Bill Melton, the founder and chairman of CyberCash has quit the company following a bust-up with investors Rose Glen Capital Management and the Palladin Group.
In his resignation e-mail to employees, Melton blamed conflicts with un-named outside investors for his departure, alleging that they had the potential to dilute the value of the company and jeopardise the planned merger with payments processor Network 1.
Both Rose Glen and Palladin have seen a $15 million investment in CyberCash, exercisable as warrants for 1.4 million shares, inflate to a 15 million+ share entitlement as the company's stock has plunged.
Sources close to the company have told the Washington Post that a deal between CyberCash and its investors may be near, possibly through an agreement under which Glen Rose and Palladin exercise half their warrants and write off the remainder.
Daniel Lynch, who co-founded CyberCash with Melton, has taken on the chairmanship while negotiations continue.