Stox ICO founder, Moshe Hogeg (pictured), has been sued for allegedly misappropriating funds by Zhewen Hu, who invested $3.8 million worth of eth in the Stox ICO that raised about $34 million in 2017.
Hu claims only $5 million of that $34 million was spent on Stox, a prediction market similar to Augur or Gnosis. The rest, the claimant says, was spent by Hogeg on other ICOs, like that of Telegram.
Moreover, Hu claims Hogeg sold his own Stox token prior to the earliest day he said he would sell them, so lowering the token value for other investors.
Stox has fallen in price from about $2.50 in August 2017, when it was tweeted out by the world famous footballer Luis Suarez, to now just one cent, with its market cap likewise down from $76 million to now under $1 million.
Hogeg’s lawyer has responded to the claim filed in an Israeli court, stating that the ICO whitepaper is of “a descriptive nature only and not binding.”
“A whitepaper does not constitute a prospectus or offering document,” Hogeg’s lawyer said. While Hogeg himself argued that as per the contract investors signed when buying Stox:
“Ownership of tokens carries no rights whether express or implied other than a limited potential future right to use or interact with the Stox platform.”
He further denied only $5 million was invested in Stox, calling the lawsuit “an extortion attempt” that is damaging his image according to Times of Israel.
There is also a jurisdictional dispute as the signed contract stated lawsuits should be brought in Gibraltar where the company behind Stox, STX Technologies Limited, is incorporated.
Hogeg is further being sued in another case where 17 claimants say they are shareholders of invest.com. According to Times of Israel:
“The 17 petitioners claimed that despite the fact that the company, better known as Invest.com, has carried out two successful ICOs (Initial Coin Offerings), each of which netted tens of millions of dollars, Hogeg has not shared the revenues from these public offerings with the petitioners, as they claim he was contractually obliged to do, but instead has unlawfully taken money for his own use.”
Hogeg spent millions of dollars last year buying a football team and some land. In addition it appears world famous celebrities were paid to promote Stox through fake endorsement tweets that often did not reveal they were just advertising.
A court will now decide whether the whitepaper and presumably other statements made during the ICO process are binding on ICO founders or whether investors have no means of holding them accountable as they just gifted the money without quite expecting anything in return.