A SpaceX-linked lawsuit could shape who profits from one of the biggest IPOs in years

• As startups like SpaceX grow more valuable while staying private longer, legal disputes are expected.
• This lawsuit shows what can happen when complex deals collide with soaring valuations.
• If SpaceX IPOs before the case is resolved, both sides could face pressure to settle.

A relatively obscure lawsuit over a disputed stake in SpaceX shares could help determine how billions of dollars in private-market gains are divvied up as the world's most valuable startup moves closer to going public.

The dispute dates back to 2020, when Trellis Software agreed to provide software to ClearList Holdings in exchange for a stake in the company, which was then building a platform to trade private-company shares. As ClearList pivoted toward investing in SpaceX, those holdings surged in value, turning the partnership into a high-stakes fight over ownership, according to filings.

Trellis alleges ClearList is now trying to push it out to capture the upside. "They're trying to get rid of our interest entirely to preserve the entire upside for themselves," Josh Schiller, a lawyer for Trellis Software, said in an interview with Business Insider. ClearList, in court filings, disputes that claim, arguing Trellis failed to deliver on its software and obtained its stake through misrepresentations.

Schiller says assets linked to the dispute nearly doubled in a year, rising from about $434 million to $843 million, driven by SpaceX's soaring value.

The dispute comes at a time when companies like SpaceX and OpenAI rack up massive paper gains ahead of an IPO. SpaceX confidentially filed to go public on Wednesday, according to multiple reports, setting the stage for what could become one of the largest IPOs in history, with a potential valuation of $1.75 trillion.

Complex ownership structures, built through secondary share deals, side agreements, and investment vehicles, are now being stress-tested as valuations soar. Those investment structures, in which shares are not sold directly from the company but rather via secondary markets, can involve multiple layers of ownership and contractual rights. At stake is not just who owns what, but how enforceable those rights really are when billions of dollars are on the line.

The outcome could set a precedent for how minority investors are treated across the booming secondary market, where early backers are increasingly fighting to secure their share of the upside before companies finally go public.

"Imagine they own a piece of property and then all of a sudden they find oil on the land," said James Rubinowitz, a lecturer at Cardozo Law School, who reviewed the case for Business Insider. "The industry will likely look at this because if ClearList is somehow able to squeeze out the minority holder, the entire industry will move to do the same."

"The amount of money that stands to be made is so gigantic that there will be tons of litigation coming," said Rubinowitz.

ClearList accuses Trellis of fraud

In court filings, ClearList and its parent company, GTS, argue that Trellis never delivered the software it promised and obtained its ownership stake through misrepresentations. They accuse Trellis of "blatant fraud" and describe its software as a "sham," alleging it failed to perform as promised and had to be replaced.

The company declined further comment beyond its filings. SpaceX did not respond to a request for comment.

ClearList has initiated arbitration seeking to nullify Trellis' stake, while Trellis has gone to Delaware court to block that effort.

ClearList is asking the court to dismiss or stay the case and compel arbitration, arguing that the parties agreed to resolve disputes through arbitration.

Timing could be critical. If SpaceX IPOs before the case is resolved, both sides could face pressure to settle.

"SpaceX might go public in the next 3 months," said Rubinowitz. "Litigation will not wrap up at that time, so they're likely going to have to enter into settlement negotiations.

Rubinowitz said he is skeptical that ClearList will ultimately prevail, arguing that the company's legal strategy appears more opportunistic than strong on the merits. Based on the facts described in the complaint, he said it is difficult to see a clear path to winning outright and suggested the goal may be to pressure Trellis into accepting a reduced payout. Even a partial victory could be significant given the potential upside.

Still, he said, other companies might want to consider whether the monetary gain is worth the risk of sending a signal that you are eager to push out shareholders when investments soar.

"You're really shooting yourself in the foot in terms of reputation by pulling a move like this," he said.