Blockchain Startup Stox and Founder Sued for $4.6 Million Over Alleged Fraud

A Chinese investor has sued a prominent Israeli crypto entrepreneur and his blockchain firm Stox over alleged fraud, English-language newspaper The Times of Israel reports Jan. 25.

The investor, Zhewen Hu, is suing Stox and its founder for $4.6 million, according to the report.

Hu allegedly invested a total of around $3.8 million worth of Ethereum in the blockchain firm - an open source, Ethereum-based prediction market platform dubbed Stox, founded by Moshe Hogeg.

The NIS 17 million lawsuit alleges that Hogeg and Stox operator, STX Technologies Limited, misappropriated millions of dollars worth of crypto that had been invested in the company.

The lawsuit claims that Stox's white paper had pledged that if the company hit its initial coin offering target of raising $30 million in ETH, all the funds would be channelled into developing its product offering.

The anticipation, according to the lawsuit, was that the successful development of Stox's prediction market platform would boost the value of the native STX token.

Having raised a total of $33 million in its August 2017 ICO, the lawsuit alleges that only $5 million of these funds were in actuality devoted to the company and its flagship product.

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.

According to the report, Hogeg faced a lawsuit in November for the alleged misappropriation of funds in regard to his crypto company, Invest.com - of which Stox is a subsidiary.

As previously reported, the Stox ICO was promoted by professional boxer Floyd Mayweather Jr., who faces separate charges from the United States Securities and Exchange Commission for unlawful promotional activities around crypto startup Centra Tech's ICO in September 2017.