A New York-based fintech startup is suing Lil Durk for at least USD $12 million, accusing the Chicago rapper, his business manager and label of “manifest fraud” in a deal to sell the rights to Lil Durk’s track Bedtime.
In a complaint filed with the US District Court for the Southern District of New York on Wednesday (December 6), Exceed Talent Capital says Lil Durk, his business manager Andrew Bonsu and his label OTF agreed to sell the rights to Bedtime to Exceed, even though Lil Durk has an exclusive contract with Sony Music Entertainment’s Alamo Records.
Exceed Talent Capital says it “enables qualified investors to directly participate in the talent and creator economy” by selling fractions of shares in the revenue streams from works created by “high-earning talents” in sports and entertainment.
The company says in its complaint that it acquired the rights to Bedtime for $600,000, with the intention of making it available through its fractional investing infrastructure. Only later did the company learn that Lil Durk, whose given name is Durk Derrick Banks, “previously had assigned to a third party the exact same rights.”
Along with Lil Durk, the lawsuit names Bonsu and OTF as defendants, along with Bonsu’s company, Only The Family Entertainment Inc., and music industry consultancy TTPMG, which Exceed says acted as an intermediary in the arrangement between Lil Durk and the fintech.
Exceed and Lil Durk announced the partnership last fall, starting with offering fans a “Trenches All-Access Pass,” a sort of NFT that provided fans exclusive access to a private Grand Theft Auto roleplay server custom-built by Lil Durk and his OTF Gaming company.
At the time, the server had a waitlist of over 15,000. Fans were offered immediate lifetime access, limited edition in-game wearables, and first dibs on shares from proceeds of Bedtime.
“Where I’m from, few own anything,” Lil Durk said at the time. “As The Voice of the Trenches and for my label OTF, I’m always looking for ways to expand and give back to my people. Exceed makes it possible for my fans to become part of my team and share in our success together.”
Exceed says that in May of 2023, the company “received a demand letter from Alamo Records… advising Exceed that [Lil Durk] was signed to an exclusive recording agreement with Alamo and that neither defendants nor [music distributor] Empire possess any right… to assign any interest in the revenue streams generated” by Bedtime.
Exceed’s complaint, which can be read in full here, says the company was forced to “cancel and withdraw the offering [of shares in Bedtime] – which Exceed had expended significant time, effort and financial resources in registering with the SEC, ensuring compliance with SEC rules and regulations and marketing and promoting.”
It was also forced to “return the funds that had been invested by third parties in the offering, further significantly damaging Exceed’s reputation and relationships with its partners and investors.”
The… contractual representations and warranties [made in the contract with Exceed] were known by defendants to be false at the time they were made.”
Exceed Talent Capital, in a legal complaint
Exceed says it “repeatedly demanded that defendants rectify their manifest contractual breaches, only to be met with resounding silence.”
At the time, Exceed had already paid $450,000 of the $600,000 it was to pay the defendants under the contract, but the defendants “utterly ignored Exceed’s entreaties and refused to refund to Exceed any portion of the [money] it had already paid.”
The company says it sustained at least $12 million in damages as a result of its failed deal with Lil Durk.
The complaint alleges that Lil Durk signed with Alamo Records well before his deal with Exceed, meaning that the “contractual representations and warranties [made in the contract with Exceed] were known by defendants to be false at the time they were made.”
Exceed is asking the court to award compensatory damages “in an amount to be determined at trial,” as well as punitive damages and attorneys’ fees and “costs incurred as a result of defendants’ misconduct.”
Lil Durk rose to fame in 2013 with his mixtape Signed to the Streets, after which he was signed to Def Jam Recordings, which released his first two albums, Remember My Name and Lil Durk 2X, in 2015 and 2016, respectively. Alamo is named as the label for all of the six studio albums that Lil Durk has released since then.
Lil Durk has been nominated four times for a Grammy, including most recently in for Best Melodic Rap Performance, for his track All My Life featuring J. Cole, in the 2024 Grammys to be held in February.Music Business Worldwide