Digital X raises AU$1.62m as co-founders leave profitless firm

Digital X has announced raising AU$1.62 million amid a focus to deliver its AirPocket product, with the fintech company's co-founders departing at the same time.
Written by Asha Barbaschow, Contributor

Australian-listed fintech firm Digital X has announced the departure of co-founders Alex Karis and William Brindise, with existing chairman Leigh Travers to assume the role of CEO.

In announcing the management shakeup, Digital X told shareholders that it has also raised an oversubscribed AU$1.62 million, with AU$350,000 of the cash coming from Australian-based Travers and newly appointed US-based president Neel Krishnan.

"Today marks a new chapter for Digital X," Travers said in a statement. "We have come a long way from our history as a bitcoin group to now.

"The major shareholders and founders have been incredibly supportive of these moves, and I am delighted Alex Karis will continue in a formal basis as an advisor to Digital X to cement further key partnerships in the negotiation phase. From here, the pure focus is delivering the AirPocket product and on our mission of delivering low-cost financial services to the people that most require them."

Digital X has yet to post a profit since landing on the Australian Securities Exchange (ASX) in June 2014 via a reverse takeover of investment firm Macro Energy.

For the first quarter of the 2017 financial year, Digital X reported a $473,000 operating loss, which the company attributed to the hack cryptocurrency exchange platform Bitfinex experienced in early August.

"The hack of two bitcoin exchanges saw the decision to suspend all post-paid customers and suspend Market Making operations," Digital X told shareholders in November.

At the time, it was also revealed that the company had spent $6 million on bitcoin in those three months alone.

Digital X emerged in October last year after DigitalBTC, trading as Digital CC, underwent a name change and shift in business model.

Digital X chairman and co-founder Zhenya Tsvetnenko announced his resignation in July, with the company telling shareholders Tsvetnenko would "relinquish" his executive role to pursue "personal interests".

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

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

Other board changes occurred at the same time, with 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.

Digital X also signed an agreement with international remittance company UniTeller for its AirPocket product.

The company raised AU$3.5 million to fund the development and rollout of AirPocket last year, its app-based cash remittance product. After rebranding, Digital X announced that 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 in order to store value to a focus on software development.

"The bitcoin side of the business has been invaluable for the company to gain development expertise in blockchain-based applications that are truly differentiated from the market," the company said at the time.

"The development of AirPocket applications will see the company achieve success with its patent-pending intellectual property."

Although Digital X is based in Perth, AirPocket is not available in Australia.

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