• Zhewe Hu, a Chinese Investor, is suing Stox, a blockchain investor firm, for breach of contract
• Hu claims that only $5 million of the $34 million raised for Stox’s predictive Platform was used for the project
• Lawyers for Stox’s owner claims that the white paper for Stox was only descriptive and not legally binding

While cryptocurrency and blockchain are making daily strides towards being legally recognized all over the world, certain aspects of the technology, such as smart contracts, are still having their validity under debate. For Chinese investor Zhewen Hu, this legal complication could end up costing him millions as an Israeli investor is claiming that whitepapers are not legally binding in a new lawsuit put forward by Hu.

Investor funds misappropriated

Zhewen Hu is surreally in court with Stox, a blockchain investment firm and Moshe Hogeg, the founder of Stox. The lawsuit alleges breach of contract and misappropriation of funds. According to Hu, he had invested a total of $3.8 million worth of Ethereum in Stox. The investment was made on an open-source prediction platform that is owned by Stox.

As of the time that the investment was made, the understanding was that the funds being raised to would be used to develop the prediction platform and that as a result, the Stox native token, STX, would receive a boost. A total of $34 million was raised eventually, but Hu says that only $5 million was actually put towards developing the platform, which is a breach of contract.

Instead, the rest of the funds were used to invest in other ICOs such as Telegram’s April 2018 ICO.

Whitepapers ‘not legally binding’

In response to the lawsuit, Hogeg’s legal team has brought into question the legally binding nature of white papers, which is what the agreement was based on.

According to them, the Stox White paper are merely descriptive and thus, are not legally binding and as such, Hogeg and Stox have no legal obligation towards Hu. Moreover, Hogeg’s team has referred to the lawsuit brought forward as nothing by an extortion attempt. They further noted that the STX Token is not a security token as such, investing in it doesn’t grant anyone partial ownership of the firm and cite the Stox’s contribution terms.

The lawsuit was brought in Israel, which Hogeg says is inappropriate because STX Technologies Limited is a Gibraltar-based entity.