Digital asset firm Securitize has been sued by Liquid Rarity Exchange, dba RarityX, and by tZERO. The claim is for patent infringement relating to two patents covering asset tokenization and fractionalized ownership systems
The filing by Liquid Rarity Exchange alleges that Securitize’s tokenization platform and digital securities infrastructure infringe one or more of its patents.
Keith Grady, Partner at the law firm of Kean Miller LLP, which is representing the plaintiffs, says, “LRE developed and patented foundational technologies for digital asset tokenization and fractionalized ownership years before these concepts entered the mainstream. When a company is put on notice that its platform infringes valid patents and responds by continuing and even expanding the infringing activity, the patent laws provide strong remedies, including enhanced damages. We intend to pursue every available remedy on behalf of our client.”
Liquid Rarity Exchange sued NFT firm OpenSea in 2024, alleging patent infringement. The case was dismissed without any damages being assessed.
tZERO, a broker-dealer and marketplace active in the digital asset sector, has also filed suit alleging patent infringement against Securitize. tZERO claims that certain products and services of Securitize, including its DS protocol and Vault Registrar, infringe its patents.
tZERO has sent a cease-and-desist letter to Securitize.
tZERO also alleges that other digital asset industry participants are infringing on its IP and is in the process of analyzing its patent claims against those products.
In the tZERO case, Securitize has filed a counter-complaint seeking a declaratory judgment confirming that it has not infringed any patents.
It is unclear whether Securitize has responded to the claims made by Liquid Rarity Exchange.
The legal challenge comes at an inconvenient time for Securitize, which is preparing to go public via a SPAC deal under the ticker “SECZ.” The SPAC deal values the company at a valuation of around $1.25 billion.