The Australian Securities and Investments Commission (ASIC) has filed a civil lawsuit against iSignthis Ltd (ASX: ISX) and its managing director and CEO, Nickolas John Karantzis, seeking ‘declarations and pecuniary penalties.’
According to Monday’s announcement, the Australian regulator has slapped an array of charges on the company, most significantly for misleading investors several times and not disclosing the ending of its relations with Visa.
It further blamed Karantzis for his involvement in the alleged wrongdoings and is seeking his disqualification from managing corporations.
Speaking to Finance Magnates, Karantzis said that iSignthis is considering its “position and the allegations regarding the Company’s alleged deficiencies in disclosures.”
“We already note a number of factual issues in the ASIC statement of claim,” he added. “As this is a civil case, we will of course respond via our defence and respect the court process.”
The Acquisitions
The market watchdog has moved to the court based on the tech company’s dealings with its three clients: Corp Destination Pty Ltd, Fcorp Services Ltd, and IMMO Servis Group.
The ASIC alleged that the company failed to disclose material information about its integration with the three entities, thus breaching its continuous disclosure obligations.
“The agreements provided one-off integration and set-up services for trading platforms,” the regulator stated. It further alleged that “the revenues derived under the agreements resulted in iSignthis achieving performance milestones which caused the allocation of 336,666,667 performance shares, a substantial majority of which were allocated to the directors of iSignthis, including to Mr. Karantzis.”
The company already admitted to its “mistake” in November 2019, for misclassification of most of its half-year revenue till June 2018. Out of the reported AUD 5 million in revenue, A$ 2.9 million came from integration services, which are one-off and non-recurring.
In a 2018 analyst briefing, Karantzis allegedly stated that only 15% of iSignthis’ H1 2018 revenue came from one-off integrations, but, according to ASIC, this figure is 75%.
ASIC earlier flagged two of the previous clients of iSignthis as scams, one of them was linked to the notorious iTrader online trading scheme.
Additionally, the Australian regulator is blaming the company for the failure to disclose the end of its relations with the payment processing giant Visa earlier this year.
At that time, Visa said that “iSignthis is not operating appropriate programs to manage Anti-Money Laundering and Risk.”
iSignthis Hitting Back
The ASX suspended trading of iSignthis shares on the stock exchange in October 2019, citing several reasons, including media speculation, volatility in ISX’s share price, and the allegations of providing services to cryptocurrency exchanges.
The tech company is now claiming massive damages from the stock market operator. As Finance Magnates reported, iSignthis is claiming additional damages of $200.7 million, on top of previously claimed $264 million.
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