ENVION UPDATE – ICO INVESTORS’ CLAIMS ANALYZED IN DETAIL

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Envion Founders Token Sale Issues

Our Approach


FinTelegram positions itself as a medium for the protection and education of investors with a special focus on crypto investments. We act as carefully as possible in our analyses and reports, as we always assume that all parties involved have their own views and implicitly or explicitly represent these views in all statements. This is a legitimate course of action. Therefore, we do not rely solely on the statements of the parties for our reports, but draw on our own expertise and form our own opinion together with experts. So much for our position and our approach. However, it is always possible that we are mistaken despite the greatest care. In this case, we are happy to correct our view on the basis of facts.

ICO Investors’ Accusations Remain On The Table


We have already reported on the possible impact of last week’s Berlin court ruling on the ENVION case. The ENVION Case goes well beyond the Swiss ENVION AG and the battle for its shares and control. The real issues in this ENVION Case are the ICO and ICO Investors’ rights. Moreover, the ENVION Case is a reference case for a multijurisdictional ICO and crypto-fund raising environment.

It is obvious that some ENVION ICO investors are not too much impressed by this first Berlin court decision. And rightfully so. Yes, the TRADO founder team just won a first court order regarding the ENVION shares. Nevertheless, the TRADO founders too are responsible for the ICO mess created by both founder teams. Investors still feel deceived and misled by both parties to the dispute. In particular, the following accusations are made:

ClaimDescriptionSources
Insider TradingThe mission-critical problems of ENVION AG and the founding teams were not disclosed to ICO investors and the public. Nevertheless, the founders sold their tokens to crypto exchanges with this insider knowledgeEnvion Investors and FinTelegram
Post-Audit Smart Contract manipulationAfter the audit, the founders of TRADO GmbH changed the smart contract several times in their favor and thus made it possible to sell their tokens during the blocking period while other investors were blocked.Guy Mann's Medium posts, BIG Report
Lock-Up infringementThe founders sold their EVN tokens during the 6-month lock-up period even though they said several times on Telegram that this would not happen (see also Smart Contract Manipulation).Envion Investors
False ProspectusThe ICO prospectus contained false and misleading information. TRADO GmbH was not represented, ENVION AG never had IPR and control over the smart contract. ENVION AG was just a shell. FinTelegram and other sources
MMU ProductionMMU mass production has not yet started. None of the 5 MMUs is active, no proof has been delivered that they even exist.Enfion Investors

Investors are not being careless in their accusations, on the contrary. Some of them have joined forces and maintain the envion-investors.org website. This website collects, analyses, structures and publishes all information concerning ENVION AG and the ICO. Based on their analysis, investors conclude that EVN Token Distribution has been conducted properly and in accordance with the information in the published prospectus. In this respect, the accusations made by ENVION CEO Matthias WOESTMANN and the Blockchain Intelligence Group (BIG) of excessive EVN token production – the reason for the illegal capital increase of Envion AG – are not accepted by investors.

However, ICO investors maintain their accusation that the founders around Michael LUCKOW sold EVN tokens worth around US$ 2 million during the 6-month lock-up period via crypto currency exchanges, despite their knowledge of the massive disputes between TRADO GmbH and the board of ENVION AG.

The first EVN Token sale is expected to have taken place shortly after the end of the ICO, the investors claim. Michael LUCKOW admits this sale to EVN Token but says that the realization of the token sale would have been “just” some US$ 2 million and that he would have used the proceeds primarily to continue the operational business, to pay the costs of the token sales and legal expenses. No documents to prove this claim in more detail have been provided to date.

The Smart Contract Manipulations


Some ENVION ICO investors have set themselves the task of closer analyzing the findings of the BIG Report and examining Smart Contract and the procedure surrounding the issue of EVN founder tokens in more detail. And again, those investors are prudent and thorough in their approach. The different versions of the Smart Contract stored on GitHub are analyzed around the timeline of the ICO project. The results of these researches and hypotheses based on them have meanwhile been published in two articles on Medium for further public discussion. The author published these contributions under a pseudonym and was quickly accused by Michael LUCKOW of having a close relationship with Matthias WOESTMANN.

Based on his analysis of the different versions of the Smart Contract on GitHub, the author concludes that the Smart Contract has been manipulated to get the EVN founder tokens out of the wallets during the lock-up period and sell them on crypto-exchanges. Here, the analysis of the investor coincides with the BIG report. The investor also believes that he can prove that the smart contract was manipulated only after the audit in the run-up to the ICO:

1. First draft: 83% current supply / 17% deliverTeamTokens after 6 months (consistent with Backes audit and committed on Nov 27, 2017). At this point all team, company and bounty tokens are all vesting for six months per standard vesting period.

2. Intermediate draft: 90% current supply / 10% deliverTeamTokens
(committed on Dec 11, 2017
 — not sure what this intermediary split means). The important point here though is that vesting is still enforced — no one (not even the founders) can get their tokens until six months after the ICO ends.

3. Final draft: 93% current supply = ICO+founders / 7% = Company + Bounty. More importantly deliverTeamTokens has no time restriction (committed on Dec 11, 2017). The final version of this code is actually completely misnamed.

The founders around Michael LUCKOW have not yet commented on the results of this investors’ research. In this respect, the author’s assertion is uncontradicted. However, we believe that the fact that this ICO investor is discussing his considerations in public shows his seriousness and his determination to find answers.

Insider trading and investor deception


ENVION EVN Tokens have been positioned as security tokens and hence subject to security laws. ICO investors raise the question of insider trading and thus unjustified enrichment by deceiving investors about the actual situation at ENVION AG.

What is ‘Insider Trading’

Insider trading is the buying or selling of a security by someone who has access to material nonpublic information about the security. Insider trading can be illegal or legal depending on when the insider makes the trade. It is illegal when the material information is still nonpublic. Source: Investopia

Insider Trading in Germany (BaFin)

Using inside information is prohibited and deemed a criminal offence. In order to detect insider trading, BaFin analyses data on all securities transactions that banks, for instance, have to report. It also analyses ad hoc notifications and follows up on information from third parties.

Insiders are persons who have knowledge of facts relating to listed companies that are not in the public domain and that could potentially have a significant impact on the share price of these companies, for instance because these persons have come into possession of this inside information in a professional capacity. Source: BaFin

From the information available the fundamental problems between the two shareholder groups started in January or February 2018 already. Although the conflict between the two founding teams had been going on for months, the public was not informed until mid-May 2018 with the WOESTMANN announcement. According to the findings on the Envion Investors website

  • the first founder tokens were moved to HitBTC exchange on Feb 16, 2018, and
  • the last founder tokens were moved to HitBTC exchange on May 8, 2018.

In the view of the published ENVION timeline, the sale of EVN founder tokens may actually have to be qualified as insider trading in accordance with applicable BaFin regulations, irrespective of the violation of the lockup period.

With this insider knowledge, the founders could have sold their EVN tokens on the crypto exchanges in a profit-maximizing way. This procedure undoubtedly fulfills the requirements of insider trading in the first place, if the circumstances were indeed as provided to the public.

 

17 COMMENTS

    • The attached transaction is for 12,673,008 EVN tokens from wallet 0x709ba466946b4e550211a128e64865c2df250692 to 0xEeB9A4DA614f746Ea9297E8386abeE98D37f4e9D.. both wallets are owned by the Founders and not associated to any Exchange. This amount has then been moved to two other wallets which are 0x3e2276395eF7B5BE938B4c38944193D7F2A1016b and 0x86AAe784bed78d9AD096efC52f007b176Fc4B7FC. Still both are not Exchange wallets. The first of which still holds the full balance hence they have not been sold. The second holds a balance of 5,813,106 EVN tokens ( https://etherscan.io/token/0xd780ae2bf04cd96e577d3d014762f831d97129d0?a=0x86aae784bed78d9ad096efc52f007b176fc4b7fc ).

      • Michael, is that really all you have to say? Would be disappointing. The article contains numerous heavy hitting points, and all you state is nothing on a comment, rather the arguments of the article?

        FinTelegram, many thanks for solid investigative journalism and Envion follow ups ?.

      • easy to just say this is obviously wrong and to not clarify why but let people find out themselves.. would suit you better after all this sh*t to tell what part you are referring to as being wrong and why that would obviously be wrong..

      • Michael, you have announced transparency with big words, but not delivered anything outside of a few misleading and distorted press releases which are an insult to everyone’s intelligence. Its in your hand to provide all details about the founder token sale. You have only admitted to it after the community found out and pushed you for a statement. That video of yours is not explaining anything. Please do everyone a favour, and start providing transparency, at last. Else, please don’t complain about the community doing the job for you.

  1. You have purposefully ignored our public comments on these issues. These accusations have no merit and you repeat them to the detriment of your professional reputation.

    A full explanation of the context for selling founders’ tokens is here:

    The prospectus was correctly executed using the smart contract. Further discussion is irrelevant—pandering for clicks at best.

    • „You have purposefully ignored our public comments on these issues„“

      Yes, this is the way, your false explanations should be handled. To be ignored.

      I honestly hope, you will be ask about your activities as an US citizen by your authorities next time you hit US mainland.

    • Laurent, since when are you the authority to decide what is relevant and what is not? It’s investors like me who have a say what is relevant.

      It was you and other Envion parties who have collected our money with an incomplete prospectus and misleading communications. If there is really no proper response from Michael or you on this article, it very much looks like you have been caught.

      Don’t you have any self reflection? Or does your hiring as communications spin doctor not allow any humility, reflection and accept making mistakes?

  2. Dear Guy Mann,

    you say to be an expert IT professional but you seem not to understand what blockchain transactions are.. the attached transaction is for 12,673,008 EVN tokens from wallet 0x709ba466946b4e550211a128e64865c2df250692 to 0xEeB9A4DA614f746Ea9297E8386abeE98D37f4e9D.. both wallets are owned by the Founders and not associated to any exchange. This amount has then been moved to two other wallets which are 0x3e2276395eF7B5BE938B4c38944193D7F2A1016b and 0x86AAe784bed78d9AD096efC52f007b176Fc4B7FC. Still both are not exchange wallets. The first of which still holds the full balance hence they have not been sold. The second holds a balance of 5,813,106 EVN tokens ( https://etherscan.io/token/0xd780ae2bf04cd96e577d3d014762f831d97129d0?a=0x86aae784bed78d9ad096efc52f007b176fc4b7fc ).

    Please learn how to trace the transactions up to the Exchange wallets before so send other unverified claims around.

    Thanks,

  3. The size of founders tokens sale is wrong – the information if you properly follow the trail on the blockchain is detailed on this google sheet shared with the community…

    https://docs.google.com/spreadsheets/d/1dGHvDeuJOXDxwqJB4x1IDSncD4KVljDisFICNgi-7v0/edit?usp=sharing

    The accusation of insider trading is false and addressed in a video by Micheal Luckow here :-

    https://envion-founders.org/envion-founders-explain-team-token-transfers/

    The accusation of selling “locked” tokens however appealing because the tokens do appear to be cclock is not grounds for a successful lawsuit – BECAUSE – nobody has managed to present to the community the paragraph or line in the legally binding prospectus agreed to TWICE by ALL investors which states they shall be locked, therefore no court of law would uphold the accusation they were sold whilst inside of a contractually agreed vesting period.

  4. The attached transaction is for 12,673,008 EVN tokens from wallet 0x709ba466946b4e550211a128e64865c2df250692 to 0xEeB9A4DA614f746Ea9297E8386abeE98D37f4e9D.. both wallets are owned by the Founders and not associated to any Exchange. This amount has then been moved to two other wallets which are 0x3e2276395eF7B5BE938B4c38944193D7F2A1016b and 0x86AAe784bed78d9AD096efC52f007b176Fc4B7FC. Still both are not Exchange wallets. The first of which still holds the full balance hence they have not been sold. The second holds a balance of 5,813,106 EVN tokens ( https://etherscan.io/token/0xd780ae2bf04cd96e577d3d014762f831d97129d0?a=0x86aae784bed78d9ad096efc52f007b176fc4b7fc ).

  5. Luckow (Trado GmbH) and Laurent fighting with nice tactics on all social media fronts. Impressive and misleading in once.

    Repeating non-facts over and over again, makes it not more true. You never show proof. Nobody will believe you, only those few who are manipulated by your fancy communication. You both play a bad game
    – Token movement was not allowed (“”Team tokens are locked 6 months. Do not spread rumors”)
    – now: out of the blue (“there was no lock period in the prospectus”)
    – so-called founders are still not named
    – Luckow (now called the de-facto CEO) who all the time worked closely with the team
    – the above video is staged and explains only, that you guys had the hand on the (not allowed) cookie jar
    – banning people for telling a different pov leads to a ban in the telegram channels
    – others in the same channel (who insult and spam with offensive pictures) will never banned
    – statements from you Laurent over many months stated the “everything is on track” (and nothing was really)
    – biggest issue: smart contract was manipulated AFTER the audit, before the ICO (wtf?)

    You are not telling the truth, you mislead, you are not treating ALL investors like they should be treated and: YOU steal the money.
    Highly illegal and thus said: the court will decide, what is right. Be prepared for justice!

    This game has soon an end.

  6. Concerned investors formed Envion Watch to expose unethical and potentially illegal actions of Envion’s internal parties. Our goal is investment protection and contributing to shedding light on the Envion mess.

    Have Envion investors been misled? Read Envion Watch’s article “Fact-Checking Envion’s Top 10 Misleading Communication Claims”: https://medium.com/@EnvionWatch/fact-checking-envions-top-10-misleading-communication-claims-238e3bdabc9e

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