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3 of Israel’s most-hyped initial coin offerings were scams, ex-employees allege

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A lawsuit filed on May 25 by employees of an Israeli venture capital fund alleges that three of Israel’s largest initial coin offerings of 2017 and 2018 were outright scams.

The three ICOs, launched by Sirin Labs, Stx Technologies Limited (Stox) and Leadcoin, collectively raised $250 million from investors around the world.

The plaintiffs claim that none of the three companies ever developed a product as they had promised investors. Instead, the plaintiffs allege, the defendants brazenly appropriated investors’ money for their own personal use.

An initial coin offering is a type of fundraising used by blockchain startups. The investor is presented with a short film about the startup, biographies of its founders, and a “white paper” explaining the technology and business plan in more detail. If the investor is impressed by the startup, he can buy tokens in its initial coin offering. These tokens often give him access to the product and if the product is successful, it is hoped, the tokens will rise in value on secondary exchanges.

The $16.1 million lawsuit was filed by Roee Brocial and Eran Okashi, former employees of the Singulariteam venture capital fund, against Moshe Hogeg, Adi Sheleg, Ido Sadeh Man, Yaron Shalem, Shmuel Asher Grizim, Avishai Ziv (Sonenriech), Singulariteam Holding II and Singulariteam Ltd.

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Neither Hogeg nor any of the other defendants responded to The Times of Israel’s requests for comment. However, in statements to other media outlets, Hogeg has denied [Hebrew link] the allegations and said the lawsuit is an attempt by disgruntled employees to extort him.

Broncial and Okashi, who according to the complaint are on unpaid leave from Singulariteam due to the coronavirus pandemic, allege that the defendants fooled them into thinking that the Sirin Labs, Stox and Leadcoin ICOs were legitimate. As a consequence, they invested their own money and persuaded family and friends to invest in the three startups, and have suffered financial damages and psychological trauma as a result, they claim.

Okashi was an accountant for companies under the Singulariteam umbrella, while Broncial was officially employed by Sirin Labs but effectively served as a personal assistant to Singulariteam’s largest shareholder, Moshe Hogeg, the lawsuit alleges.

Hogeg, a startup entrepreneur who emerged from obscurity in the early 2010s, is best known for attracting celebrity investors to his startup ventures, including Mexican billionaire Carlos Slim, film star Leonardo Dicaprio and Kazakh oligarch Kenges Rakishev. Critics have described Hogeg as a “serial failed entrepreneur” who manages to attract investors through good PR and uncritical articles in the media. Hogeg is also the owner of the Beitar Jerusalem soccer team.

Hogeg has been sued multiple times by investors of various ventures who........

© The Times of Israel

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