July 26, 2018. BERLIN — Switzerland’s financial authority FINMA has announced the opening of an investigation into envion’s Initial Coin Offering (ICO) and replaced the company’s board with a law firm working for the regulator. Trado GmbH, a company representing the founders’ interests in the company, won an injunction against the CEO and board member Matthias Woestmann via his company Quadrat Capital for breach of contract on June 21st. The founders believe the investigation to be a positive development for both investors and for the founders and will provide greater protection to ensure that ICO funds be used according to agreements made with investors.
FINMA has not yet contacted the founders directly, but have indicated that Switzerland’s banking laws may have been violated. Woestmann and his Swiss lawyer were responsible for setting up the ICO’s legal framework in Switzerland as per Woestmann’s request. That framework is now under review in order to determine whether or not envion fulfilled all the regulatory requirements necessary prior to accepting deposits from investors for the 30-year security which was issued in the form of EVN tokens.
According to their website, FINMA has already acted by replacing envion’s board with Swiss-based law firm GHR while the company is being investigated. Matthias Woestmann and newly appointed board member Marc Gurov may no longer act on behalf of the company without consent of the investigators. FINMA will determine if the ICO was conducted legally and whether the current board is fit to manage envion. The action leaves Woestmann further restricted from causing harm to envion’s assets beyond last month’s ruling by the Berlin Commercial Court forced the CEO to obtain approval from the founders for any significant company actions.
The 3-judge panel ruled further that actions by the current majority shareholders have damaged the company and its assets. Envion has yet to use the $100 million in funds raised from the ICO to build mobile data centers while under the current ownership. Over 35,000 people invested in envion hoping to share in profits from the company’s mobile cryptocurrency mining units which operate on overcapacities from renewable energy. It is estimated that millions of dollars in profits have been lost due to the delays in operating the company.
Previous announcements by Woestmann indicated that he was in contact with FINMA regarding his false claim that the founders issued illegitimate tokens. These claims were rejected by the Berlin court as unsubstantiated despite the submission of audits and documents to the court by van Aubel’s law firm. The founders believe the findings of the Berlin court will be confirmed by FINMA should Woestmann’s false claims be considered as part of the investigation.
Regulatory compliance factored heavily in the founders structuring of the company and ICO. The envion ICO was the most compliant in history, backing their cryptocurrency token with a traditional financial instrument and issuing a prospectus more commonly seen with an IPO for their investors. The founders are exceedingly confident that FINMA will find their conduct to be in accordance with regulations and that the illegal actions carried out by Woestmann, van Aubel, and von Falkenhausen—including the failure to manage the company towards the goals spelled out in the whitepaper—will be exposed and punished along with any other irregularities stemming from the company set-up performed by Woestmann.
Trado looks forward to a productive cooperation with FINMA and will continue to fight for the rights of investors. “Regulators have a valuable role in enforcing the rights of token holders and the founders are eager to see FINMA use its authority to protect investors,” said Michael Luckow, CEO of Trado GmbH which represents the interests of the founders.