Publicly listed ICO advisory firm DigitalX Ltd. has been served an Originating Application and Statement of Claim by a court in Australia by a group of investors over ICOs the company advised on.
The firm has denied the claims and plans to refute all charges laid against the firm, according to the press release.
Australian client files claim against DigitalX
On September 28, DigitalX made an announcement stating that the firm has been served with an Originating Application and Statement of Claim in Australia’s Federal Court.
DigitalX explained in a report that the claim has been filed by clients in relation to an ICO investment for which DigitalX served as an advisor. The firm wrote in its report:
“[DigitalX] denies any claim of wrongdoing and, for reasons that will become apparent as the matter progresses, believes it has strong grounds to defend any claims brought forward by these applicants. As such, the Company intends to vigorously defend this matter and protect [its] reputation.”
The claim against DigitalX is for a combined total of around $1.833 million not including damages, and the legal advisors of the firm are currently reviewing and examining the claims of its client.
DigitalX is a publicly-listed firm that offers advisory services to projects planning an Initial Coin Offering (ICO). It also offers blockchain consulting services and blockchain-related software development.
DigitalX published its annual report to shareholders on 29 September stating that the firm had cash and digital assets which amounted to over $10 million at the end of the 2018 fiscal year.
The reaction of shares prices of DigitalX
Shortly after the firm announced that it is facing a legal claim in an Australian court, the shares of the publicly listed blockchain tech and consultancy firm DigitalX have declined dramatically.
Over the last 24 hours, the share prices of DigitalX dropped by almost 12 percent, consequently trading at 0.083 Australian dollars or $0.06, according to data obtained from the Australian Securities Exchange (ASX).
The wide chasm between the company’s share price at the beginning of this year and today has reached almost 150 percent.
Amidst this year’s price slump, the firm also abandoned its mining operation. Within this period, the firm has also been rebranded as DigitalX as it shifts focus to consumer products which includes a payments app.
Regulatory actions in Australia
The Australian Securities and Investments Commission (ASIC), the Australian market watchdog, earlier this month issued a warning on “misleading” ICOs and crypto-asset funds targeted at retail investors.
In the report, the ASIC revealed that it has stopped five different ICOs which failed to provide appropriate investor protection measures from raising capital since April.
The ASIC announced its intentions to increase scrutiny of cryptocurrency exchanges and ICOs in the country, highlighting the industry as an area of priority through 2022.