​Digital X loses co-founder but gains 185 percent in total revenue for Q4

Zhenya Tsvetnenko may have announced his resignation at Digital X, however, the company's success is not slowing down with total revenue hitting above $16 million for the June quarter.
Written by Aimee Chanthadavong, Contributor on

Digital X chairman and co-founder Zhenya Tsvetnenko has announced his resignation as part of a number of changes to the company's board of directors.

In a statement on Monday, the company said Tsvetnenko will "relinquish" his executive role to pursue "personal interests".

Tsvetnenko, along with two others, is currently being accused by prosecutors in the United States for scheming customers with unsolicited text messages, according to Reuters.

While one of the co-accused Fraser Thompson, an ex-executive at mobile aggregation company Mobile Messenger, has been arrested, Reuters reported Tsvetnenko has not been arrested.

Evelyn Duffy, a spokesperson on behalf of Tsvetnenko, has told ZDNet: "The matter is before the court, and Mr Zhenya Tsvetnenko will be defending all allegations against him".

Other board changes include non-executive director Brett Mitchell stepping down from the board, but remaining as a corporate advisor; and Leigh Travers joining the board as executive director.

Despite losing their co-founder, the company reported total revenue reached record levels over the quarter ending 30 June, 2016, hitting above $16 million, a 185 percent increase on the previous quarter. In June, alone, revenue reached $6.4 million, the fifth consecutive growth month for the firm.

Digital X has attributed the results to the strong interest in bitcoins, driven by global economic uncertainty, increased US investor base, and volatile global currencies due to central banks using so-called aggressive monetary policies.

At the same time, the Australian bitcoin company said its expansion in the global payments market with its blockchain-based Airpocket is gaining traction.

Last year, Digtal X raised AU$3.5 million to fund the development and rollout of AirPocket and after rebranding, Digital X announced its focus would be on the AirPocket platform, saying that the new name and direction represented a strategic change from a focus on bitcoin as a mechanism to store value to a focus on software development.

However, the company did not ditch the cryptocurrency altogether, announcing revenues for the month of April this year surpassed $4 million.

Digital X also reported total working capital including net receivables of $2 million at the end of the June quarter, saying it was due to the development of AirPocket and losses from its mining operations, which have now ceased.

Looking ahead, the company believes interest in bitcoin will continue over the medium term, and believe it will help drive further interest in blockchain.

The company added it plans to seek out more opportunities to form other strategic partnerships across US and Latin America for the Airpocket.

Digital X partnered with telco giant Telefonica to market Airpocket in Latin America via an SMS campaign in May.

The partnership built on an existing distribution and sales agreement the companies signed earlier this year, which gives customers in North America access to transfer funds directly into mobile phone accounts of Telefonica users in Argentina, Columbia, Costa Rica, Ecuador, El Salvador, Guatemala, Mexico, Nicaragua, Panama, Peru, and Uraguay.

"We are starting to make significant inroads into the payment and cash transfer space with Airpocket as the industry acknowledges the key benefits of our blockchain-based solution," Digital X CEO Alex Karis said.

"There isn't simply anything in the market that can match the security, cost, and universal acceptance of the blockchain."

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