A Chinese cryptocurrency investor has filed a NIS 17 million lawsuit (about $4.6 million) against Moshe Hogeg and STX Technologies Limited (also known as Stox) alleging that the company’s owner Hogeg misappropriated millions of dollars worth of cryptocurrency invested in the company.
According to the lawsuit, filed on January 24 in Tel Aviv District Court, the investor, Zhewen Hu, invested a total of about $3.8 million worth of the virtual currency Ethereum in the Stox prediction market platform on the basis of the company’s promises and commitments in its white paper, which is a kind of prospectus that cryptocurrency companies make available to potential investors ahead of an initial coin offering (ICO).
According to the lawsuit, the Stox white paper claimed that if the firm were able to raise $30 million worth of Ethereum, it would invest all of the money to develop its prediction market platform and make it successful, thereby hopefully increasing the value of Stox tokens in secondary markets.
The August 2017 ICO of Stox raised $34 million. However, the lawsuit claims, Hogeg only invested $5 million of this total in the company and used the rest to invest in other ICOs, like that of Telegram. In addition, claims the lawsuit, Hogeg sold his own tokens in Stox before the earliest date when he said he would do so, thereby devaluing the tokens of other investors.
In November 2018, Hogeg was accused in a lawsuit of misappropriating funds in another cryptocurrency company under his control, invest.com. Hogeg has denied any wrongdoing in both cases.
Hogeg, one of Israel’s highest-profile cryptocurrency entrepreneurs, has in recent months gone on a multi-million dollar spending spree. On June 20, 2018, it was reported that he had purchased $19 million of land in the wealthy Tel Aviv suburb of Kfar Shmaryahu from businessman Ilan Ben-Dov, paying for part of it in Bitcoin.
In August, he bought Beitar Jerusalem, one of Israel’s top soccer teams, for $7.2 million.
In October, Tel Aviv University announced that it had accepted a $1.9 million donation from Hogeg to establish the “Hogeg Institute for Blockchain Applications” at the university’s Coller School of Management.