April 01, 2019. | AtoZ Markets - The Canadian police have frozen the assets of the founders of blockchain services company Vanbex, as a precaution in the 2017 Vanbex ICO investigations that are going on for fraud claims.
The investigations had started in 2017 against an initial coin offering (ICO), that gathered raised $22 million, which was said to have been a scam.
The court documents dated March 13 read that the company, led by Kevin Hobbs and Lisa Cheng, could raise $30 million CAD (about $22 million) worth of fiat and cryptocurrencies through the sale of a token named FUEL.
The token would be usable a forthcoming smart contract system called Etherparty, as Vanbex told investors then, claiming that “the value of the FUEL token would increase dramatically,” as civil forfeiture action filed in the Supreme Court of British Columbia documented.
However, Vanbex did not develop any “useable products”, with a prior intention to misappropriate the corporately invested funds raised for their own personal benefit,”, as per the court filing.
“FUEL tokens became virtually worthless in dollar value while not being capable of use in the non-existent smart contracts system or for any product or service other than a cryptocurrency coin creating service called Rocket,”, claimed the director of civil forfeiture at Canada’s Ministry of Attorney General.
Until press time, no criminal charges have been filed and the company directors Kevin Hobbs and Lisa Cheng denied the fraud claims, as per media resources, stressing that Vanbex is cooperating with the authorities.
Sudden prosperity and luxury and criminal record!
On the other hand, the founders denied that they had promised about the value of FUEL tokens, saying “the tokens integrate bitcoin and Ethereum and the value of any currency is beyond any company or individual’s control, obviously. … Fuel tokens pay for transaction fees on the network for Smart Contracts deployed through our architecture.”
On its turn, the Royal Canadian Mounted Police (RCMP) had begun investigating Vanbex and its founders for fraud concerns in May 2018 and the Canadian Revenue Agency subsequently began a tax probe, as per the filing.
The investigations unveiled that Hobbs spent some of the misappropriated funds on gambling “domestically and internationally at the high roller level,” according to one of the filings.
From September 2016 to March 2018, he withdrew a total of $1.3 million from casinos in British Columbia, one document alleges. In November 2017, the state-owned British Columbia Lottery Corporation put Hobbs on a “watch list,” preventing him from buying in at any of its casinos without proof of the source of his funds.
The filing also revealed that the founders “acquired sudden and substantial personal wealth” all of a sudden, purchasing two condominiums around their ICO time , one in Vancouver and another in Toronto, for about $3 million each and two Land Rovers, and renting a Lamborghini worth $375,000 USD for a three-year term contract.
On the top of the above mentioned, Hobbs has a criminal record in Canada as the probes showed. Possessing criminally obtained property and money laundering in 2008 were in the record, for which was sentenced to nine months, in addition to 30 months in prison growing and trafficking in marijuana in 2009.
In 2005, he was busted for the possession of drugs in New York, which gave him a sentence of a year in prison, according to the investigation papers.