Vanbex Sells Intellectual Property

September 9, 2019

Canadian Blockchain Firm Sells Intellectual Property in the Middle of a Criminal Investigation of Its ICO

A blockchain company known as Vanbex, based in Canada, currently finds itself under a criminal investigation, as well as multiple lawsuits due to its $22 million ICO. However, this did not stop the firm from selling its intellectual property to another Canadian company — a cryptocurrency brokerage Hyperion, based in Toronto. So far, neither of the firms has shared details about the sale, such as the price of the sold IP.

However, Vanbex's co-founder, Lisa Cheng, did comment by saying that the acquisition will allow the products and the business models to continue operating under the new management. Meanwhile, Hyperion's CEO, Michael Zavet, also stated that the acquisition of Vanbex's products was a strategic move which will allow the brokerage to focus on a larger market share.

The token in question is known as FUEL, and Vanbex distributed it during an ICO which is now being investigated. According to Vanbex officials, the token will still keep its use cases, such as payment for transaction fees, different services that exist as part of the Vanbex/Hyperion ecosystem, API integrations, and alike. However, the token's investors do not appear to be completely at ease.

One investor even stated that they were hoping that the agreement between Hyperion and Vanbex would have legally-binding elements that would ensure that Hyperion will keep accepting FUEL. As for Vanbex itself, it plans to operate as a consultant firm for other blockchain projects, while it will continue to provide its full support to Hyperion and help its Vancouver offices grow.

While the asset sale seems rather sudden to many, Vanbex claims that this is not the case, and that the companies were negotiating the sale for months. They pointed out that an update from June 25th states that the company is looking to pass its tech products on, and allow them to shed some of the negativity that surrounds Vanbex itself.

Allegedly, Cheng was supposed to lead the new company as the CEO, while Hobbs planned to stay with Vanbex and try to repair the company's image. Hobbs held an AMA session on the same day, stating that the new company that Cheng will be leading is an existing firm that wishes to buy Vanbex's IP. It is currently not known whether the 'new company' that Hobbs has referred to was actually Hyperion, or some other firm. The confusion is further increased by the fact that there was no mention of Lisa Cheng joining Hyperion anytime soon.

Vanbex investigation

When it comes to Vanbex investigation, it was started back in May 2018 by the RCMP (Royal Canadian Mounted Police). Soon after that, the country's CRA (Canadian Revenue Agency) began its tax probe. The authorities moved quickly against the company and its officials, freezing Hobbs' and Cheng's bank accounts, as well as seizing their property earlier this year, in March.

The allegations against the firm state that its founders misappropriated as much as $22 million, which the company raised during its ICO back in 2017. Meanwhile, they did not deliver the products that they promised, which Vanbex officials denied. Further, they claim that there is no evidence that would support these claims, and while this was true at the time — some evidence did appear son after that.

For example, RCMP claims that another company operated by Cheng and Hobbs — Etherparty — got its first preICO contribution back on August 17th, 2017. After this date, there were nine transactions of around $5.5 million, which all took place between August 21st and December 4th of the same year.

Following this, Hobbs withdrew $4.1 million from his own Cumberland account on December 7th, only for him and Cheng to buy a condominium for approximately the same amount of money on the very next day.

The British Columbia Supreme Court ruling on July 19th shows that investors managed to demonstrate how Cheng and Hobbs managed to sell around $5.5 in BTC, which was followed by a spending spree. Vanbex responded to this by stating that there is no proof that the money spent by Cheng and Hobbs came from the ICO, and that Hobbs managed to win it while gambling.

The official allegedly managed to win as much as $60,000 in winnings per month from different casinos that he frequented, but the authorities were not convinced, and neither was the judge. For now, the investigation is still ongoing, while the founders' property is still under arrest.

No end to Vanbex's troubles

This was not the last difficulty that Vanbex and its officials had faced. During the investigation, the company was also hit by a lawsuit filed by two investors who claimed that the company's co-founders also violated Canadian securities law, as their ICO was not registered as a security offering. The investors — Craig Petersen and Andrew Beck — apparently felt misled by this, and each of them spent around $30,000 on the purchase of FUEL. However, due to all the legal issues that Vanbex was seeing, the token's price dropped, and they found themselves unable to sell them.

However, Hobbs claims that the lawsuit is an attempt to blackmail the firm and that the party responsible is Kip Warner, a former employee who reported the company to the police. At the moment, Vanbex itself sues Warner for defamation. As for Warner, he stated that he had problems with getting paid for his work, and that he found it surprising that the company was more interested in advertising than in their product development.

He noticed that there were no engineers, and that everyone was just doing marketing, which made him suspicious. He then quit his job and went to the police with his suspicions, and the authorities started investigating the firm.

Author: Ali Raza for
Cryptocurrency: Ethereum

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