ABTCoin, a digital currency startup that was found guilty of violating federal securities laws, has just told New York federal judge Vernon S. Broderick that they cannot pay the $250,000 settlement that they agreed to pay plaintiffs.
$20 million ICO but financially struggling
On May 12, ABTCoins lawyers from Reitler Kailas & Rosenblatt LLC wrote a letter to U.S. District Judge Vernon S. Broderick saying the company was not able to pay the settlement cost that they proposed “due to a change in circumstances.” The lawyers also added that ABTCoin was not able to cover their legal costs, and therefore, Reitler Kailas & Rosenblatt LLC lawyers were requesting to withdraw from the case.
This news comes as a surprise considering that ABTCoin raised more than $20 million in its 2017 initial coin offering (ICO). Before hosting a token sale, ABTCoin told potential investors that it was going to use the funds that they raise to create “the fastest blockchain in the world.” However, upon release, the ABTCoin blockchain was not able to accomplish the technological achievements they had marketed. In addition, the ABT blockchain did not see very much user adoption and decreased in value by 85% by March 2018.
After experiencing ABTCoin’s technological shortcomings, investors in the project took action against the company.
Raymond Balestra, the lead plaintiff in the class-action lawsuit, sued ABTCoin, claiming that they had conducted an unregistered securities sale in 2017. ABTCoin attempted to have the case dismissed, but in March 2019, Judge Broderick rejected ABTCoin’s dismissal bid, saying that the plaintiffs had adequately shown that ABTCoin had violated federal securities laws.
ABTCoin may have done this because they are making a legal chess-move, or maybe ABTCoin is out of money. It looks like the ABTCoin case is coming to a close—but backtracking on the settlement that they proposed themselves was unexpected.
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