Mythical Games settles case with Fenix Games, which lost its $150M in funding and founders

Fenix Games said it raised $150 million in November 2022 to create a new kind of publisher for blockchain gaming. But then it was quickly sued by Mythical Games, the blockchain gaming company where its founders originated.

Today, Mythical Games said it reached a settlement with Fenix Games and its founders, and the announcement noted that Fenix Games founders are no longer at Fenix and that Fenix Games did not succeed in raising the $150 million.

In a way, it’s another sad moment for blockchain games, which have had a rocky road for a variety of reasons. Fenix Games started with a lot of ambition, as it was founded by three former executives at Mythical Games: Rudy Koch, Matthew Nutt, and Chris Ko. They were all veterans of the game industry and were excited about blockchain games.

But in December 2023, their former employer sued them. Mythical filed a lawsuit against the three former executives, alleging that they stole a strategic business plan to raise money for themselves while still on Mythical’s payroll.

The announcement today said that Koch, Nutt and Ko are no longer employed by or associated with Phoenix Group or Cypher Capital, nor did they receive the previously announced $150 million from Phoenix Group or Cypher Capital. The details of the agreement are confidential. In the agreement, neither side admitted to fault or liability.

The original suit alleged that — while the trio were still working at Mythical — Mythical’s cofounder and former top executive Rudy Koch, chief operating officer Matthew Nutt, and senior vice president for corporate strategy and development Chris Ko were put in charge of developing and raising capital for the new fund, Mythical Ventures, which would help individual developers bring blockchain games to market.

Mythical said in the lawsuit it began developing plans for Mythical Ventures in 2021. It contributed $4 million for the fund and put Koch, Nutt and Ko — all members of the senior executive team — in charge of its development.

In April 2022, Ko allegedly made a presentation to the Mythical board of directors detailing the fund’s strategic business plan, investment thesis, target gaming sectors and initial pipeline of deals.

Mythical then sent the executives to Dubai four times in 2022 to raise capital from investment firms interested in blockchain technologies. One of Mythical’s investors introduced Koch, Ko and Nutt to Cypher Capital, a Dubai investment firm specializing in blockchain strategies.

But instead, the lawsuit alleged the defendants used Mythical’s connections and business plan to secretly steer investor money to themselves and set up their own copycat firm, called Fenix Games, which they announced within weeks of abruptly quitting Mythical in November 2022.

When they announced the company, the founders said Fenix Games would be a publisher and platform company that would play a key role in bringing blockchain games to market. Fenix Games planned to acquire, invest and publish both existing games and blockchain games of the future.

The investors included Phoenix Group and Cypher Capital, Fenix Games announced. But as noted, at least one of those investors was supposed to be investing in Mythical’s fund, not Fenix’s. The whole idea behind Fenix was to be ready for a consolidation among blockchain game companies in the wake of the Cambrian explosion of blockchain firms in 2021 and 2022.

“You can think of us as like a VC fund,” said Chris Ko, CEO and cofounder of Fenix Games, in an interview with GamesBeat back in November 2022. “The market is similar to earlier [mobile gaming at the rise of free-to-play games] but it hasn’t found its Clash of Clans for blockchain games yet. We’re using the VC arm to fund the next generation of games. We’re actually going to start off with a huge base of capital to invest in those studios. We’re also looking to use our balance sheet to acquire a bunch of existing games in the Web2 space to build a portfolio. And that will be the right base for our portfolio.”

We have sent a request for comment to Ko. Ko noted on his LinkedIn page that he left the CEO job at Fenix Games in July 2023. And Fenix Games hasn’t put out an announcement since it announced in June 2023 that it had partnered with Immutable on blockchain games.

Since that time, there has been a lot of turmoil in the game startup scene as well as blockchain games in particular. FTX blew up and went through a major fraud trial, undermining faith in cryptocurrency-backed companies such as blockchain game startups. Binance tangled with regulators. And the Crypto Winter got under way. Game companies went through layoffs, and it became harder to raise funding.

It’s easy not to notice that many startups just went silent after all of those events. Many have gone out of business. But few were as ambitious as Fenix Games, which had claimed to have raised so much money.