Vanbex blockchain company faces prosecution over fraudulent ICO

Vanbex blockchain company faces prosecution over fraudulent ICO

Another initial coin offering (ICO) has been found to be nothing more than a fraud. Like many before them, the founders of the Vanbex blockchain services company thought they could get away with a scam surrounding a new cryptocurrency token, but law enforcement officials have dropped the hammer. Bank accounts have now been frozen and property seized, and the company’s founders will most likely spend time behind bars.

Kevin Hobbs and Lisa Cheng launched an ICO for Canada-based Vanbex in 2017, offering a token called FUEL. The ICO raised around $22 million in fiat and crypto, with the company asserting that the money would be used to develop a new smart contract system dubbed Etherparty. It billed the ICO as a certainty for seeing huge returns and that “the value of the FUEL token would increase dramatically.”

Fast forward to today, and there is still no viable product from Vanbex. According to the civil forfeiture action that was field in the Supreme Court of British Columbia, Hobbs and Cheng “did not intend to develop the products they were marketing but rather [acted] with [the] intention to misappropriate the corporately invested funds raised for their own personal benefit.”

The action further stated, “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.”

On March 14, Canadian Justice J.A. Power authorized the seizure of two Land Rovers and order accounts at the Bank of Montreal frozen. Two accounts owned by Hobbs were targeted that held a little less than $2 million and Hobbs and Cheng were ordered to not use their condominium for financial gain for at least 30 days. Bank accounts associated with the company, however, have not been frozen, according to reports.

Hobbs and Cheng, as well as Vanbex, came under investigation by the Royal Canadian Mounted Police in May of last year. Subsequently, the Canadian Revenue Agency also began investigating the company.

At about the same time the ICO was wrapping up, Hobbs and Cheng went on a shopping spree, purchasing two condominiums, two Land Rovers and leasing a $375,000 Lamborghini. The investigations also revealed that Hobbs took up gambling “domestically and internationally at the high roller level,” at one point withdrawing $1.3 million from British Columbia casinos.

Hobbs already had a criminal record in Canada before Vanbex. He was previously convicted of possession of property that was “criminally obtained” and money laundering.

The pair deny the charges, asserting that it’s all a misunderstanding that will be cleared up. No criminal charges have been filed against the pair yet, but that most likely will change soon.

New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.