Moshe Hogeg sued for NIS 17m over alleged sting

Moshe Hogeg Photo: Yonatan Bloom

"Hogeg clearly planned from the beginning to steal the investment money and use it for his needs," a Chinese investor has claimed.

A Chinese citizen today filed a NIS 17 million lawsuit in the Tel Aviv District Court against three respondents: Moshe Hogeg, head of the Singulariteam investment company; former Singulariteam CFO and current Saga Foundation CFO Yaron Shalem; and the Stox Technologies company. The claimant says he fell victim to "the respondents' well-planned sting, led by respondent no. 1, Moshe Hogeg." Today's lawsuit comes only one month after another legal dispute involving Hogeg ended in a compromise settlement.

Hogeg is a known blockchain entrepreneur and the owner of the Beitar Jerusalem soccer team. The statement of claim alleges that respondent no. 2, Shalem, "is Hogeg's partner and righthand man, and during the time relevant to the claim was CFO and/or was responsible for finances in Hogeg's Singulariteam investment group. It is alleged that Shalem was a partner in the sting, or at least helped Hogeg carry it out.

The statement of claims says that Stox, the third respondent, is a company fully owned and controlled by Hogeg, through which he conducted the alleged sting. Stox last year terminated its activity in Israel and laid off all of its employees.

The price of Stox's currency collapsed

Stox, which developed a prediction markets blockchain platform, raised $33 million in an initial coin offering (ICO) in 2017. The company also raised $8 million from private investors, led by Hogeg's Singulariteam. Stox's cryptocurrency traded around $1.20 following the ICO, but then plunged, and is currently at only $0.02.

The statement of claims alleges, "Instead of Hogeg and Stox fulfilling their obligations and the explicit presentations they made to investors, including the claimant, in the ICO white paper, Hogeg withdrew all of the ICO proceeds from the company ($35 million) and deposited them in his own name or other businesses related to him in violation of a long series of undertakings listed in the white paper, and in any case without doing anything to promote the company's business and objectives, as presented to investors in the white paper."

It is also alleged that Hogeg and the company gave the investors various presentations about the currency, including "a presentation according to which they had information… that in view of the cooperation with Invest.com, the Stox token (digital currency) would be a popular and liquid currency from the beginning of the activity."

The statement of claim goes on to state, "Unfortunately… it emerged in retrospect that the undertakings of Hogeg and the company to the investors, including the claimant, including the undertakings in the white paper and the additional updates, were callously violated by the company, Hogeg, and Shalem, while it was clear that Hogeg had no intention of fulfilling them from the beginning; they were designed solely to make the investors put money into the company in the ICO."

The statement of claim alleges, "It is therefore clear that Hogeg's aim was simply to make an ostensibly 'serious' false presentation in the white paper that would appeal to large and serious investors in order to persuade them to invest large sums, while the 'spoils' would be divided among him and his partners after the ICO."

As if that were not enough, the statement of claim, presented by Adv. Shmulik Cassouto, Adv. Yossy Heazrachy, and Adv. Sharon Sahai, alleges that Hogeg's actions following the ICO "clearly show that Hogeg planned from the beginning to steal the investment money and use it for his needs. In other words, his intention was simply to defraud the investors."

According to the statement of claim, the Chinese claimant, Hozuan, invested $4.6 million in Stox's tokens, including $1.8 million in the ICO (paid for with 7,463 units of the Etherium digital currency) and $2.8 million after the ICO, due to Hogeg's undertakings to the investors in the white paper.

Hogeg: Filing lawsuits has become a system

Hogeg said in response, "Mr. Hogeg or the fund received no notice that a claim had been filed, and first learned of it through the media. Unfortunately, filing lawsuits in Israel against foreign companies in which the fund invested, which are not Israeli and do not operate in Israel, has become a system. We are seeing aggressive pressure being exerted through the media in Israel with the deliberate use of Mr. Hogeg's name as a means of damaging his reputation in an attempt to extort money, although the company involved in foreign. Singulariteam in general, and Mr. Hogeg in particular, will not give in to these corrupt attempts at extortion."

On Tuestday, Hogeg published a "warning" on the "Bitcoin -The Israeli Community" Facebook group alleging, "A substantial sum was stolen from me yesterday through a semi-sophisticated sting, after I wanted to buy a large quantity of Grin over the counter."

Hogeg founded Singulariteam and heads the Sirin Labs startup, whose main product is a blockchain smartphone named Finney equipped with a "cold" crypto wallet for use with digital currencies.

Previous dispute ended in compromise

This is not Hogeg's first trip to court. A month ago, Hogeg was embroiled with 17 shareholders in AOH (known as AnyOption) concerning a merger agreement. The case ended in a compromise settlement.

In a notice to Tel Aviv District Court Judge Hagai Brenner, the parties said that they had reached a settlement on the dispute between them through a short and intensive mediation proceeding administered by mediator Adv. Zvi Bar-Nathan.

The case was first reported by "Globes" when the 17 shareholders in AOH, which marketed binary options and was acquired by Singulariteam group company Invest.com (or IDC), alleged that Hogeg was smuggling IDC's assets , money, and rights to other corporations under his control, or to straw-men representing him, and therefore petitioned for the liquidation of IDC.

Published by Globes, Israel business news - en.globes.co.il - on January 24, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Moshe Hogeg Photo: Yonatan Bloom
Moshe Hogeg Photo: Yonatan Bloom
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