Five Xapo employees have lost their bid to dismiss a breach of contract lawsuit brought on by former employer LifeLock.

The update is the latest in a case first brought to light by Fortune when it revealed LifeLock was seeking damages from the defendants, including current Xapo CEO Wences Casares and COO Federico Murrone, related to the development of IP it says would become the foundation of the bitcoin services firm.

LifeLock has alleged that the defendants did not disclose the “nature and extent” of their role in developing the project, which it argues was created on its computers and using its resources. Xapo has denied the allegations, stating that LifeLock was aware of the project and it relinquished its claim to any technology developed.

LifeLock secured the services of members of the current Xapo team when it purchased Lemon, a digital wallet platform, for $42.6m in December 2013. Xapo has since raised $40m in venture capital, adding former US Treasury Secretary Larry Summers and ex-Citi CEO John Reed to its advisory board in May.

The full filing finds Judge Peter Kirwan overruling objections by the plaintiffs that the breach of contract suit filed by LifeLock be dismissed for lacking sufficient facts. In his notes, the judge also alludes to an agreement allegedly signed between the companies waiving claims to any bitcoin-related technology created.

Kirwan writes:

“The letter thus does not clearly release defendant Casares from any or all of the breaches alleged here, and the demurrer does not lie to only part of a cause of action. Even if it were assumed for purposes of argument that it did, that would not absolve Casares of all potential liability … Among the fraudulent acts alleged in the third cause of action is that defendant Casares misrepresented his ‘personal bitcoin storage business’ in order to obtain a letter he could later claim was a release from liability related to his disclosure of confidential information.”

The judge goes on to note that LifeLock has alleged Casares “misrepresented” Xapo to obtain a letter he could claim released him from liability for pursuing the venture. LifeLock further has disputed whether its representative had the authority to sign the letter.

The defendants in the case will next be required to attend a hearing on 24th July.

The full text of the filing can be found here.

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