The Destiny Tech100 lawsuit that has drawn the most attention is not against the fund itself but against its parent company. On January 23, 2024, co-founder Samvit Ramadurgam sued Destiny XYZ Inc., CEO Sohail Prasad, and directors Archit Kumar and Carlos Licona in the Delaware Court of Chancery, alleging breach of fiduciary duties tied to a reverse stock split that he says wiped out his ownership stake.1Docket Alarm. Samvit Ramadurgam v. Destiny XYZ Inc., et al., Case No. 2024-0057 The case is active and no ruling or settlement has been publicly reported.
What Ramadurgam Alleges
Ramadurgam co-founded Destiny XYZ with Prasad and held a 32.3% equity stake in the company. According to his complaint, the board executed a reverse stock split on November 9, 2023, that eliminated his entire position and left 100% of the equity in Prasad’s hands.2Business Insider. Forge Co-Founders Lawsuit Over Control of Startup Destiny XYZ
Ramadurgam called the transaction a “Machiavellian scheme.” He alleges the company relied on a fabricated valuation to justify paying him roughly $300,000 for a stake in a business he values at more than $100 million. His requested remedy is to reverse the stock split and restore his ownership.2Business Insider. Forge Co-Founders Lawsuit Over Control of Startup Destiny XYZ
How Prasad and the Board Have Responded
Prasad has publicly defended the split. He described Ramadurgam as an “absentee executive” who was “holding the company hostage,” and said Ramadurgam spent 70 days at meditation retreats in 2022 and showed low email productivity. According to Prasad, the equity that came free through the split was earmarked for a new employee stock program, and Ramadurgam received fair market value for his shares.2Business Insider. Forge Co-Founders Lawsuit Over Control of Startup Destiny XYZ
Where the Case Stands
The matter is docketed as Samvit Ramadurgam v. Destiny XYZ Inc., et al., Case No. 2024-0057, before Judge Paul A. Fioravanti Jr. in the Delaware Court of Chancery. It was listed as active on the most recent docket information available, with no publicly reported ruling, dismissal, or settlement.1Docket Alarm. Samvit Ramadurgam v. Destiny XYZ Inc., et al., Case No. 2024-0057
Who the Defendants Are
Sohail Prasad is founder, chairman, and CEO of both Destiny XYZ Inc., the parent company named in the suit, and Destiny Tech100 Inc., the closed-end fund that trades on the NYSE under DXYZ. He is classified as an “interested person” of the fund under the Investment Company Act of 1940 because of his controlling interest in Destiny Advisors LLC, the fund’s investment adviser.3SEC. Destiny Tech100 Inc. Definitive Proxy Statement Kumar and Licona sit on the parent company’s board.
What the Lawsuit Does Not Cover
This case targets the parent company’s internal ownership dispute. It is not a securities suit brought by fund shareholders, and it does not challenge how DXYZ is priced, sold, or managed. Searchers who arrived here after reading about DXYZ’s stock price swings or its share issuances should note that the reverse split at issue happened at the private parent, not at the publicly traded fund.
Other Legal and Regulatory Pressures on DXYZ
Separate from the co-founder litigation, the fund itself faces several legal and regulatory questions worth flagging because they are sometimes conflated with the lawsuit.
RIC Tax Diversification
Destiny Tech100 elected to be taxed as a Regulated Investment Company, a status that requires it to meet a diversification test limiting concentration in any single investment to 25% of assets. The fund’s June 2025 SEC filing disclosed that its SpaceX holdings, held through special purpose vehicles, made up approximately 25.9% of total assets as of March 31, 2023, exceeding that threshold.4SEC. Destiny Tech100 Inc. Form N-CSR
The fund said it was pursuing remediation, including raising additional capital and potentially selling investments to come into compliance. If it fails to qualify for a de minimis exception by September 30, 2025, and cannot obtain “reasonable cause” relief, it would be taxed as a regular corporation. The fund said it could not currently estimate the financial impact of that outcome.4SEC. Destiny Tech100 Inc. Form N-CSR That September 2025 deadline has passed with no public disclosure of adverse tax consequences.
SPV and Forward Contract Exposure
DXYZ generally does not hold shares of private companies directly. It invests through special purpose vehicles holding preferred stock, common stock, or forward contracts, the last of which represent an agreement for future delivery of shares once they become freely transferable.5SEC. Destiny Tech100 Inc. Form 424B3
Stripe has reportedly stated that it forbids employees from entering secondary market deals involving forward contracts and considers such contracts void.6Acadian Asset Management. Stupidity Is Our Destiny: Historic Closed-End Fund Overpricing DXYZ’s leadership has maintained that its deals are legal. The fund’s aggregate forward contract exposure to Stripe accounted for less than 5% of net assets as of the June 2025 filing.5SEC. Destiny Tech100 Inc. Form 424B3
The fund has also disclosed in filings that it sometimes has no direct relationship with the underlying counterparties in its SPV investments and depends on third parties to enforce its rights, and that breaches by those parties could materially affect performance.7SEC. Destiny Tech100 Inc. Form N-CSR (2024)
SEC Enforcement
No SEC enforcement actions against the fund or its leadership have been publicly reported.