WENATCHEE — Shareholders who put $8.5 million into a Wenatchee bitcoin venture are suing its founder, saying he and his company defrauded them of about $2.4 million.
Malachi Salcido, 46, is the main target of the lawsuit from the investor fund, along with his former cryptocurrency mining company StepChange Data Inc. and his chief operating officer, Nick Warner, 38. The lawsuit, filed March 1, claims Salcido and other defendants embezzled assets, disguised costs, overcharged for management fees and leasing, and used corporate funds for their own benefit. The company says it disputes the allegations.
The plaintiffs want a Chelan County judge to place StepChange into receivership, so its accounts can be reviewed independently with court oversight. They allege that after they paid $8.5 million for shares of the business, Salcido overbilled for rent at two data centers used in bitcoin mining, and hid the true costs of doing business by mingling accounts.
Among other steps, Salcido allegedly subleased Port of Douglas County property he leased through his primary company, Salcido Enterprises, to StepChange, charging more than three times the amount of rent Salcido Enterprises paid on the property. The lawsuit also claims Salcido also overcharged for rent on property his company owned outright; failed to disclose a separate financial lawsuit brought against his company; mischaracterized payments made from StepChange to Salcido Enterprises as “development costs;” and “generated phony invoices and business records” to conceal misdealings.
Salcido, an early proponent of Wenatchee Valley cryptocurrency services, resigned from StepChange last November after serving as its board president and CEO. He has yet to file a formal response to the lawsuit.
The investor-plaintiffs include three angel investment funds based in the U.S. and Luxembourg, one of them Seattle-based SeaChange (formerly Seattle Angel Fund), plus individual investors in Spain and Sweden.