Sebastian Sinclair

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 <ul>
 <li>Polychain Capital led a $4 million equity round in DEX builder Shipyard Software last July</li>
 <li>Shipyard is the startup behind retail investor platform Clipper and an OFAC sanctions compliance tool</li>
 </ul>
 
</div>



San Francisco-based crypto investment firm Polychain Capital is taking a decentralized cryptocurrency exchange (DEX) provider to court over an apparent equity deal gone awry.



DEX builder Shipyard Software, also based in San Francisco, raised <a href="https://www.globenewswire.com/en/news-release/2021/07/13/2262154/0/en/Shipyard-Software-Raises-21M-for-its-First-Decentralized-Exchange-Clipper.html" target="_blank" rel="noreferrer noopener">$21 million</a> last July for its retail-focused platform Clipper, built on Ethereum. Polychain led a $4 million equity round as part of Shipyard&#8217;s raise, with the remaining $17 million derived from liquidity providers contributing to the DEX&#8217;s pool. 



Alongside its DEX offerings, Shipyard markets a compliance tool for <a href="https://cms.blockworks.co/netherlands-arrests-suspected-tornado-cash-dev-days-after-us-sanctions/" target="_blank" rel="noreferrer noopener">OFAC sanctions</a>, which allows &#8220;DeFi protocols and crypto exchanges to comply with regulations and attract institutional investors.&#8221;



More than a year after its investment, Polychain claims it has never received its Shipyard Software shares, according to a recent complaint filed in Delaware court spotted by <a href="https://www.law360.com/articles/1520003" target="_blank" rel="noreferrer noopener">Law360</a>. Polychain is now seeking an order requesting Shipyard &#8220;return and issue digital assets.&#8221;



The exact assets Polychain wants returned hasn&#8217;t yet been disclosed. Blockworks reached out to Polychain and Shipyard but spokespersons weren&#8217;t immediately available.



<h3 class="wp-block-heading">Not just DEX: Polychain is a crypto hedge fund veteran</h3>



Polychain, founded in 2016 by Coinbase&#8217;s first employee Olaf Carlson-Wee, is a prolific investor in the crypto space. 



The firm has led 80 funding rounds and backed 158 blockchain startups in total, including Compound (which it successfully exited) and hacked blockchain bridge <a href="https://cms.blockworks.co/nomad-token-bridge-raided-for-190m-in-frenzied-free-for-all/" target="_blank" rel="noreferrer noopener">Nomad</a>, according to Crunchbase.



Last month, Polychain was ordered to pay crypto hedge fund firm Pantera Capital $5.5 million in fees and expenses. Pantera participated in Polychain&#8217;s 2016 seed round. 



An arbitrator had upheld the claim that Carlson-Wee breached his fiduciary duty by “diverting corporate opportunities&#8221; away from Pantera toward Polychain, <a href="https://news.bloomberglaw.com/esg/crypto-firm-polychain-must-pay-investor-5-million-court-says" target="_blank" rel="noreferrer noopener">Bloomberg Law</a> reported.



Polychain&#8217;s most recent capital deployment was with <a href="https://www.prnewswire.com/news-releases/vespene-energy-closes-4-3-million-funding-round-led-by-polychain-capital-to-pioneer-carbon-negative-bitcoin-mining-using-captured-landfill-methane-301601766.html" target="_blank" rel="noreferrer noopener">Vespene Energy</a>, a company converting landfill methane to fuel bitcoin mining.



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