Helbiz ICO Investors Sues Company Over Proposed Smart Contract Destruction

Helbiz Inc., an Italian-American transportation company and e-scooter manufacturer, is currently facing a class-action suit as investors seek to prevent it from destroying its asset’s underpinning smart contract.

On July 6, a referendum filed by the plaintiffs sought an initial injunction and a restraining order against the firm and its executives. In it, the plaintiffs claimed that such an action could cause significant losses, as their assets are at stake.

Save Investors’ Money

In the referendum, the plaintiffs assert that Helbiz is trying to destroy the smart contracts in a bid to hide losses due to cryptocurrencies and pave the way for its Initial Public Offering (IPO). They add that such an action would constitute a trespass, and at the minimum, an in sanctioned conversion of their physical property.

“The threatened destruction of personal property is a well-established basis for an injunction. Once destroyed, the contract […] can never be restored,” the referendum adds.

Helbiz has had an exciting run-up to this point. The company’s chief executive, Salvatore Palella, is often credited for bringing electric scooters to Italy. However, he also did quite a lot for the blockchain industry.

In June 2019, Italian Transportation Minister Danilo Toninelli granted a decree allowing micro-mobility firms to operate in cities that had committed to an e-scoter trial. Many credit this decision to be an urging from Palella.

An ICO Bust?

Since then, Helbiz has become a surging company, with over 8,000 scooters in Italy alone. The company’s expansion has also gone beyond its home country — it now has offices in Milan, Singapore, Madrid, and New York, amongst others. Helbiz announced in June 2019 that it was working towards an Initial Public Offering (IPO). At the time, the company confirmed that it would conduct a dual listing on the NASDAQ and AIM Italia – an Italian stock exchange that caters primarily to the needs of small, quick-expansion firms.

The ICO for the HelbizCoin came in 2017, with Palella promoting the asset and its associated blockchain platform as a peer-to-peer solution that would revolutionize the ride-sharing economy. With the hype over the sharing economy reaching fever pitch in 2017, HelbizCoin managed to raise almost $40 million through small investors, according to a report.

In their case, however, the plaintiffs claim that Palella had broken the contract that he entered into with the investors at the time of the ICO. Michael Kanovitz, a civil rights attorney at Chicago-based Loevy & Loevy, explained that Palella had planned to use the ICO’s capital to build a “smartphone-based vehicle rental platform” Helbiz would use as a centerpiece for expanding to cars and seaplanes.

The plaintiffs are also accusing the firm of having sidelined them since it announced plans to go public. In part, they claimed that Helbiz had distanced itself from the HelbizCoin, mainly because the asset’s value had dropped by about 99 percent.