- Jarrad Hope and Carl Bennetts, the co-founders of Status Network, cannot be located
- The Status Network ICO from 2017, which raised over $100 million, was allegedly illegal
- Enraged investors have filled a complaint against Status Network in April as part of the lawsuit storm later named the ‘Red Wedding’
Status Network is a software development start-up, which promised to deliver several Web3 applications, including a decentralized chat client and a decentralized web browser. The company conducted an ICO in 2017, selling over $100 million of SNT tokens. As there were little to no news on product development, the investors started investigating and filing lawsuits, demanding back their money. Furthermore, the investigation from two independent counselling firms failed to locate the Status Network co-founders.
The 2017 Status Network ICO was a Sale of Unregistered Securities
Status Network investors have made several efforts in recovering their investment, including filing a complaint against Status Network, Hope, and Bennetts in April 2020. In the complaint investor Alexander Clifford on behalf of all others similarly situated, claims that the Status Network mislead the investors by promoting their SNT token as a utility network token, when it was in fact a security token. The investors are suing to recover their stakes plus damages.
The leadership of Status Network consists of Jarrad Hope, the company’s CEO, and Carl Bennetts, the chief communication officer. While Hope was the one who organized the whole token sale, Bennetts’ role was advertising the ICO.
Status Co-Founders Disappeared “into the fog of internet obscurity”
Both Status co-founders have been largely unresponsive to court appeals, which pushed the plaintiff to investigate. Counselling companies Selendy & Gay PLLC and Roche Cyrulnik Freedman LLP had taken exhaustive efforts to locate the defendants in the case, but the search turned out to be fruitless. The firms describe their efforts in a Monday, August 3, letter addressed at a New York district judge and conclude that the defendants may be planning to disappear “into the fog of internet obscurity.” The letter states:
“Plaintiff’s counsel has undertaken exhaustive efforts to locate both of the Individual Defendants. Plaintiff’s counsel has, among other things, expended significant resources searching through corporate records, social media accounts, websites, blog posts, interviews, government registries, business addresses, and residential addresses both in the United States and abroad. It has also engaged a private investigator to locate the Individual Defendants… Notwithstanding these diligent efforts, Plaintiff has been unable to discern an address for either Individual Defendant.”
Hope’s Twitter Activity Indicates He Values Anonymity
While Bennett’s Tweets are protected and viewable only by approved followers, Hope is quite active, and his Twitter feed is public. It should be highlighted that privacy is also one of the Status’ key principles. Furthermore, Hope retweeted one of the Status’s posts, which says that total anonymity should be every user’s right:
Stay Private. Use Status.https://t.co/mhdshYbjsi pic.twitter.com/xBYPLESFSt
— Status (@ethstatus) July 31, 2020
The investigators also had trouble locating the Status Network’s offices. While the company is registered in Zug, the crypto hub of Switzerland, the investigators were unable to determine “whether Status’s address for service of process in Zug, Switzerland hosts any physical office space or employees, or whether it is simply a corporate mailing address.” Status representative declined to comment on the matter.
Part of ‘Red Wedding’ Class-Action Complaints
The lawsuit filed against Status Network in April is part of this spring’s batch of class-action complaints dubbed the ‘Red Wedding’. The batch consists of 11 lawsuits filled by 42 investors, all represented by New York law firm Roche Cyrulnik Freedman LLP. The complaints, which were filed against industry giants like Binance, Block.one, BitMEX, Tron Foundation, and others, seek over $1 billion in investment refunds and damages in total. Every lawsuit from the ‘Red Wedding’ batch states that investors were misled into buying unregistered securities.
You can also read our recently published article, in which we reveal the basic things you should consider before launching an ICO in 2020 in order to avoid legal trouble.