As per reports by English-language newspaper The Times of Israel, published on 25th January, a prominent Israeli crypto entrepreneur and his blockchain firm Stox has been sued by a Chinese investor over alleged fraud.
Stox and its founder has been sued by Zhewen Hu for $4.6 million. According to reports, Hu allegedly had invested a total of around $3.8 million worth of Ethereum (ETH) in the blockchain firm which is an open source, Ethereum-based prediction maket founded by Moshe Hogeg.
Hogeg is a known figure in the crypto sphere for his many cryptocurrency-related ventures. He has been associated with the blockchain smartphone developer Sirin Labs, and is serving as chairman of LeadCoin, a blockchain-based decentralized lead-sharing network. He is also the owner of Beitar Jerusalem, one of Israel’s top soccer clubs, having negotiated its purchase for $7.2 million last August.
The NIS 17 million lawsuit (~$4.6 million) alleges that Hogeg and Stox operator, STX Technologies Limited, misappropriated millions of dollars worth of crypto that had been invested in the company and that their white paper had promised that if the company hit its initial coin offering (ICO) target of raising $30 million in ETH, all the funds would be channelled into developing its product offering. The idea behind this was that with the successful development of Stox’s prediction market platform, the value of the native STX token will also increase.
The lawsuit claims that only 5 million USD of the total 33 million USD raised in its August 2017 ICO, was actually devoted to the company and its flagship product. Hu claims that Hogeg reinvested the rest of the capital to invest in other ICOs — including that of major messenger app Telegram. The claim also states that Hogeg breached his commitment to investors by selling his Stox holdings earlier than promised, thus purportedly devaluing the tokens’ worth. However Hogeg has steadily denied any such claims.