One of the leading companies in the Bitcoin industry, referred to as the Fort Knox of Bitcoin has got trouble brewing around it. Xapo is known for its secure Bitcoin wallet and vault services and is considered as one of the hottest Bitcoin start-ups. Xapo’s founder is currently facing a lawsuit from LifeLock whose outcome will prove to be decisive about the company’s future.

According to the coverage of the lawsuit by Fortune, LifeLock, an online identity security company claims that Xapo was developed by its founder Wences Casares and team using the resources of a digital wallet company, Lemon while they were still part of it. Lemon was acquired by LifeLock in December 2013. The lawsuit seeks remedial civil action in the form of disgorgement against Casares and the team that developed Xapo.

As LifeLock claims that Xapo was developed using the time and resources that rightfully belonged to LifeLock though Lemon, it is seeking compensation for the misused resources and any resulting gains derived directly or indirectly by Xapo. If proven in the court of law, Xapo will be forced to pay LifeLock a huge sum of money with due interest.

Xapo, original started as an add-on for Lemon’s digital wallet product in April 2013 before the board decided to pull the plug on its further development. During the same time, Lemon started negotiating with LifeLock to sell its digital wallet app. LifeLock apparently declined the offer and went for complete acquisition of Lemon at $42.6 million valuation instead.

It was later found that Wences Casares, who was also the founder of Lemon continued working on the scrapped project in secret, along with few other employees of Lemon to create Xapo. Even though LifeLock claims it had knowledge about Casares personal Bitcoin project during the time of acquisition, it had no knowledge of his continued usage of Lemon’s resources even after the company changed hands from him to LifeLock.

While the current lawsuit only seeks for disgorgement of Xapo product value attributed to the misrepresentations, omissions, breach of duties and other wrongful conduct on behalf of Casares and others, it may snowball into a much bigger lawsuit directed at Xapo itself.

If the lawsuit works in favour of LifeLock, Xapo may soon face an IP lawsuit from LifeLock as it claims that there has been no mention of any carve-out for Bitcoin IP in the merger agreement between Lemon and LifeLock.

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