Horizon State lost a fifth of its market cap just hours before the company officially announced it will cease operations due to a legal case in Australia.
In the shock development, blockchain-based voting platform Horizon State has blamed the prohibitive cost of fighting an Australian legal battle for its collapse.
In the hours prior to the announcement, the price of Horizon State’s Decision Token plunged almost 20%, raising questions over whether some traders had foreknowledge of the announcement..
The news was announced to the 2500 members of its Telegram group at 11:17 am by which time it had already lost 18.4%.
The announcement was poorly handled: Horizon State did not Tweet it and the blog had no mention of it as of 3 pm this afternoon.
By the time the news was posted on Horizon State’s Facebook page around noon the token was down 40%. The Horizon State website went offline shortly afterward.
With a heavy heart…
“It is with a heavy heart that we have made the decision to shut our doors,” the announcement read.
“While we can’t reveal many details of the cause, we can at least say that it has nothing to do with the business – which has been taking consistent strides forward to new heights – and everything to do with a recently-served legal case in Australia.
“The estimated costs to challenge this case, and potentially proceed through the mediation process to reach a settlement is an eye-watering expense will see the business become insolvent, and ultimately force its closure.
“We have in good faith explored all possible avenues to resolve the issue outside of the legal system in good faith to this time.”
We are excited to announce changes to our #governance model, which to us represents a major step forward in building the strong foundation needed for us to expand to a global audience. https://t.co/KHsLgRU9dJ pic.twitter.com/92D4Ri681x
— Horizon State (@HorizonState) August 13, 2019
Co-founder had just returned
The news comes just days after Horizon State announced changes to its governance model and the return of co-founder Jamie Skella.
That announcement has since been removed from the company’s blog.
Micky contacted Horizon State to confirm the announcement was legitimate.
Chief Product Officer Andy Ellis told Micky he and the team were “absolutely devastated” but was unable to comment further.
“We’ve shared what we’re willing to share and without legal advice, we can’t share anything else,” he said.
The news comes as a shock, as in July Ellis had told Micky the company was “flat out with demand” from new clients including a council, a political party, and Housing New Zealand.
Horizon State’s Telegram group is abuzz with rumours the lawsuit comes from former CEO Oren Alazraki.
Users have posted messages that appear to have been forwarded from Stephen Cornwell, the former Technology Lead for the company.
Elsewhere there is unconfirmed speculation the case might involve the Australian Securities and Investments Commission pursuing Horizon State for being an unregulated security.
In late May ASIC updated its guidance on cryptocurrencies indicating that it believed many cryptocurrencies fall under the definition of financial products and require an Australian Financial Services License.
It suggested some tokens may fall within the definition of a security and many ICOs could fall under the definition of a Managed Investment Scheme – all of which require strict regulatory compliance.
— Rory (@roryhighside) August 19, 2019
Horizon State community responds
Horizon State’s community was devastated by the news – with many querying the price plunge.
“The massive sell-off prior to this announcement was obviously just a coincidence, right HST?” asked Duane Ober on the Horizon State Facebook page. “Sure would be a shame if ASIC looked into it.”
On Twitter, Crypto Plankton wrote: “The biggest question that needs answering is why HST dumped hours before @HorizonState announced it was closing doors.”
the biggest question that needs answering is why HST dumped hours before @HorizonState announced it was closing doors. Anyone who ever shilled this deemed-to-fail project should be held accountable
— Crypto Plankton (@Crypto_Pl3nkton) August 19, 2019