Judge Freezes Bitwise Assets in Lawsuit by Texas Partner

A Fresno County Superior Court judge issued a temporary restraining order freezing several assets of companies related to Bitwise Industries.

The action from Judge Jeffrey Hamilton was the result of a lawsuit filed Tuesday by NICbyte LLC, a Texas-based business partner of Bitwise entities.

The two firms collaborated to buy seven property in Fresno, Oakland, and Bakersfield. NICbyte held 95% interest in the joint company, and invested $43 million.

NICbyte accused the Bitwise entities — listed in the lawsuit as Wishon Row, LLC and several others wholly-owned subsidiaries — of taking out $30 million in loans, using the properties as collateral.

Wishon Row did so without permission, and in violation of the joint venture agreement, the lawsuit alleges. The Bitwise entities also listed four properties for sale without permission from its partner.

NICbyte’s attorneys had no comment. The listed corporate counsel for Bitwise could not be reached for comment. The company furloughed its employees on Monday.

A chart from court filings showing the relationship between Bitwise and NICbyte, LLC.

Accusations Made By Partner

Parren James

While it is still not clear who is behind NICbyte, in court filings, Parren James, a principal with San Francisco-based Grounded Capital, LLC, says he is “authorized to act on behalf” of NICbyte.

“Defendants’ intentional malfeasance and other wrongful behavior almost certainly is motivated to save or enrich Defendants’ affiliate — Bitwise Industries, Inc. — the financially troubled Fresno technology company,” James wrote in a court declaration.

James also alleged that on May 25, Bitwise co-CEO Jake Soberal made an “unannounced and unscheduled” visit to the residence of someone affiliated with NICbyte. It was not revealed who.

“This attempted personal visit was shocking and unwelcome in all respects. After the attempted visit and later that day, I spoke to Mr. Soberal over the phone and even during that call, Mr. Soberal concealed and failed to disclose the loans or recorded trust deeds,” James said in the declaration.

James said he “does not have any knowledge” of where the $30 million loan went.

Temporary Order Granted

The lawsuit asked the judge for the temporary restraining order to freeze seven bank accounts at Central Valley Community Bank; stop the sale of the State Center Warehouse at 747 R Street in Fresno, and three properties in Bakersfield; turn over books and other documents; prevent damaging the buildings or other documents; and set an injunction bond of $10,000.

Hamilton granted the TRO at a Wednesday afternoon ex parte (meaning one side brings the action and is required to attend) hearing. It is not clear if any Bitwise representative was present.

The bank account of the main company, BW Industries, Inc., was not frozen by Hamilton’s ruling against the plaintiff’s request.

The TRO will run through June 17.

Attorneys for NICByte notified Soberal and Bitwise co-CEO Irma Olguin Jr. a day head of the hearing.

The Fresno Bee first reported the story of the TRO.

Read the Judge’s TRO