coindesk.com
Former speed skater Apolo Ohno – the most decorated winter Olympian in U.S. history – is being sued in a California court for his role in an allegedly fraudulent $50 million initial coin offering (ICO).
In a lawsuit filed Aug. 13, attorneys representing a handful of investors in HYB – the native token of HybridBlock, a now-defunct cryptocurrency exchange started in 2017 by Ohno and his business partner, Rod Jao – say their clients were the victims of a fraudulent scheme.
Brian Kang, a Los Angeles-based investor, poured nearly $1.5 million worth of ether into HYB. Other named plaintiffs, including Prasad Hurra, David Kim, David Kwon and Young Jae Kwon, each invested between $70,000 and $250,000 into the scheme.
The civil suit against HybridBlock comes as the U.S. Securities and Exchange Commission (SEC) continues to hunt down fraudsters that took advantage of the largely unregulated initial coin offering (ICO) boom of 2017 and 2018.
From January to June of 2018, Ohno and Jao promoted HybridBlock and its ICO on social media, at conferences, and in interviews, raising an estimated $50 million. But instead of their funds being used to build out the HybridBlock exchange and ecosystem as investors were led to believe, the complaint alleges the ICO was a “mere vessel for Defendants’ personal enrichment.”
Ohno, Jao and their associates are accused of funneling the money into personal accounts and business accounts belonging to Allysian, an unrelated supplement company also controlled by Jao and Ohno.
Farhad Novian and Alexander Gura, the Los Angeles-based attorneys for the plaintiffs, say that Ohno and Jao covered their tracks by claiming to be victims of a hack in August 2019.
According to the complaint, the purported hack was disputed by an electronic asset security company hired by HybridBlock after investors, including the plaintiffs, demanded to know where their money was. A report cited in the complaint detailed HybridBlock’s uncooperativeness during the investigation, including providing a “misleading incident report” and “failing to provide complete screenshots, chat logs and login histories of suspect accounts,” as well as its failure to notify investors or law enforcement of the breach.
After the alleged hack, Jao and Ohno are also accused of creating the Asia Digital Asset Exchange (ADAX) – described as an “automated liquidity protocol that facilitates trades within the Cardano ecosystem” – in May 2019 to acquire the failing HybridBlock and serve as an “exit vehicle” to funnel funds through to themselves.
Novian and Gura told CoinDesk in an interview they are still in the process of serving papers to the defendants, and have not yet made contact with their attorneys.
CoinDesk was unable to reach the defendants for comment at the time of publication.