ASX-Listed DigitalX Hit With Legal Action Over ICO Involvement

Shares in the publicly listed blockchain tech and consultancy firm DigitalX have slumped after it revealed it is facing a legal claim in an Australian court.

In an announcement to the Australian Securities Exchange (ASX) Friday, the firm says it has been served with an Originating Application and Statement of Claim in Australia's Federal Court, which has been brought by a group of investors in an initial coin offering (ICO) to which it was an advisor.

The parties are claiming roughly US$1,833,077 plus damages, the company indicates.

DigitalX says it is currently reviewing the claim with its legal team, but it "denies any claim of wrongdoing and, for reasons that will become apparent as this matter progresses, believes that it has strong grounds to defend any claims bought forward by these applicants."

DigitalX states:

"As such, the Company intends to vigorously defend this matter and protect the reputation of the Company."

As the news broke, shares in the Perth, Australia, and New York-based firm had dropped from a daily high of AUS$0.092 to AUS$0.08, at press time.

The company, which provides ICO and blockchain consulting services and blockchain software development, started off as a bitcoin mining business called DigitalBTC and was one of the first publicly listed bitcoin companies, launching for trading on the ASX back in 2015.

It abandoned mining the same year, amid a price slump at the time, and rebranded as DigitalX a month later as it shifted focus to consumer products including a payments app.

Today's news is not the first time the company has faced legal trouble and, in July 2016, its co-founder, Zhenya Tsvetnenko, resigned after he was indicted by the U.S. government for his alleged involvement in a fraudulent text messaging scheme.

ASX image via Shutterstock