Chappaqua cryptocurrency firm sued for $22.3M

A cofounder of a Chappaqua cryptocurrency company is suing her company and partners for $22.3 million for allegedly cutting her off from her share of the profits.

Jingjing Zhou, of New Canaan, Connecticut and formerly of White Plains, sued Youbi (Cayman) Capital GP Sept. 17 in Westchester Supreme Court.

The co-defendants include cofounders Yaofei Chen, of Old Tappan, New Jersey; Chen Li, of Chappaqua; and a company officer, Hyejin Lee, of Old Tappan.

Zhou claims she was “locked out of the company she helped grow” and denied her “rightful share in the management, operation and profits of the company.”

Youbi Capital was incorporated in the Cayman Islands in 2018, is based in Chappaqua, and invests cryptocurrency funds from investors.

Zhou held 18.5% of the shares and was named a director.

Beginning with $50,000, the complaint states, Youbi has grown this year to $280 million in assets and $120 million in profits.

Zhou claims that she identified investors and sponsors, participated in planning strategies and helped determine how to invest the funds.

But she claims she was never compensated while the defendants have been paid salaries and received distributions.

In 2018, she alleges, her partners suddenly cut off her access to company records and shared crypto wallets. She says they never provided her with notice, held a meeting or passed a resolution for their actions.

Since 2019, the defendants have operated behind closed doors and kept her uninformed about business operations, according to the complaint, and this past May, Li told her that her shares have been significantly diluted.

Zhou says the defendants are foreign nationals and she believes they intend to relocate outside of the United States.

She is demanding an accounting of the company’s finances from the beginning, the right to inspect records, an order barring the defendants from distributing profits or trading assets until her proportionate share is determined and $22.3 million.

Youbi’s attorney, David I. Greenberger, and defendants Chen and Li did not respond to an email asking for their side of the story.

Zhou initially filed the complaint in federal court in Manhattan on Sept. 10 and asked for an emergency restraining order against the defendants.

U.S. District Judge P. Kevin Castel cited several deficiencies in denying her request and he ordered Zhou to file an amended complaint by Sept. 17.

Instead, Zhou withdrew the federal case, refiled the complaint in Westchester Supreme Court, and asked for a temporary restraining order against the defendants.

Greenberger responded, in part, that Zhou cannot demonstrate the irreparable harm necessary to justify a restraining order and that her request, if granted, would effectively stop Youbi from operating.

Zhou is represented by Manhattan attorneys Sandra L. Musumeci and Brendan J. Gerdes and Chicago attorney Edward Casmere.