Supreme Court Orders Bynexus Founder to Pay 17.3 Million Shekels
The Supreme Court dismissed Tsiki Fox's appeal, upholding an order to pay 17.3 million shekels to Czech investment firm Springtide Ventures for financial fraud and false reporting.
The Supreme Court dismissed the appeal filed by Tsiki Fox, founder of the medical cybersecurity company Bynexus, upholding a ruling that he must pay 17.3 million shekels to the Czech investment firm Springtide Ventures. The court confirmed that Fox engaged in fraud by presenting fictitious financial reports and false representations to secure millions of dollars in investments.
Court Findings and Appeal Confirmation
Justices Yael Wilner, Ofer Grosskopf, and Yechiel Kasher affirmed the previous ruling by Judge Jacob Sharvit of the Tel Aviv Economic Court. The judicial panels established that Fox orchestrated a deliberate scheme through fabricated documents and inflated metrics to mislead Springtide, an investment arm of the KKCG fund, which invested in Bynexus between 2016 and 2017. Fox controlled Bynexus as founder, CEO, and chairman of the board through his holding company, Dom-Spiro.
Court investigations revealed dramatic discrepancies between reported and actual figures. While Bynexus was marketed as a thriving enterprise with millions in revenue, the company accumulated losses of approximately 7.7 million dollars between 2013 and 2017. For instance, reports for 2017 claimed massive revenues while the actual earnings stood at merely 21,000 dollars, contrasted with multi-million dollar net losses.
Legal Precedent and Business Conduct
Justice Kasher issued a strong warning regarding corporate governance and business ethics, addressing scenarios where third parties collaborate with individuals breaching fiduciary duties. The Supreme Court emphasized that even if allegations regarding Czech representatives were examined, Fox bore primary responsibility as the primary corporate organ involved in the deception.
The court ruled that individuals or entities cooperating in a breach of fiduciary duty may be held liable for resulting damages and required to disgorge profits. Furthermore, the Supreme Court addressed mitigation of damages, ruling that an injured party is generally not obligated to accept settlement offers conditioned on waiving legal claims unless strict, exceptional criteria are met.
In addition to the 17.3 million shekels compensation, the Supreme Court ordered Fox to pay 35,000 shekels in legal costs. Springtide Ventures was represented by attorneys Tal Shapira, Merav Bar-Zik, and Tomer Antchel, while Fox was represented by Doron Afik, Yair Aloni, and Osnat Netai.
