Swiss regulators have ruled that the crypto mining firm behind the $90 million ICO in 2018 participated in illegal activity. Specifically, Envion AG unlawfully received public deposits from 37,000 investors according to the FINMA regulatory authority.
Based in Zug, the company is now being liquidated, hopefully, to compensate investors.
Delusions of Grandeur
The project started out with great potential. To most onlookers, it seemed like a genuinely promising opportunity in a space rife with half-baked ideas. A high-functioning cryptocurrency mining unit that users could buy shares in was the basic concept.
With an experienced CEO, solid partnerships, and what appeared to be a working product in production, the stage was set. It wasn’t to be.
The project fell apart after what was described by many as a hostile takeover on the part of Matthias Woestmann, the CEO.
The founders accused Woestmann of squeezing them out of the company and embezzling funds. They set up a website to communicate with investors. Suddenly a relatively unknown figure, Michael Luckow, seemed to be a crucial member of the team.
Meanwhile, Woestmann accused the founders of printing off 40 million excess tokens (later saying 20 million) and selling them, taking the money for themselves. This is the reason, he claims, that he pushed them out.
The founders accused Woestmann of changing aspects of the ICO prospectus, which appeared to be true.
A complaint was filed in Germany and Swiss regulators also began working on the case.
The case has dragged on for over a year, with no end in sight. Last summer, 6 months after the ICO, a court ruled in the founders’ favor.
The court ruled that Woestmann had illegally breached his contract, colluding with Thomas Van Aubel to take over the company. The company shut down and was given to a liquidator in Zug, Switzerland. While Woestmann lost that particular court case, many investors have also laid the blame at the founders’ feet.
When will Laurent Martin face justice? With the first court dates now confirmed, yet another lie is exposed. No single investor lawsuit has been rejected. And yes, Trado is dragged to court by #Envion investors. pic.twitter.com/ByWuxMHt9V
— Envion Watch (@EnvionWatch) March 27, 2019
All $90 Million Illegally Received
The most recent development finds that all funds of the January 2018 ICO were received illegally. Envion AG received $90 million USD from over 37,000 investors without the necessary statutory license. FINMA state that Envion AG “seriously violated supervisory law”.
Investors bought EVN tokens with US dollars, Ethereum, and Bitcoin. The prospectus does not meet minimum statutory requirements, and the company did not perform the mandatory internal audit as required.
According to FINMA, the crypto assets and USD that investors sent Envion AG make the company liable for accepting public deposits for the Banking Act. This requires a banking license, which Envion AG does not have.
The firm is now bankrupt.
Woestmann and Founders Comment to CCN
Speaking to CCN, Woestmann pointed to the FINMA press release and stated that he was not personally responsible for any illegal activity. He was careful not to acknowledge that such activity took place.
Even if rules were violated, it was not the result of personal wrongdoing. Management cooperated with authorities to avoid further damage. All together this is the reason why there are no sanctions against the individuals and the case ends here.
Founder Martin Laurent also replied, saying:
The founders have not engaged in any illegal activity and the press release does not imply explicitly or implicitly that they did. Matthias Woestmann and his Swiss lawyer were responsible for the set-up of the legal framework for the ICO including the prospectus.
The Envion scandal was one of the worst in fundraising history, a cautionary tale to new investors entering the space.