The Swiss Financial Market Supervisory Authority (FINMA) has announced that the firm behind a $90 million initial coin offering (ICO) took money illegally from investors. Envion AG, a crypto mining company, unlawfully received public deposits from 37,000 investors in exchange for bond-like tokens issued without a licence .The company is now in liquidation and FINMA will take no further action.
EVN tokens were sold for US dollars, Ethereum and Bitcoin, granting the token holders a claim to repayment after thirty years. FINMA judged that accepting these payments qualified as public deposits under the Banking Act, which requires a banking licence.
Additionally, the conditions for the EVN tokens issued in a bond-like form were “not equal for all investors, the prospectuses did not meet the minimum statutory requirements and there was no internal audit unit as required by law”.
No Intention To Damage Investors
Envion’s former CEO, Matthias Woestmann said in a statement that a private FINMA report said investigators could not find any misappropriation of funds, and that it was evident there had been no intention to damage investors.
The project that claimed to provide portable, environmentally clean mining units, fell apart after a hostile takeover by former German TV journalist Woestmann, and in the process, diluted founder holdings from 81 percent to 33 percent. He then transferred a majority of the shares to his lawyer. The founders also accused him of misappropriating funds, pressuring them out of the business and of changing aspects of the ICO prospectus. Woestmann accused them of printing millions of extra tokens, selling them and keeping the profits for themselves.
Envion’s co-founder Michael Luckow tried to salvage the company and a complaint was filed in Germany, soon after, the Swiss authorities began to investigate. The courts ruled in favour of the founders saying that Woestmann had illegally breached his contract. The company was closed and handed over to liquidators in Switzerland.
Woestmann added that the end of the proceedings against him was a “clear signal” and that the board of directors was therefore “totally exonerated”. He hopes that the Zug bankruptcy office will “do everything possible” to return the money to investors.
FINMA cannot provide information regarding the financial situation of Envion AG as the bankruptcy proceedings are controlled by the Bankruptcy Office of Zug.