U.K based cryptocurrency startup, London Block Exchange (LBX) has come under fire following a windup lawsuit filed by a law firm that it owes (Squire Patton Boggs (UK) LLP).
Windup lawsuits are usually filed against a company to recover a debt that it owes and also to prevent the debt from accumulating. In some cases, it could be a sign that a company is under severe financial pressure.
While U.K laws purportedly allow for windup lawsuits if the debt is more than £750 (appr. $968) LBX’s CEO Benjamin Dives told Coindesk that the amount it owes the Squire Patton is £9,900 (appr. $12,787).
Squire Patton reportedly provided legal services to LBX including drafting the company’s terms and condition page. However, Dives claimed that his attention was not drawn to the bill until the law firm got angry.
He also said that the sent the payment to the creditor in less than 24 hours after receiving notice of the lawsuit, although the law firm (the creditor) claimed it was already late, then.
Speaking on whether the current situation means LBX will soon become insolvent or is under financial pressure, he said,
“We’re getting calls from people who think we’re going out of business, but we’re not going into liquidation.”
There Could Be More
Following Dives' claims that LBX was in good financial standing, popular Bitcoin podcaster Peter McCormack challenged the CEO’s statement and made bold claims without providing evidence.
Peter claimed that LBX has not paid its workers since the start of 2019 and also that the firm owes creditors millions of dollars. He alleged that the financial strain was caused by the startup’s inability to raise expected funds from investors after a ‘calamitous ICO.’
Meanwhile, Dives did not respond to the accusations and only said he was advised by lawyers not to do so.