Moshe Hogeg, a renowned Israeli crypto entrepreneur is the latest individual accused of defalcating ICO funds. Hogeg’s partners petitioned the court that funds from two projects were misappropriated by him. The issue arose after two entities that he is associated with were declared insolvent despite raising funds through initial coin offerings.
The Times of Israel reported that consequent to this, some shareholders are seeking to have IDC Investdotcom Holdings, the company associated with Hogeg and which is more popularly known as Invest.com liquidated. The court has already appointed a liquidator in the case.
The 17 petitioners are all associated with a binary option company AnyOption which is no longer in operation. This is a clear link that that the crypto industry is well associated with the crypto industry in the country.
Israel-Based Operation Registered in Cyprus
Hogeg has been accused of using the funds that were raised from two initial coin offering for his personal use in another case that highlights the failings of the crypto-based fundraising drive that has been touted as automated with smart contracts that ensure that everything goes as planned.
The petition stated that although the entities were registered in Cyprus the businesses actually operated out of Israel and therefore subject to Israeli laws.
Hogeg who has been one of the vocal advocates of the initial coin offering in Israel has been in the news for making several multi-million dollar purchases and donations including a parcel of land he bought in Tel Aviv at US$19 million and the Israeli top soccer club Beitar Jerusalem which he acquired at a price of US$7.2 million. Hogeg also recently donated US$1.9 million to Tel Aviv University to put up a blockchain research facility named in his honor.
The Israeli entrepreneur is known to own a venture capital business Invest.com which is associated with Singulariteam. The popular Sirin Labs behind the $1000 Finney, the first proposed blockchain based smartphone is a subsidaiary of Singulariteam.
Merger Agreement Between AnyOption and Invest.com
The petitioners say that the two companies, AnyOption and Invest.com formed a merger last year when it became obvious that the Israeli government was going to ban the binary trading option sector. The agreement between the two companies was to pay AnyOption $3.5 million courtesy of Invest.com. AnyOption was supposed to become a shareholder of the crypto company Stox that was the firm through which ICO funds were raised.
Stox was a ble to raise $34 million in token sales last year. With the coin market still bullish then, the price of the ETH hoard soared to $60 million by this year. However, the petitioners are saying that they did not benefit from the proceeds of the ICO as Hogeg ensured that his company Invest.com was schemed out as well as the partners.
The August 2017 ICO was not the only one conducted by Stox. In February, the crypto startup raised $33 million for Zodiac which the petitioners said that the company received payments for.
In response to the petition, Invest.com Hogeg’s company denies that it was insolvent. The court did not agree with the assertion after viewing evidences before it and has appointed a temporary liquidator. It is not yet clear if criminal proceedings will be filed against Hogeg.
One of the challenges the cryptocurrency industry has faced is frauds perpetrated through initial coin offerings and bounties. Regulators are working to find ways of protecting investors in digital token but are yet to make headway.