Lygon, a blockchain startup backed by International Business Machines and other major backers including major financial institutions, has gone bankrupt.
The Australia-based company has about $14.3 million in debt, according to news platform news.com.au.
Ligon went into liquidation just five years after its launch, according to a statutory report filed with the corporate regulator in late 2023.
Headquartered in Sydney, Lygon has subsidiaries in New Zealand and Singapore. The company has also attracted the attention of the banking community.
Established as a joint venture between ANZ, CBA, Westpac, IBM and Scentre Group, the company aimed to revolutionize the digitization of bank guarantees through blockchain technology.
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Focused on streamlining processes, Lygon sought to eliminate the cumbersome practice of sending paper documents by courier for bank guarantees, ultimately saving time and money.
The success story garnered significant media coverage, including reports from The Australian Financial Review and various trade publications, highlighting the $12.75 million raised in the crowdfunding campaign.
However, the narrative began to decline after about a year. In June 2023, Ligon appointed administrators and eventually liquidated a few months later.
In this unfortunate situation, an employee whose investment not only affected him personally but also his family expressed regret over the financial loss.
Additionally, news.com.au’s Russell, who spoke on condition of anonymity, said employees were owed significant sums of money. He described the situation as a sad one.
Ligon’s intellectual property rights
In October 2023, Ligon’s intellectual property (IP) was sold to a consortium that included investment funds and former senior executives, as appointed liquidator Trent Hancock of Hamilton Murphy said.
Initially valued at $5.1 million, the company’s technology sold for just $500,000, a tenth of its initial value, and was purchased by some of Lygon’s former executives.
As part of the sale, Lygon was required to change its business name to an 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 said his family had invested nearly $500,000 in Lygon, but he admitted this amount was “a drop in the ocean” compared to the losses suffered by other shareholders.
He claimed Lygon had raised nearly $5 million from staff and colleagues by hosting fundraisers for friends and family, all of which has now been lost.
Cryptocurrency Confusion
Blockchain liquidations and collapses are a recurring problem in the cryptocurrency industry, impacting investors, creditors and the broader market.
Last June, cryptocurrency lending platform Celsius Network, which billed itself as a safer alternative to banks, faced a number of challenges, including a liquidity crisis and market manipulation allegations against 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 Networks plans to exit bankruptcy proceedings on November 9, 2023 and form a new company, NewCo, to repay customers and creditors.
The plan, approved by a New York bankruptcy court, involved using mining companies to repay creditors.
The newly formed company, NewCo, was expected to receive financial support from two sources. It includes $450 million in cryptocurrency held by Celsius and a $50 million investment from Fahrenheit, the investment group that acquired the rights to oversee NewCo’s mining and staking operations.