A Chinese investor is suing the founder of cryptocurrency company Stox in an Israeli court. Zhewen Hu claims that Moshe Hogeg effectively ran a Ponzi scheme and wants NIS 17 million ($4.63 million) in compensation for his investment in the firm.
Stox was founded in 2013 as a subsidiary of Invest.com – another firm that Hogeg owns.
It wasn’t until last year, however, that it launched its initial coin offering (ICO).
With support from the famous boxer Floyd Mayweather, the company was able to raise over $30 million in funding.
Since then, the firm has faced repeated accusations that Hogeg was running the company as an exit scam.
Whether that is true or not remains to be seen.
Stox was supposed to be a platform that enabled users to make money by predicting the outcome of certain events. The company’s website lists an example as being able to predict the price of Bitcoin.
What does that sound an awful lot like? DEFINITELY NOT binary options. Yup. Nothing to see here.
Hogeg responded to Hu’s lawsuit saying that he will “not give in to despicable extortion attempts.”
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“I am the force behind the company,” he added, “and will have the final say.”
According to the lawsuit filed by Hu, Hogeg and some of his colleagues at Stox simply pocketed the money that they raised and walked away with it.
Though the company did issue a whitepaper and business plan, the lawsuit alleges that Hogeg and his cohorts just wanted to use those things to raise money for the company.
There seems to be some merit to these claims. According to Israeli outlet Calcalist, the whitepaper said that the company would be launched in conjunction with Invest.com.
Hogeg claimed that Invest.com had three million users, that it had revenues in 2016 of over $50 million and that each user would be issued with a cryptocurrency wallet which they could then use to access Stox’s services.
None of this happened. At the time of publication, Invest.com only had a landing page, and Stox had less than 1,000 downloads on the Android application store. The company currently only offers access to a form of sports betting, but it is unclear as to whether this is even operational.