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

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 $21 million last July for its retail-focused platform Clipper, built on Ethereum. Polychain led a $4 million equity round as part of Shipyard’s raise, with the remaining $17 million derived from liquidity providers contributing to the DEX’s pool.

Alongside its DEX offerings, Shipyard markets a compliance tool for OFAC sanctions, which allows “DeFi protocols and crypto exchanges to comply with regulations and attract institutional investors.”

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 Law360. Polychain is now seeking an order requesting Shipyard “return and issue digital assets.”

The exact assets Polychain wants returned hasn’t yet been disclosed. Blockworks reached out to Polychain and Shipyard but spokespersons weren’t immediately available.

Not just DEX: Polychain is a crypto hedge fund veteran

Polychain, founded in 2016 by Coinbase’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 Nomad, 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’s 2016 seed round.

An arbitrator had upheld the claim that Carlson-Wee breached his fiduciary duty by “diverting corporate opportunities” away from Pantera toward Polychain, Bloomberg Law reported.

Polychain’s most recent capital deployment was with Vespene Energy, a company converting landfill methane to fuel bitcoin mining.

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