Crypto exchange aspirant Byte Power Group has abandoned its Singapore-based developer Soar Labs amid allegations of missing digital currency tokens.
Byte Power (ASX:BPG) and Soar Labs were working together to establish a cryptocurrency exchange in Brisbane, due for first trials at the end of last year.
The exchange would provide “a safer and smarter method to trade Cryptocurrencies for non-technical users” and would allow “a seamless trading process to convert traded cryptocurrencies such as Bitcoin, Ethereum and Soar Coins to Australian dollars”, BPG told investors in October.
But a statement from Soar Labs chief Seth Lim on January 1 sounded alarm bells.
“Selling of SOAR tokens at manageable levels has not been executed and have been issued out to reduce the liability of COMPANY X (debts, backdated to salary directors),” the announcement read.
“In the interest of market protection of SOAR, any and all SOAR token holders and overall integrity of SOAR, this constitutes reckless and negligent actions from COMPANY X and constitutes breach of agreement.”
According to the statement, 213,785,594 SOAR Tokens were suspended, belonging to Byte Power and chief Alvin Phua’s digital wallet.
Byte Power told the market on January 4 that “the current balance of 179,183,168 Soar Coins held by the Company and 34,602,426 Soar Coins held by a Director of the Company have been temporarily suspended based on a number of allegations”.
Australia’s corporate regulator has since questioned the sequence of events with Byte Power.
In response the Byte Power board said they had to deal with the removal of their cryptocurrency coins before they could act.
“The information was not released to the market at an earlier time due to the initial information contained in the email received by the board being regarded as an incomplete proposal or negotiation as well as information that comprises matters of supposition or being insufficiently definite to warrant disclosure,” they told the ASX.
“The board had to deal with the novel issue of cryptocurrency coins being removed from the relevant wallets without authorisation while the board was being misled by the statement of Soar Labs that the Soar Tokens were merely suspended.”
Byte Power Group scrapped their deal with Soar Labs on Wednesday.
“As a consequence of recent events concerning the unauthorised dealing by Soar Labs with property rightfully belonging to Byte Power Pty Ltd, among other things, it has become untenable for BPPL to work with Soar Labs,” they told the market on Wednesday.
Byte Power shares remain in suspension, with last trades at 0.9c before Christmas.
New Malaysian-based developer Noetic Synergy has been appointed to continue work on the exchange, a move chief Alvin Phua told Stockhead it was meant to be.
“Sometimes things just happen for a reason, our new relationship has ended up being commercially a lot more cost-effective,” Mr Phua said.
“Management are working very hard to have all the moving pieces put away so we can focus on the big picture.”
The development of the exchange was on course and would be up and running by April.
Under the agreement, Noetic will deliver all of Byte Power’s functional and technical specification for its exchange including set up services, software implementation, operational management and IT outsourcing.
“With the emergence of new compliance requirements in the cryptocurrency field and the volatile market landscape, the Board has decided to work with a larger organisation with the depth and breadth of experience for enterprise solution,” Mr Phua told the market.
“We are pleased to partner with Noetic with the skills and infrastructure to develop and provide a turnkey solution.”
Shares in the company spiked on the announcement of the exchange back in November, and have been trading between 0.7c and 1.2c ever since.