Shareholder confusion as Southern Cross Payments de-lists after 30 month+ court case with the ASX itself

Southern Cross Payments (ASX:SP1) has angered shareholders today after announcing it will de-list off the ASX following a 30-month-plus court battle with the operators of the Australian bourse itself. 

In late 2019, the company, then called iSignthis (ISX), had trading in its shares suspended by the ASX. Southern Cross responded by taking the ASX to Federal Court on 5th December in 2019. 

Individual shareholders in Southern Cross used an on-line share chatroom today to voice their frustration at funds now unrecoverable, with one user describing the saga as a “slow motion rug pull.” 

Multiple users have taken to the forum to inquire as to whether their funds will be subject to a class action. At least one user has called for CEO John Karantzis to be “indicted.” 

It’s worth going over a timeline of events here. 

It started with some questions

Ultimately, the ASX questioned business practices being employed by iSignthis (ISX), and its observance of financial reporting obligations. 

Questions regarded:

• Which websites its customers must use

• Whether or not ISX was involved in crypto trading activity

• Why ISX chose particular banks in Europe to deal with 

• How much revenue it made per each country it was operating in

Overall, the ASX was left with uncertainty over the integrity of the company's operations.

In March 2020, the bourse operator said ISX had not responded to the former's "please explain" in the time set forth, nor did it apply for an extension for more time to answer. 

Escalation of damages

By August 2020, ISX was asking the ASX for damages of $264m. 

At the time, Karantzis told shareholders it was up to the ASX to provide evidence of wrongdoing by ISX. 

One month later, in September 2020: ISX was now seeking $464.7m from the ASX. 

Visa boot gets ASIC’s attention

Then, in October, Visa booted iSignthis from participating in the Visa network, where it had been operating in the capacity through a side venture.

Visa’s termination of the deal got the attention of ASIC, the Australian securities regulator, which then commenced its own legal proceedings.

In April of 2021, the AFR straight up implied ISX was involved in money laundering, for which the company managed to eke an apology out of the publisher. 

And then, finally, today 

Southern Cross Payments has today informed the market it will de-list off the ASX. 

In summary, Southern Cross does not appear to be getting the $400m plus it was seeking from the ASX. In the end, the company never actually answered ASX’s questions in full. 

“The parties have agreed that it is appropriate for SP1 to delist, and this will occur on 4 November 2022," a brief announcement read today.

Cut down at its peak: a look at SP1's five-year charts gives context to shareholder frustration, given the long wait. It may also explain why company management held on for so long