Outside Source
Blockchain startup Lygon — backed by International Business Machines and other prominent supporters, including major financial institutions — has gone bankrupt.
The Australia-based company’s debt hovers at around $14.3 million, according to news platform news.com.au.
Per a statutory report filed with the corporate regulator in late 2023, Lygon entered liquidation just five years after launching.
Lygon, headquartered in Sydney, has subsidiaries in New Zealand and Singapore. The firm also captured the attention of the banking community.
Established as a joint venture by ANZ, CBA, Westpac, IBM, and Scentre Group, the company aimed to revolutionize the digitization of bank guarantees through blockchain technology.
Focused on streamlining the process, Lygon sought to eliminate the cumbersome practice of couriering paper documents for bank guarantees, ultimately saving time and money.
The success story gained significant media coverage, including reports in The Australian Financial Review and various trade publications, highlighting its $12.75 million raised in a crowdfunding campaign.
However, the narrative took a downturn just over a year later. In June 2023, Lygon appointed administrators, eventually liquidating a few months afterward.
Amid this unfortunate turn of events, a staff member, who not only invested personally but also influenced their family to invest, expressed lamentation over the financial losses.
Furthermore, Russell, an individual who spoke on the condition of anonymity to news.com.au, conveyed that staff are owed a significant amount of money. He described the situation as a sad state of affairs.
Lygon’s intellectual property
In October 2023, Lygon’s intellectual property (IP) was sold to a consortium involving an investment fund and former senior executives, as stated by the appointed liquidator, Trent Hancock of insolvency Hamilton Murphy.
Initially valued at $5.1 million, the firm’s technology was sold for a mere $500,000, representing one-tenth of its initial valuation, and was purchased by some of Lygon’s previous leadership team.
As part of the sale, Lygon was required to change its business name to its Australian Business Number.
Russell expressed disappointment with the sale, noting that it significantly diluted the investments of those involved. He also expressed surprise at the legal aspects of the situation, highlighting that the same leadership team repurchased the assets at a fraction of the original cost.
Russell disclosed that members of his family invested nearly $500,000 in Lygon, though he acknowledged this amount as “a drop in the ocean” compared to the losses incurred by other shareholders.
He asserted that Lygon had conducted a friend’s and family fundraiser, accumulating close to $5 million from staff and their associates, all of which have now been lost.
Crypto chaos
Blockchain liquidation and collapses have been recurring issues in the cryptocurrency industry, impacting investors, creditors, and the broader market.
Last June, Celsius Network, a cryptocurrency lending platform, which also promoted itself as a safer alternative to banks faced several challenges, including a liquidity crisis and allegations of market manipulation against its co-founder, Alex Mashinsky.
Mashinsky was arrested and charged with securities fraud, commodities fraud, and conspiracy to manipulate the price of the Celsius token; CEL.
After a lengthy bankruptcy process, Celsius Network ended its bankruptcy case on Nov. 9, 2023, with a plan to create a new company, NewCo, which will repay customers and creditors.
The plan, approved by a New York bankruptcy court, involved using a mining firm to pay back creditors.
NewCo, the newly established company, was set to receive financial backing from two sources: $450 million in cryptocurrency held by Celsius and a $50 million investment from Fahrenheit, an investment group that acquired the rights to oversee NewCo’s mining and staking operations.
This article first appeared at crypto.news
