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Another Crypto firm gets sued By investors, CEO ridicules ICOs

A China-based multinational firm, Xunlei, has been accused by investors of dumping them through a crypto fundraising project in 2017.

Chen Lei, CEO of Xunlei, has strongly discredited investors who claim that his firm misled them to invest in a bid to organize a legal ICO project in China. South China Morning Post reported that Xunlei provides a cloud-based platform for sharing digital content.

Although ICO projects demand fiat or popular digital currencies from the investors, yet participants in the Xunlei ICO had to share their idle bandwidth with the project developers against a reward of Linktoken.

The CEO said that his company never treated the distribution of Linktoken as an ICO as it was not meant to raise any capital and investors did not have the power to trade Linktoken for profit. He said, “By making a public offering, really you need to use it to raise money. We have never used a coin to raise any money at all, that’s never our intention.”

Xunlei started its operation in 2017 after the launch of Linktoken.  The company was able to boost its stocks by nearly 500 percent in November after the distribution of its digital assets. As of early April, the company faced a steep decline in the prize of its shares which rested at $10.

The firm is defamed by investors who bought company’s shares when they were soaring high in October 2017. They claim that Xunlei has used a “disguised ICO” to commit fraud with its clients. It has also been said that the China-based tech firm provided false information about its business.

Investors also blame the tech firm for making it compulsory to purchase hardware from Xunlei to share bandwidth and become liable for Linktoken.

In his defense, Lei said, “We are a small capital company, so our stock price does fluctuate, but I don’t think there’s any basis for the lawsuit because we’re operating in China and it is the Chinese law and regulations that we need to observe. The definition of an ICO has to be interpreted in the Chinese market.”

He is also thinking of hiring professional help to settle the matter. He further added, “ICOs are terrible, and a bad name to blockchain technology. Governments should clamp down on these practices – a crackdown is the only way blockchain can rebuild its reputation.”

He ridiculed ICOs and requested the authorities to make stricter laws to eliminate the budding industry. He firmly believes that his firm has “been very straight on our business practices – we do not sell tokens.”

It should be noted that Chinese government has banned all actions related to the trading and the mining of any digital currency. Moreover, crypto technology is already under speculation of many governments who are trying to either tame or destroy the community. It won’t be wrong to say that a warm attitude towards the blockchain technology and a harsh perspective for crypto money has created an environment of confusion and uncertainty in China.

Article written by Clay Space

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Clay is Storyteller, World Builder, Blockchain Entrepreneur. With an academic background in informatics and logistics, Clay spent years in software development and the blockchain industry. In 2012 he became involved in various cryptocurrency-related projects. To know more about Clay, follow him on Twitter.