A lawsuit filed on May 25 by employees of an Israeli venture capital fund alleges that three of Israel's largest cryptocurrency ICOs in 2017 and 2018. Totally a scam.
Three ICOs launched by Sirin Labs, Stx Technologies Limited (Stox) and Leadcoin, have raised $250 million from investors around the world.
The plaintiffs allege that none of the three companies ever developed a product as they promised investors. Instead, the defendants blatantly appropriated investors' money for personal use.
An ICO is the first issuance of virtual currency, a form of fundraising used by blockchain startups. Investors will be presented with a short film about the startup, biographies of the founders, and a "white paper" explaining the technology and business plan in more detail. If impressed by the startup, they can purchase tokens in its initial virtual currency offering. These tokens typically allow access to the product, and if the product is successful, it is expected that the tokens will increase in value on secondary exchanges.
In subsequent statements, Hogeg denied the allegation and said the lawsuit was an attempt by disgruntled employees to blackmail him. Hogeg is an entrepreneur who has emerged since the early 2010s, famous for attracting famous investors into his startup projects, including Mexican billionaire Carlos Slim, movie star Leonardo Dicaprio and Kazakh financier Kenges Rakishev. Hogeg is also the owner of the Beitar Jerusalem football team.
Hogeg has been sued several times by investors of various ventures who allege that he cheated them. In most cases, Hogeg settled with the plaintiffs, by signing non-disclosure agreements. And Hogeg is a 70% shareholder of Singulariteam, while the other defendants own a smaller number of shares in the fund.
Stx Technologies Limited, raised $34 million in August 2017 for the "predictive marketplace" of current events and sports. Leadcoin, on the other hand, raised $50 million in March 2018 for a "decentralized lead-sharing network".
The Stox ICO has been confirmed by the famous American boxer Floyd Mayweather. On Instagram, Sirin Labs is promoted by soccer star Lionel Messi and supermodels like Irina Shayk and Sara Sampaio.
"Immediately after they raised money and sometimes while they were doing so, defendants gutted the companies and let them exist without any substantial activity, leaving investors with great damage," the lawsuit alleges.
The complaint alleges that Singulariteam's owners were attracted by the fact that the cryptocurrency is unregulated.
The plaintiffs have filed audio recordings of Steven Kruger, Singulariteam's legal counsel, which reveal how Moshe Hogeg stole investors' money. However, Kruger passed away recently from complications following an operation.
According to the plaintiffs, the defendants used the money they raised to buy expensive properties. They also allege that the defendants took approximately $21 million in Stox funds to invest in Telegram's ICO.
The plaintiffs also claim that they personally invested in the aforementioned ICOs and encouraged friends and family to do the same. But promises of roses never appeared. Even about a month after Sirin's ICO, the value of one of the tokens increased. But the plaintiffs were barred from doing so, while some defendants sold their share.
The value of virtual currencies from the 3 projects above is extremely low, at the present time.
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