Gala Games is one of the staple gaming organizations in web3 and one with an enormous following. In an all-too-common occurrence in web3, we have another giant involved in a legal scandal: Gala Games’ co-founders, Eric Schiermeyer and Wright Thurston, are suing each other over an alleged $130 million token theft and $600m mismanagement, among a litany of other complaints. This Gala Games lawsuit is putting the entire ecosystem in jeopardy; here’s what you need to know.
The Gala Games Lawsuit Breakdown
This is a highly complicated case, I am not a legal professional, and this is a summary of all the information I have found in the past few days (3rd and 4th September 2023).
Key Players and Terms
Eric Schiermeyer (Username: Benefactor): Co-founder and President of Gala Games
Wright Thurston (Username: Blockchain Jedi): Co-founder and Director of Gala Games, Person of Significant Control of True North United Investments LLC
True North: Thurston’s investment company that owns roughly 45% of BGP Games (there are differing figures, with one lawsuit citing 40.927% ownership)
Blockchain Game Partners (BGP/BGP Games): The company name of Gala Games
Jason Brink (Username: BitBender): President of Blockchain at Gala Games
Lawsuit 1: True North v. Eric Schiermeyer
True North’s lawsuit against Eric Schiermeyer alleges corporate waste, conversion, and unjust enrichment. In short, True North claims Schiermeyer misused $600m of Gala’s funds, stole business opportunities that should have been Gala’s, borrowed millions to aid the growth of personal wealth, and was not transparent.
The depth of these allegations makes it difficult to summarize, but there are some key pieces of information circulating. Allegedly, Schiermeyer burned 21 billion of BGP’s v2 $GALA tokens, which consequently erased $600m or more in BGP assets and removed $151 million from True North’s value. (Side note: I cannot determine whether the $660m $GALA burned in May is the burning event in question.) This move is said to have given Schiermeyer more control over Gala Games.
Schiermeyer is also said to have taken v2 tokens for himself, as well as bought a $5m airplane, among other expenses. The board either did not vote for any of Schiermeyer’s actions, or as above, essentially voted against it.
The business opportunities that were said to have been stolen relate to Gala Music and Gala Film which were set up as subsidiaries, again without board approval, and cut BGP out of the deals. In a rather brash sidestepping of that complaint, Schiermeyer (Benefactor) put this in the announcement channel of the Gala Games Discord server:
In one of the most bizarre elements of this case, BGP had to vote for action to be taken against Schiermeyer and for him to be removed from his role at Gala Games, which would require Schiermeyer to vote for his own removal; he did not.
One final point of interest involves Gala Games’ community icon and “President of Blockchain”, Jason Brink (aka BitBender), whom Schiermeyer is alleged to have funneled millions of dollars worth of cryptocurrency to, from BGP’s coffers.
The case against Schiermeyer is looking to remove him from the role of director and president of BGP, as well as pay damages that could be extraordinarily high.
Lawsuit 2: Eric Schiermeyer v. Wright Thurston and True North
Eric Schiermeyer is suing co-founder, Wright Thurston, and his “investment vehicle”, True North, over the alleged theft of 8.6 billion $GALA tokens in 2021, as well as stolen licenses for Gala nodes.
The central allegation in this case is that Thurston and True North stole 8,645,014,077 $GALA (v1) tokens in early 2021 claiming that he intended to hold the tokens in secure wallets on behalf of Gala Games. Then, in 2022, it is alleged that Thurston and/or True North began selling them “in a complex web of obfuscatory transactions” where he was able to exchange, hide, or sell, $130m worth of $GALA.
The secondary complaint by Schiermeyer is the theft of node licenses, which provide $GALA tokens, then selling these nodes, and keeping the proceeds himself (personally or through True North). Incidentally, the lawsuit mentions that Thurston and True North are being sued by the purchasers of these “stolen” nodes.
While researching True North, I found a different lawsuit against the company that is referenced in Schiermeyer’s, in which the SEC is suing True North on a number of fraud charges.
Final Thoughts
This is an unprecedented disaster in an industry that has become something of a specialist in unprecedented disasters. Gala Games has taken a reputational hit like no other, but whether it can — or even should — survive this, remains to be seen. Two of the co-founders are suing each other with grave accusations, and the most public-facing person at Gala Games, BitBender, appears to have benefited from the alleged shady actions. In the lawsuit against Thurston and True North, there is the following colorful paragraph:
As someone who holds $GALA tokens and has done for several years, as well as written myriad articles on the Gala Games ecosystem and spoken about them and their games regularly, I feel a little queasy. We must retain innocence as the starting point, but the sheer volume and severity of allegations set about some cognitive dissonance. I want to see Gala Games succeed, and I want to see their games become popular, but if even a handful of the allegations made in these two lawsuits are true, it seems the top of the company is rotten.
Sources: Case 1, Case 2, @Timnology, and @hitesh.eth
