Ozy Media, the defunct news site whose founder is accused of fraud, has sued media founder Semafor, claiming founder Ben Smith used stolen “trade secrets” to launch the venture.
The lawsuit filed Thursday in federal court in Brooklyn alleges that Semafor “is a spitting image of the media company Carlos Watson founded a decade earlier: OZY.”
Smith launched Semafor in October 2022 after a stint as editor-in-chief at BuzzFeed and media columnist for the New York Times, where he reported on Ozy executives' attempts to deceive investors in September 2021.
That article led to criminal charges against both Ozy and Watson, who has pleaded not guilty to federal charges of conspiracy to commit securities fraud, wire fraud and identity theft.
Ozy's new lawsuit sensationally accuses Smith of violating a non-disclosure agreement he signed in 2019, when BuzzFeed was exploring a merger with Ozy, and of ripping off the company's business model to build Semafor.
Ozy Media, the defunct news site whose founder Carlos Watson (left) is accused of fraud, has sued media founder Semafor, claiming that founder Ben Smith (right) stole trade secrets
The lawsuit also reveals a remarkable email to Watson from BuzzFeed founder and CEO Jonah Peretti during the 2019 merger talks
The lawsuit also reveals a remarkable email to Watson from BuzzFeed founder and CEO Jonah Peretti, during the 2019 merger talks, in which Peretti said Watson was “the missing leader” BuzzFeed needed.
According to the lawsuit, Watson rejected BuzzFeed's takeover offers, including a $250 million deal with an additional $30 million in incentives for Watson, who was offered a BuzzFeed board seat and the position of president.
The lawsuit names BuzzFeed, which declined to comment, as well as Semafor and Smith, who did not immediately respond to requests for comment Thursday afternoon.
A spokesperson for Watson and his legal team accused Smith of trying to “kill” Ozy for personal financial gain, taking advantage of his position as a Times columnist, where he revealed that Ozy executive Samir Rao had posed as a YouTube executive during a telephone conversation with investors. (Rao pleaded guilty.)
“Ben Smith not only had the ability to kill OZY using NDA-protected information: he had the financial motive to do so, even as the New York Times allowed him to pose as an objective reporter.” , the spokesperson said in an email. to DailyMail.com.
“Millions of dollars of Smith's personal wealth were tied up in BuzzFeed stock options, the value of which was threatened as long as OZY existed as an attractive place for media investors to invest their money,” the spokesperson claimed.
The spokesperson claimed that Smith's reporting wiped Ozy off the board and paved the way for BuzzFeed's initial public offering in December 2021, allowing him to take advantage of incentive stock options.
“Smith knew the field would be clear for him to operationalize OZY's stolen playbook, so he created Semafor to fill the void in the market he helped create,” the person added.
Ozy CEO Samir Rao (left) pretended to be YouTube CEO Alex Piper (right) during a phone call with potential investor Goldman Sachs. Rao has pleaded guilty in the case
BuzzFeed shuttered its news division in April and is at risk of being delisted from the Nasdaq stock exchange, with its shares trading for less than a dollar and 97 percent lower than their initial public offering price.
Smith, Semafor's editor-in-chief, co-founded the news site with former Bloomberg Media CEO Justin Smith (no relation), who runs the business side of the operation.
In interviews, the Smiths have described Semafor as a global news site aimed at college-educated readers.
Semafor's website describes it as “an intelligent, transparent global news platform for breaking stories, analysis and video.”
Ozy went silent following Ben Smith's report that Ozy co-founder Rao had posed as a YouTube executive during a fundraising call with Goldman Sachs and touted exaggerated video engagement statistics.
Watson, a former Goldman Sachs banker, attributed the incident at the time to a mental health crisis he said Rao was experiencing.
In October, Watson, who is black, told DailyMail.com that he believed the charges against him were racially motivated.
Federal prosecutors vehemently denied these claims in a lawsuit. They said Watson was “charged solely because of his own brazen criminal scheme” and emphasized that “race was in no way a factor” in the charges.
A federal judge has rejected his attempt to suppress evidence in the case that he says was illegally seized, refusing to dismiss the charges.