Founder of ethereum-based prediction market platform Stox, Moshe Hogeg has finally responded to the lawsuit that was originally filed against him on January 24th of alleged funds being raised during the platform’s ICO were invested to other ICOs instead of being used for the development of Stox as originally stated in the white paper.
According to information provided by The Times of Israel, Hogeg and his legal team have are arguing that the company’s white paper is for descriptive purposes only and shouldn’t be taken as a official binding agreement.
The ICO for Stox occurred during August 2017 and eventually raised a total of $33 million worth of Ether. Zhewen Hu, a Chinese investor who reportedly invested over $3.8 million into the ICO, was the one to file this lawsuit against Hegog and Stox, claiming that only $5 million of the raised ICO was invested into Stox while the rest were used to invest into the encrypted messaging app Telegram’s ICO, along with some others.
The lawsuit goes on to claim that the ICO funds were misappropriated instead of being deployed as specified in the company’s white paper. According to the white paper, should the ICO successfully raise at least $30 million worth of Ether, which did happen, 50 percent of it would be utilized to pay its employees, 20 percent would go into marketing, 15 percent would be spent on incentives and joint venture opportunities, and the remaining 15 percent would be used for any legal efforts, compliance, and miscellaneous expenditures.
Although, during the weekend Hogeg finally responded to the lawsuit by claiming that not only was Hu misinformed about the Stox only have $5 million invested into it from the ICO, but the company’s white paper is of a “descriptive nature only and not binding.” Do to the white paper unable to act as a prospectus given to the investors before the ICO, Hogeg and his legal team believe it “confers no legal responsibility on its issuers.”
Along with the allegations made by Hu on the ICO funds being misappropriated, the lawsuit against Stox claims that Hogeg devalued the Stox token (STX) of other investors by selling his share much earlier than he originally claimed to do so. In response to this, Hogeg stated that shareholders of STX signed a contribution terms document that states the token ownership doesn’t constitute the following:
“Any ownership right or stake, share, equity, security, commodity, bond, debt instrument or any other financial instrument carrying equivalent rights; any right to receive future revenues, shares or any other form of participation or governance right in or relating to STX and/or the STX Platform.”
Hu initially filed the lawsuit with the Tel Aviv District Court.