Athena Bitcoin is fighting a copyright infringement lawsuit filed by AML Software — and the operator just lost its attempt to bully the plaintiff into dropping the case through Rule 11 sanctions threats. The case centers on whether Athena acquired legitimate rights to use Bitcoin ATM software code, or whether it participated in an unauthorized scheme to transfer ownership of proprietary code worth millions.
This isn't regulatory drama. This is corporate warfare over intellectual property that powers Bitcoin ATMs — and it's happening as Athena faces separate enforcement action from the DC Attorney General over elder scam facilitation.
## What Athena Allegedly Did
AML Software, an Illinois-based company, owns the copyright to Bitcoin ATM software code it developed and registered in September 2025. According to AML's complaint, here's what happened:
**June 2024:** Ryan Pineo (AML's code developer) arranged an oral, non-exclusive license for one defendant to use the AML Software for monthly payments based on ATM transaction volume — a "rent to own" structure common in the industry.
**The problem:** Instead of a straightforward license, three parties executed two written agreements:
1. **Bitom Labs-PSBC Consulting Agreement (June 1, 2024):** Bitom Labs (Pineo's company) agreed to deliver "Bitcoin ATM software platform" to PSBC LLC (controlled by Jordan Mirch) by June 10 for payments capped at $2 million. The agreement stated PSBC would **own** all intellectual property rights in the delivered software.
2. **PSBC-Athena Agreement (June 19, 2024):** Just days later, PSBC agreed to deliver the same "Bitcoin ATM software platform" to Athena by June 18 for $5.5 million — nearly triple the price. The agreement stated PSBC "irrevocably transfer, conveys and assigns to [Athena] without reservation and in perpetuity all right, title and interest" in the code and "all Intellectual Property Rights."
9 days
Time between PSBC receiving code and delivering it to Athena
Amount Athena still owes, even by defendants' account
**According to AML:** This was a fraudulent scheme to circumvent copyright law and steal title to AML's code. Athena stopped making payments in September 2025. AML filed suit for copyright infringement.
**According to Athena:** PSBC received a "perpetual, irrevocable, royalty-free, fully paid-up" license, modified the code to create a derivative work, and legitimately sold that modified version to Athena. AML's lawsuit is frivolous and warrants Rule 11 sanctions.
## The Copyright Law Problem Athena Can't Escape
Here's the issue that makes Athena's Rule 11 motion look desperate: **You cannot transfer copyright ownership without a written agreement signed by the copyright owner.**
The Copyright Act is explicit:
> "A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed." — 17 U.S.C. § 204(a)
Critical Legal Point:
AML never signed a written agreement transferring title to the AML Software code
The Bitom Labs-PSBC agreement was not signed by AML (the copyright owner)
Even if PSBC received a valid license, a license does not convey ownership rights that can then be resold
Modifying licensed code does not magically grant ownership of the underlying copyrighted work
AML's position is simple: The "Consulting Agreement" between Bitom Labs and PSBC was not signed by AML. Therefore, under the Copyright Act, no transfer of ownership occurred. PSBC never held title. Athena never acquired title. Any claim to ownership of the AML code — modified or not — is legally void.
Athena's response in its Rule 11 motion: "This dispute is not about ownership."
But Athena's own agreements say otherwise. The PSBC-Athena Agreement explicitly states PSBC "irrevocably transfer, conveys and assigns to [Athena] without reservation and in perpetuity **all right, title and interest** in the New Technology, including **Intellectual Property Rights**."
When AML's counsel asked Athena to stipulate that it holds no ownership rights in the AML code, Athena's counsel responded: "Of course, Defendants cannot agree that they have no rights in the PSBC [derivative] Code or any associated intellectual property."
## The "Consulting Agreement" That Wasn't a License
Athena's Rule 11 motion hinges on the claim that the Bitom Labs-PSBC agreement was a software license. But the agreement itself contradicts that characterization:
- **Title:** "Consulting Agreement"
- **Services:** "Development of Bitcoin ATM software platform"
- **Payment:** Based on ATM transaction sales, capped at $2 million
- **Delivery deadline:** June 10, 2024 (9 days after signing)
What's Missing:
The phrase "license" appears nowhere in connection with the AML Software
No mention of "AML Software" or "AML Code" in the entire agreement
No grant of rights to use, modify, or distribute the AML Software
Payment described as compensation for "consulting services," not a software license
The only license language appears in Section 5.5, which addresses Bitom Labs' use of **its own materials** to complete the consulting work. This is boilerplate language for work-for-hire arrangements — not a software license agreement.
AML's position: If this were truly a license transaction, Pineo and Mirch would have executed an actual license agreement with AML (the copyright owner). Instead, they created a paper trail designed to obscure the true nature of the transaction.
## The Timing Problem
Athena claims PSBC "developed" a modified version of the AML code. But the timeline makes that claim implausible:
Timeline:
June 1, 2024: Bitom Labs-PSBC agreement signed (delivery by June 10)
June 10, 2024: Delivery deadline for "Bitcoin ATM software platform" to PSBC
June 18, 2024: Delivery deadline for "Bitcoin ATM software platform" from PSBC to Athena
June 19, 2024: PSBC-Athena agreement signed
**9 days** elapsed between PSBC supposedly receiving the code and delivering it to Athena. According to AML's principal, developing a new Bitcoin ATM software platform from scratch would take months or years. The AML code took $2.5 million in investment and years of development to reach its June 2024 state.
The more plausible explanation: PSBC received a copy of the AML code on June 10 and passed it directly to Athena by June 18, with little or no modification.
## The WhatsApp Messages Defendants Don't Want You to See
Athena's Rule 11 motion cherry-picks WhatsApp messages between Pineo and AML principal Sonny Meraban from 2023 to claim Meraban "knew about" the transaction. But messages Athena didn't highlight tell a different story:
**April 2023 — Discussing licensing strategy:**
> **Meraban:** "How do we get more people to test it... I want every one to test it"
> **Meraban:** "He's not interested if he can't buy it"
> **Meraban:** "I will die with my software for 1m... 2.5 really"
**June 2023 — "Rent to own" structure:**
> **Meraban:** "so anyone you talk to that is the kind of way I want to do with software... 4m PP or 3-5 year rent to own dependign what their sales are or just pay the 1%"
> **Pineo:** "ye nobody can afford a copy"
> **Meraban:** "Rent to own plan anything to get them to convert"
> **Pineo:** "ya that's basically what i'm doing, just nobody can afford one outright"
**June 14, 2024 — Athena deal:**
> **Meraban:** "Would love to get 5 more of these deals. Even if they dont buy it and just pay is good. thats 75k a month"
> **Pineo:** "Yup that's the goal"
**July 2024 — No sublicensing allowed:**
> **Meraban:** "the software sold is exclusively to be used by the operator your company contracted with only and not to be resold by any operator or your company unless theres a new payment split of 5050... Any new operator who we sell the software to would be the same thing"
**October 28, 2024 — Confusion when Meraban learns of the $2M cap:**
> **Meraban:** "so after 2M is paid ur saying they own the software?"
> **Pineo:** "yup"
> **Meraban:** "i thought you said they are renting it until they come up with 2M lump sum"
> **Pineo:** "no they don't have to come up with any lump sum"
> **Meraban:** "i could have sworn i thought that was the deal"
**Same day — But no reselling:**
> **Meraban:** "they cant resell a copy I mean"
> **Pineo:** "they cannot resell. Correct."
**January 2025 — Pineo tries to buy AML outright:**
> **Pineo:** "GM, I want to buy you out of AML so I own 100% of the software. Can you think about what you would want and we can discuss later in the week? Not the corporate entity, just the software rights."
> **Meraban:** "I don't want to sell it... I would never sell it."
The messages confirm AML's version of events:
1. **All licenses were non-exclusive and non-transferable** — sublicensing was explicitly prohibited
2. **The standard arrangement was "rent to own"** — monthly payments until the licensee could afford a lump-sum buyout for a fully paid-up license
3. **The Athena deal was understood as a rent-to-own license** — "Even if they dont buy it and just pay is good"
4. **Meraban never intended to sell ownership** — he rejected Pineo's January 2025 attempt to buy the software outright
5. **Reselling was prohibited** — even after the October conversation where Pineo claimed Athena would "own" the software
Athena's Rule 11 motion argues these messages prove Meraban "knew" about the transaction. But knowing about a monthly-payment license arrangement is not the same as authorizing a $5.5 million sale of ownership rights.
## The License Defense Falls Apart
Even if the Court finds PSBC received a valid oral license (which AML disputes), Athena cannot escape copyright infringement for three reasons:
### 1. The License Terminated for Non-Payment
Under Eleventh Circuit law, **a non-exclusive license becomes revocable if the licensee breaches the payment obligation.**
> "A material breach of the parties' oral understanding may entitle the licensor to revoke its permission for future use of the copyrighted materials." — *Fokiss, Inc. v. TLM Global, LLC*, 2025 WL 353923, at *6 (S.D. Fla. Jan. 31, 2025)
Athena stopped making payments in **September 2025**. Even Defendants admit **$200,000 is still owed**. AML filed this lawsuit in September 2025, which constitutes formal revocation under *Vergara Hermosilla v. The Coca-Cola Co.*, 717 F. Supp. 2d 1297 (S.D. Fla. 2010).
AML also sent a formal termination letter on December 26, 2025. Either way, the license is dead.
### 2. Defendants Exceeded the Scope of the License
Even if a license existed, **"a defendant who exceeds the scope of an implied license commits copyright infringement."** *Latimer v. Roaring Toyz, Inc.*, 601 F.3d 1224, 1235 (11th Cir. 2010).
AML provided (at most) a single, non-transferable license for one defendant to **use** the AML code on Bitcoin ATMs. AML did not grant rights to:
- Create derivative works
- Transfer or sublicense the code to third parties
- Sell ownership of modified versions
PSBC allegedly modified the code and then **sold ownership rights** (including intellectual property) to Athena for $5.5 million. That exceeds the scope of any license AML provided.
### 3. The September 2025 Payment Cutoff
Since September 2025, Ryan Pineo has also **withheld payments AML receives from all other Bitcoin ATM operators** who license the AML Software. This is AML's only source of revenue.
The timing is suspicious: Athena stops paying in September. Pineo cuts off all other revenue streams in September. AML files suit in September.
This forms the basis for AML's claims against Pineo individually for breach of fiduciary duty and conversion.
## The Rule 11 Sanctions Fight
Athena filed a motion seeking Rule 11 sanctions against AML and its counsel, demanding they be punished for filing a "frivolous" lawsuit. Athena's motion makes three key arguments:
1. **AML's counsel failed to investigate** — they should have known about the WhatsApp messages proving Meraban consented
2. **AML's claims are objectively frivolous** — the license was irrevocable and fully authorized
3. **AML's counsel knowingly filed false allegations** — specifically about Mirch's involvement being concealed
AML's response in the January 16, 2026 filing:
Key Counterarguments:
Declaratory judgment claim is bulletproof: There is no written agreement from AML transferring copyright ownership. Under 17 U.S.C. § 204(a), AML still owns the copyright. This is not a frivolous claim — it's black-letter copyright law.
Athena contradicts itself: Athena's first Rule 11 motion argued AML "agreed to sell the software" to PSBC. Now Athena argues "this dispute is not about ownership." But Athena's own agreements purport to convey "all right, title and interest" in the code.
License defense fails: Even if a license existed, it terminated for non-payment in September 2025. Athena is using the code without authorization.
Rule 11 is being weaponized: Athena threatened sanctions twice, demanded AML drop the entire case, and timed the safe harbor period to expire the day after Christmas. This is a bullying tactic, not good-faith litigation.
AML is requesting **cross-sanctions** against Athena and its counsel under Rule 11. Federal courts can sanction parties for filing improper Rule 11 motions themselves:
> "[T]he filing of a motion for sanctions [under Rule 11] is itself subject to the requirements of the rule and can lead to sanctions." — *Smith v. Psychiatric Solutions, Inc.*, 750 F.3d 1253, 1260 (11th Cir. 2014)
Courts have awarded attorney's fees to parties forced to defend against improper Rule 11 motions filed "as an improper combative tool." *Id.*
## Why This Matters
This case raises three critical issues for the Bitcoin ATM industry:
### 1. Intellectual Property Rights in Bitcoin ATM Software
Bitcoin ATM operators license software from multiple vendors. If this lawsuit establishes that operators like Athena can claim ownership of licensed code by making minor modifications and reselling it, **the entire licensing model collapses.**
Software developers will either refuse to license to Bitcoin ATM operators or demand ironclad written agreements with severe penalties for unauthorized use.
### 2. Corporate Accountability for Document-Shuffling
The structure of this transaction — oral license → consulting agreement → "development services" agreement → sale for triple the price 9 days later — looks like a deliberate attempt to obscure the true nature of the deal.
If Athena prevails, it sends a message that operators can use document engineering to circumvent copyright law. If AML prevails, it establishes that courts will look past the paperwork to the substance of the transaction.
### 3. Rule 11 as a Bullying Tool
Athena filed its Rule 11 motion before discovery, before any substantive briefing, and before the Court had ruled on anything. The motion demanded AML drop the entire case.
If courts allow this tactic to succeed, well-funded operators can use Rule 11 threats to intimidate smaller software companies out of asserting their rights.
## What Happens Next
The Court will rule on Athena's Rule 11 motion and AML's cross-motion for sanctions. Possible outcomes:
**If Athena wins:** AML and its counsel could be ordered to pay Athena's attorney's fees for defending the lawsuit. AML might be forced to dismiss the case or face financial penalties for continuing.
**If AML wins:** Athena and its counsel could be sanctioned for filing a frivolous Rule 11 motion. AML will proceed to discovery, where it can demand:
- Source code comparison between AML's original code and the "PSBC Code"
- Internal communications about the transaction structure
- Payment records showing when Athena stopped paying
- Documentation of what modifications (if any) were made
**Most likely outcome:** The Court denies both motions and orders the parties to proceed with discovery. Rule 11 motions are disfavored, and courts typically prefer to resolve substantive disputes through the adversarial process rather than sanctions.
But the real question is whether Athena can defend its claimed ownership of the code without a written agreement from AML. Under the Copyright Act, that's going to be difficult.
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**Related:** Athena Bitcoin Trust Score: F (15) | DC Attorney General Sues Athena Bitcoin Over Elder Scam Facilitation | Bitcoin ATM Operators Directory
This article is based on publicly available legal filings and regulatory documents.
It does not constitute legal advice. All parties referenced are presumed innocent until proven otherwise.
