DigitalX and Shivom sent to mediation to resolve $2.5m lawsuit
Cryptocurrency and blockchain consultant DigitalX was due to front court on Thursday for the first case management hearing in respect of a $2.5 million consumer protection lawsuit — but the matter was referred to mediation.
DigitalX (ASX:DCC) is being sued by a consortium of eight parties for alleged misleading or deceptive conduct under consumer protection law.
DigitalX denies any wrongdoing, and has previously said that that it intends to vigorously defend the matter.
The Statement of Claim filed by the eight applicants with the Western Australian registry of the Federal Court — obtained by Stockhead — revealed it was healthcare blockchain play Shivom at the centre of the lawsuit.
It is alleged in the proceedings that DigitalX acted as corporate advisor to Shivom, providing the company technical expertise, marketing and promotion services and introductions to its network, but that it failed to provide accurate advice, which allegedly caused incorrect representations to be made.
Shivom, launched last October in northern India, has the ambitious plan of “growing to be the largest genomic and health data-hub on the planet”.
On a visit to Australia in March, co-founder Axel Schumacher told the AFR he wanted to raise $US45 million in an Initial Coin Offering “pre-sale” and an additional $30 million in a public sale of its “OMX” digital tokens.
An Initial Coin Offering or ICO is like an initial public offering — but instead of offering shares, an issuer sells digital tokens that can be traded on cryptocurrency platforms or swapped for services.
DigitalX works with companies “to optimise and accelerate their ICO launch” according to the company’s website.
Under the federal court claim, the parties claim they brought significant amounts of OMX tokens under false pretences.
Collectively they purchased 11.6 million OMX tokens for 1,610 Ethereum, which had a value of $2.5 million when purchased, it is alleged.
The initial hearing was scheduled for 10am on October 18, but a day earlier Justice Neil McKerracher ordered that the hearing be “vacated” and the matter be referred to a mediator.
DigitalX has also been ordered to file a defence by November 15.
A new court date will be set if the matter is not resolved in mediation.