| Legal Proceedings |
From
time to time, the Company is and may become involved in legal proceedings. The Company records a liability for those legal proceedings
when it determines it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company also
discloses when it is reasonably possible that a material loss may be incurred, however, the amount cannot be reasonably estimated. From
time to time, the Company may enter into discussions regarding settlement of these matters, and may enter into settlement agreements,
if it believes settlement is in the best interest of the Company and its shareholders. The following is a summary of our current outstanding
litigation.
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December 12, 2022, Jacqueline Dollar (a/k/a Jacqueline Reynolds), former Chief Marketing Officer of the Company, filed a complaint against
the Company, Fredi Nisan, and Does 1-20 in San Diego Superior Court. Ms. Dollar is alleging she was undercompensated compared to her
male counterparts and retaliated against after raising concerns to management resulting in sex discrimination in violation of the California
Fair Employment and Housing Act (“FEHA”) and failure to prevent discrimination in violation of FEHA. Ms. Dollar is also claiming
intentional infliction of emotional distress. Ms. Dollar is seeking an unspecified amount of damages related to, among other things,
payment of past and future lost wages, stock issuances, bonuses and benefits, compensatory damages, and general, economic, non-economic,
and special damages. On January 21, 2026, Ms. Dollar filed a notice of conditional settlement of the entire case with the Court. The
parties have since entered into a confidential settlement agreement, pursuant to which all claims are to be dismissed upon satisfaction
of all settlement terms. |
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As previously disclosed
in the Company’s 10-Q for the period ending March 31, 2025, as filed on May 20, 2025, since December 2022, the Company has
been cooperating with an ongoing investigation by the SEC regarding possible violations of the federal securities laws. Following
discussions with the Staff of the SEC, the Company made certain disclosures addressing the concerns regarding the Company’s
2020 Registration Statement on Form S-1 filed on December 23, 2020 and subsequent reporting, which are contained in the Company’s
Quarterly Report on Form 10-Q for the period ended March 31, 2025 under Part I, Note 14, Commitments and Contingencies, and
Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments,
and under the Part II section titled “Legal Proceedings.”
On April 27, 2026, the SEC filed a settled action against the Company and its founders, memorializing the previously disclosed settlement.
SEC v. RYVYL Inc., et al., Case No. 3:26-cv-02672-WQH-MMP (S.D. Cal.). The proposed final judgment, approved by the Court
on May 11, 2026, does not require the Company to pay any monetary penalty and, fully resolves all claims regarding the Company. |
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On June 25, 2024, J. Drew Byelick, a former Chief Financial Officer
of the Company, filed a complaint against the Company in the United States District Court for the Southern District of California, Case
No. ’24CV1096 JLS MSB. Mr. Byelick alleged breach of contract, fraudulent inducement of employment, along with intentional misrepresentation
and concealment. The Company moved to dismiss the complaint for failure to state a claim and for other violations of the federal rules
of civil procedure. The Court granted that motion on December 20, 2024, but permitted Mr. Byelick to file an amended complaint. Mr. Byelick
filed his first amended complaint on January 19, 2025, asserting the same core claims. The Company moved to dismiss the first amended
complaint for similar reasons as its motion to dismiss the original complaint. The Court granted that motion, in part, on April 18, 2025,
ruling that Mr. Byelick was incapable of pleading certain claims (and dismissing those claims) but adequately pled others for purposes
of a motion to dismiss only. Mr. Byelick subsequently filed a motion for partial summary judgment, which the Court denied in full as premature.
Discovery is closed, and the parties are scheduled to participate in mediation on August 26, 2026. A trial date has not yet been set.
Given the uncertainty of litigation, and the legal standards that must be met for success on the merits, the Company cannot predict the
outcome at this time or estimate a reasonably possible loss or range of loss that may result from this action. |
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On July 2, 2025, Plaintiff Kapcharge USA Inc. commenced a lawsuit against Defendants
Ryvyl Inc., FFS Data Corporation, CML Management, LLC and Cynthia Lambert in San Diego Superior Court, Case No. 25CU035045C. This
lawsuit stems from a dispute between Kapcharge on the one hand and FFS Data Corporation (“FFS”), and CML Management,
LLC on the other hand, related to a payment processor agreement between Kapcharge and FFS. Kapcharge alleges causes of action for
Conversion, Money Had and Received, Violation of Penal Code § 496, Restitution, Breach of Contract (against FFS, CML, and Lambert),
and Unfair Competition in Violation of California Business and Professions Code § 17200 et seq. The Company denies all allegations
of liability and intends to vigorously defend against all claims. Kapcharge filed a demurrer on August 28, 2025 related to
the causes of action for Conversion and Violation of Penal Code § 496. On April 8, 2026, Kapcharge and Ryvyl filed a stipulation
for stay of the proceedings and to continue the demurrer hearing. On May 12, 2026, the parties entered into a confidential settlement
agreement, pursuant to which all claims are to be dismissed. |
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On July 15, 2025, Plaintiff Rachael Mora filed a complaint against the Company, Fredi Nisan, and
Does 1-20 in San Diego Superior Court. Ms. Mora is alleging sex discrimination and sexual favoritism in violation of the California
Fair Employment and Housing Act (“FEHA”), and failure to prevent discrimination in violation of FEHA. Ms. Mora is also
claiming retaliation and negligent supervision/negligent retention. Ms. Mora is seeking an unspecified amount of damages related
to, among other things, payment of past and future lost wages, stock issuances, bonuses and benefits, compensatory damages, and general,
economic, non-economic, and special damages. As the Company cannot predict the outcome of the matter, the probability of an outcome
cannot be determined. The Company intends to vigorously defend against all claims. |
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On December 29, 2025, Plaintiff Ellenoff, Grossman & Schole LLP (“EGS”), filed a
complaint against the Company in the Supreme Court of the State of New York County of New York. EGS is alleging breach of contract,
account stated, and quantum meriut. On July 29, 2026, the parties entered into a confidential settlement agreement, pursuant to which
a Stipulation of Discontinuance with prejudice will be filed upon satisfaction of agreed terms. |
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On March 16, 2026, Plaintiff Ideyalabs, LLC (“Ideyalabs”), filed a complaint against
the Company and two of its wholly owned subsidiaries in San Diego Superior Court, Case No. 26CU014745C. Ideyalabs alleged breach
of contract, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. Ideyalabs then filed a writ of
attachment application on March 23, 2026. On May 15, 2026, the Company filed a cross-complaint alleging fraudulent inducement, declaratory
relief, breach of settlement agreement, and rescission. On June 30, 2026, Ideyalabs filed a demurrer and motion to strike. A hearing
is scheduled for December 18, 2026 on these motions. The Company denies liability and intends to vigorously defend against all claims.
Given the stage of the lawsuit, the uncertainty of litigation, and the legal standards that must be met for success on the merits,
the Company cannot predict the outcome at this time or estimate a reasonably possible loss or range of loss that may result from
this action. |
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On July 7, 2026, Plaintiff Tessa Desjardins (“Desjardins”), filed a complaint against the Company and one of its agents in United States District Court for the Eastern District of Louisiana, Case No. 2:26-cv-01472-BSL-EJD. Desjardins alleged copyright infringement, statutory damages for willful infringement, and contributory copyright infringement. The Company denies liability and intends to vigorously defend against all claims. Given the stage of the lawsuit, the uncertainty of litigation, and the legal standards that must be met for success on the merits, the Company cannot predict the outcome at this time or estimate a reasonably possible loss or range of loss that may result from this action. |
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On June 12, 2026, the Company filed a complaint against W. Graeme Roustan, Roustan Media, Inc., and True Sports, ULC (collectively the “Defendants”) in the Superior Court of the State of Delaware, Case No. N26C-06-167 KMM CCLD. The Company alleged breach of contract. The Company intends to vigorously pursue its claims in this action. Given the stage of the litigation, the inherent uncertainty of litigation, and the legal and factual issues that must be resolved for the Company to prevail on the merits, the Company cannot predict the outcome at this time or estimate the amount or range of any potential recovery that may result from this action. |
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