Israeli crypto entrepreneur Moshe Hogeg and his blockchain firm Stox (STX) are facing a lawsuit from a disgruntled investor in the United States.
A Vancouver-based investor has accused Hogeg of major breaches of contract and alleged fraud that caused him losses of at least $430,000, according to a lawsuit filed Nov. 25. The complaint is filed with the United States District Court for the Western District of Washington.
In the 43-page lawsuit, the plaintiff Sean Snyder claims that the company failed to perform its obligations under its whitepaper by issuing a larger amount of tokens than originally announced and eventually causing a significant loss in the value for its digital currency. Specifically, the defendants allegedly flooded the market with 16 million STX out of all 43 million STX in circulation, the plaintiff says.
According to Snyder, Hogeg and other involved defendants are responsible for defrauding global investors of “hundreds of millions of dollars.”
Founded by Hogeg, Stox is an open-source Ethereum (ETH)-based prediction market platform. Alongside Stox, Hogeg is involved in multiple crypto-related ventures as he founded major blockchain smartphone developer Sirin Labs and serves as chairman of blockchain network LeadCoin.
Hogeg allegedly used investor money to buy real estate and a soccer team
Among multiple accusations, the plaintiff also argued that Hogeg misappropriated investor money to make a number of expensive purchases. According to the lawsuit, those purchases included $19 million to buy land in Tel Aviv, $7 million for acquisition of Beitar Jerusalem, which is one of Israel’s top soccer clubs, as well as a $1.9 million donation to Tel Aviv University.
According to The Block, Snyder has put forward his claim himself and is not represented by legal counsel in this case.
Previous legal issues regarding misappropriated funds
In January 2019, a Chinese investor sued Hogeg and Stox for $4.6 million, alleging that the defendants misappropriated millions of dollars worth of crypto that had been invested in the firm. According to the lawsuit, only $5 million out of its $33 million initial coin offering (ICO) held in August 2017 were actually used to develop Stox’s product.
STX hit its all-time high of $2.60 with a market capitalization of around $4.2 million during the ICO in August 2017. Since then, the cryptocurrency has gradually fallen in waves to see a market cap of around $540,000 to date. At press time, STX is down 6.5% to trade at $0.01, according to Coin360.
STX all-time price chart. Source: Coin360