The Israeli entrepreneur behind the crypto firm Stox (STX), Moshe Hogeg has repudiated misappropriating investors’ funds in a reply to the lawsuit filed against him. The development is reported by the Online newspaper The Times of Israel on Saturday, Feb. 9.
As media outlets reported earlier in January, Chinese investor Zhewen Hu has sued Stox and its founder for $4.6 million. Hu claims to have invested a total of around $3.8 million worth of Ethereum in an Ethereum-based, open source prediction market platform.
Hu’s expectation was that the successful development of Stox’s prediction market platform would boost the value of the native STX token, as per the lawsuit. Nevertheless, the plaintiff believes that only $5 million of lucratively raised $34 million went to fund Stox.
In addition, Hu alleges that Hogeg used the rest of the amount to invest in other ICOs such as messaging app Telegram’s ICO. It is to be noted that Telegram’s ICO was conducted in April 2018.
Nevertheless, Hogeg’s lawyers mentioned that the Stox white paper is of “a descriptive nature only and not binding,” in a response to the suit filed on Feb. 5. Hogeg’s attorneys concluded that the document did not present any compulsory program and consequently confers no legal responsibility on its issuers.
Notably, Hogeg has denied any unlawful activity, describing the lawsuit as an “extortion attempt,” according to the The Times of Israel. Apparently citing Stox’s contribution terms, he further argues that the STX token is not a security and does not grant any ownership rights in the company.
Additionally, as STX Technologies Limited is a Gibraltar-based entity, Hogeg believes Israel is not the proper jurisdiction to continue with the case.
Hogeg is known for his involvement in several cryptocurrency-related ventures. Interestingly, he founded blockchain smartphone developer Sirin Labs. Furthermore, he served as chairman of LeadCoin, a blockchain-based decentralized lead-sharing network.