., 335 P.3d 190 (Nev. 2014), and drawing guidance from Beard Research, Inc. v. Kates, 8 A.3d 573 (Del. Ch. 2010), aff’d, 11 A.3d 749 (Del. 2010).

Tortious interference. Additionally, the court preserved Banq’s claim that Purcell interfered with its prospective economic relations. Purcell allegedly solicited existing and potential investors to redirect funds to Fortress. The court held that investment from existing shareholders could qualify as a prospective economic advantage under In re Amerco Derivative Litig., 252 P.3d 681 (Nev. 2011), and that Banq adequately alleged intent and resulting harm.

Spoliation of evidence. The court dismissed Banq’s negligent spoliation of evidence claim, holding that Nevada does not recognize such a tort and rejecting Banq’s argument that the foreseeability of litigation or fiduciary duties created a duty to preserve evidence. The court distinguished Contreras v. Am. Fam. Mut. Ins. Co., 135 F. Supp. 3d 1208 (D. Nev. 2015), explaining that the duty in that case arose from a party’s voluntary agreement to preserve evidence—not merely from foreseeable litigation.

The Case is Nos. 23-1226, 23-7751, and 23-7850.

Judge: Wesley, R.

Attorneys: Keane Barger (Loeb & Loeb) for Atticus Ltd. Liability Co. William Evans (Goodwin Procter) for The Dramatic Publishing Co.

Companies: Atticus Ltd. Liability Co.; The Dramatic Publishing Co.

Cases: TortClaims StateLawClaims EvidenceDiscovery NevadaNews