Cannabis tech firm MassRoots, hedge fund in legal tangle over stock claim

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Cannabis social media platform MassRoots, which recently announced a deal to merge with a metal-recycling firm, is trying to fend off a $12 million arbitration claim by an investment fund.

Iroquois Master Fund, a hedge fund operated by Iroquois Capital Management of the Cayman Islands, claimed in a demand for arbitration that it holds a warrant entitling it to purchase up to 156.3 million shares of MassRoots stock at .0004 dollars per share.

Denver-based MassRoots (MSRT) was trading at about 5 cents a share on Wednesday on the over-the-counter markets.

In a federal lawsuit filed Monday in the Southern District of New York, MassRoots counters that it’s not subject to the warrant, which Iroquois bought from a third-party in 2019.

The company is requesting a court injunction to prevent Iroquois from pursuing the matter through arbitration, saying it would cause “irreparable harm.”

MassRoots, which has managed to dodge a number of financial bullets over the years, announced in May a $14 million deal with Virginia-based metal-recycling firm Empire Services.

At the time, Danny Meeks, Empire president, said his intention was to “build MassRoots into a diversified conglomerate of profitable businesses.” Meeks has since become MassRoots’ president and board chair.

Iroquois, which is seeking up to $12 million in damages in the arbitration request, claims that MassRoots and Meeks are unjustly enriching themselves by ignoring the obligation to Iroquois.

Meeks, according to Iroquois, boasted he would personally receive all 495 million shares of stock issued by MassRoots in connection with the Empire deal and would never issue shares to Iroquois.

– Jeff Smith