He invested ₹6 lakh in a Web3 project. It never launched. Now his ex-co-founder wants ₹40 crore

A former co-founder of a Web3 project is seeking ₹40 crore from his ex-business partner after investing ₹6 lakh in the venture, with the dispute now before the High Court over the appointment of an arbitrator.

The names of the people involved were not revealed in the Reddit post seeking legal advice.

The two were introduced last year by a common contact who wanted to get into Web3. The project was nearly built and involved NFTs and a game concept. They signed an agreement to work as 50-50 co-founders.

Under the arrangement, one partner invested ₹6 lakh as capital, while the other handled the rest of the work.

The project included artwork, a website, branding and a full asset pack, all of which were completed and shared with the co-founder. However, the project was never launched after the crypto market fell sharply, and neither of them made any money from it.

Investor first sought refund

Four months into the project, the investor allegedly asked, “Where's my ROI?”

Take a look at the viral post here:

The other co-founder said they explained the market conditions. Eight months later, the investor allegedly demanded the return of his ₹6 lakh “WITH INTEREST”.

A lawyer representing the other co-founder responded that the money was an investment, not a loan. The investor's own legal letter also described the ₹6 lakh as an investment, the Reddit user said.

Three weeks later, the investor allegedly sent a claim for ₹40 crore in “loss of revenue”.

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₹40 crore claim linked to pitch deck projections

The ₹40 crore figure appears to have been based on a projected revenue figure in the original pitch deck.

The projection was described as an optimistic “if everything goes perfectly” scenario rather than a guaranteed return.

The agreement between the two also contained an arbitration clause for disputes. It had no refund clause, guaranteed returns or timeline.

Dispute reaches High Court

The former co-founder has approached the High Court seeking the appointment of an arbitrator. The first hearing was adjourned.

The person seeking legal advice said they already have a lawyer and are now trying to understand whether the case can be dismissed before an arbitrator is appointed and whether damages running into crores can be claimed on the basis of projections in a pitch deck.

Questions have also been raised over who would pay the arbitrator's fees and whether the size of the ₹40 crore claim would result in higher arbitration costs.

The co-founder said they were considering offering the investor his share of the project assets and walking away from the dispute, adding that they no longer cared about the assets.