Crypto Frontline

Filecoin Faces Legal Issues with VC Investors Part of Its ICO

Filecoin Faces Legal Issues with VC Investors Part of Its ICO
August 20
10:28 2020

Raising approximately $205 during its 2017 ICO had put Filecoin among some of the top-performing blockchain-based projects, but as of lately, the parent company seems to be facing some legal issues with venture capital investors that took part in the Initial Coin Offering.

Even the top crypto companies like Block.one or Tezos are facing legal issues, so it should be no surprise if a company like Filecoin has to go down the same path. The lack of regulation in the ICO industry is showing its teeth and now all the startups need to face consequences, even though, in the meantime, some of them managed to be successful after using the funds raised wisely.

Filecoin faces internal issues

Unlike most of the other ICOs facing regulatory issues with agencies like the SEC or ASIC, in the case of Filecoin, there’s an issue between the parent company and the venture capital investors which had contributed to the ICO back in 2017. More specifically, thy are accusing the project’s leaders of selling digital tokens, that should belong to them.

Based on the latest reports from fortune.com, the dispute is currently in mediation mode and the Filecoin spokesman declined to comment further on the matter. We don’t know yet if the tokens at stake were sold to raise capital for day-to-day operations, or some people aimed to take advantage of high market valuations.

Is Filecoin a successful project?

Filecoin is a powerful and dynamic distributed cloud storage network for your data, designed to store and retrieve data. Its business model is designed to compete with larger players like Microsoft or Amazon Web Services, with the sole difference that it is based on the blockchain technology.

Ensuring decentralization is one of the key features of the network, combining IPFS, a peer-to-peer distributed network protocol, to make a more efficient and secure web, free from corporate control. At a time when antitrust accusations are mounting on big tech companies, Filecoin is a project that provides a different approach for small and medium-sized businesses, that don’t want to depend on other brands they compete with.

However, the latest dispute is not beneficial for the reliability of the company in the short-term. Announcing a resolution should not be an issue in the months ahead, considering it is an internal issue, and sooner or later both investors and Filecoin leaders will need to find a common ground.

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