DigitalX slumps on ICO court claim

Shares in cryptocurrency-focused DigitalX have fallen nearly 12 per cent today after the company revealed it has been served with a $US1.8 million claim in the Federal Court of Australia.

The claim was filed by a group of investors in relation to an initial coin offering which DigitalX advised on.

The claim is for a combined amount of $US1.8 million plus damages.  

DigitalX shares finished down 11.7 per cent at 8.3 cents each today.

The company said it was reviewing the claims, but denied any wrongdoing.

“While the company and its legal advisers continue to review and examine the claims made, the company denies any claim of wrongdoing and, for reasons that will become apparent as this matter progresses, believes that it has strong grounds to defend any claims bought forward by these applicants,” DigtialX said in a statement to the ASX.

“As such, the company intends to vigorously defend this matter and protect the reputation of the company.”

Business News understands the ICO was not local. 

The news comes after the Australian Securities and Investment Commission last week took action to stop several proposed initial coin offerings targeting retail investors.

“If you raise money from the public, you have important legal obligations,” Asic commissioner John Price said.

“It is the legal substance of your offer - not what it is called - that matters.

“You should not simply assume that using an ICO structure allows you to ignore key protections there for the investing public and you should always ensure disclosure about your offer is complete and accurate.”