Royal Canadian Mounted Police freeze assets of Vanbex founders and investigate alleged fraudulent initial coin offering (ICO).

The founders of Vancouver-based blockchain consulting firm Vanbex have had their assets frozen while the Royal Canadian Mounted Police (RCMP) investigate an alleged fraudulent initial coin offering (ICO).

According to a court document published in mid-March, Vanbex founders Kevin Hobbs and Lisa Cheng raised money through the ICO for a cryptocurrency that they had no intention of developing, instead using the funds for their own personal gain.

The company, which was referred to as both Vanbex and Etherparty, is alleged to have been nothing more than a shell company set-up to trick investors. Large returns were promised in return for investment in its Etherparty (FUEL) cryptocurrency, which was touted as being the basis of an ecosystem for the company’ smart contracts.

According to the court documents, over $30m Canadian dollars were raised (approx. $22m US) in the ‘ICO’ – coinciding with a very noticeable increase in the founders’ personal wealth.

Apparently, the RCMP launched its investigation of both the company and the founders in May 2018, and Hobbs and Cheng have now had their accounts frozen, their shiny new Land Rovers seized, and been ordered not to dispose of their condominium.

The court document lists real estate and vehicles allegedly purchased with the funds raised by the ICO, and also states that Hobbs used some to fund his gambling habit. It also highlights the fact that Hobbs himself has a criminal record including money laundering and drugs trafficking.

It should be noted that Lisa Cheng has vigorously denied the allegations, stating that they are the result of false claims by a former contractor, and pointed out that Vanbex’s business accounts have not been frozen. As to be expected, Etherparty was down substantially on the news.

AYO.NEWS says:

Whilst we certainly hope that Lisa Cheng is telling the truth and the whole mess is simply due to false allegations by a disgruntled former contractor, the fact that one of the company founders has a criminal history of money laundering doesn’t look good. Of course, at this stage the allegations remain just that, and the matter will be decided by courts in due course, but it is at least reassuring that the Canadian authorities are being so proactive on the matter.

Just three weeks ago AYO.NEWS reported that OneCoin founders Konstantin Ignatov and Ruja Ignatova were arrested at Los Angeles International and charged with multiple fraud and money laundering offences (read more). As we have said time and again, thankfully the ‘Wild West’ days of cryptocurrencies are well and truly over.