Nasdaq-listed know-how agency Xunlei has turn into the topic of a number of class-action lawsuits from buyers who bought the corporate’s digital token, Linktoken. Xunlei is accused of deceptive buyers to disguise an preliminary coin providing (ICO) by way of which Linktoken was distributed.
Xunlei CEO Rejects ICO Allegations
The chief government officer of Xunlei, Chen Lei, has rejected accusations that the corporate misled buyers in an effort to illegally conduct an ICO in China.
Xunlei’s Linktoken was distributed to customers in trade for a contribution of idle web bandwidth, in line with South China Morning Post. Chen Lei has claimed that the Linktoken distribution didn’t comprise an ICO because of the firm not elevating any funds by means of the issuance of the tokens, and because of Linktoken comprising a utility token that isn’t allowed to be traded. “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,” Mr. Lei said.
In October 2017, Linktoken was launched at the side of different efforts by Xunlei to enter the booming blockchain business. Whilst the distribution of the Linktoken seems to have been the catalyst for many weeks of sharp bullish motion, the worth of Xunlei’s inventory has greater than halved since posting 500% positive aspects and setting report highs of $25 USD in November 2017.
Xunlei’s Stock Plummets
Since then, the worth of Xunlei’s shares had plummeted to roughly $10 by early April, prompting some U.S.-based buyers to hunt motion towards the corporate for allegations of giving false and/or deceptive statements relating to the legitimacy of the corporate’s cryptocurrency-related actions between October 2017 and January 2018. Among different allegations, buyers have pointed to the requirement that they buy hardware from Xunlei with a view to share bandwidth and declare the digital tokens in return.
Chen Lei has refuted the allegations, stating “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,” including that “the definition of [an] ICO has to be interpreted in the Chinese market.” Mr. Lei additionally indicated that Xunlei is presently within the strategy of hiring authorized counsel to refute the allegations.
Chen Lei Claims to Support Regulatory Action Against ICOs
Chen Lei additionally criticized preliminary coin choices and advocated for higher regulatory motion to be taken towards such, stating “ICOs are terrible, and give a bad name to blockchain technology. Governments should clamp down on these practices – a crackdown is the only way blockchain can rebuild its reputation.” Mr. Lei added: “We have been very straight on our business practices – we do not sell tokens.”
China’s National Internet Finance Association (NIFA), a self-regulatory physique established by the People’s Bank of China and approved by China’s State Council, carried out an investigation into Xunlei’s token distribution, concluding in January the corporate had evaded laws by way of conducting an “initial miner offering.”
NIFA stated “In the case of Lianke issued by Xunlei, for example, the issuing company in effect substitutes Lianke for the duty to pay back project contributors with legal tender, making it essentially a financing activity and a form of disguised ICO. In addition, with frequent promotional activities and publishing of trading tutorials, Xunlei has lured many citizens without sound discernment into IMO activities.”
Xunlei Shares Bounce After Blockchain Launch
Despite the controversy and ongoing class-action lawsuits, Xunlie’s inventory has bounced in current days following the corporate’s announcement that its “Thunderchain” blockchain platform designed to facilitate the event of decentralized purposes has been launched.
Xunlei’s shares (XNET) are presently buying and selling at $13.46, after retracing from highs of $14 on the 20th of April.
Do you assume that Xunlei will probably be profitable in evading ICO standing relating to its Linktoken issuance? Share your ideas within the feedback part under
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