LIQUIDATION OF ENVION UNDER FINMA GOVERNANCE SEEMS TO BE THE VERY BEST ALTERNATIVE FOR ICO INVESTORS

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Update July 30, 2018 (11.45am): our reader Maximilian provided additional information on the FINMA action. He rightfully pointed out that the founders’ press release on the FINMA action and the purported removal of the ENVION board members is wrong. The FINMA commissioner acts as an investigating agent with the mission to clarify the facts relevant for supervisory law and implement the measures ordered by FINMA.  In ENVION‘s case the mandated investigator is authorized to act as sole representative on behalf of the company. The former signatories are no longer allowed to act on behalf of the company without consent of the mandated investigator. That said, WOESTMANN obviously is still a board member and perhaps CEO but needs the FINMA agent’s approval for his decisions. Furthermore, Maximilian rightfully argued that “there is no information anywhere besides in the Founder’s press release (who are not party to the proceedings), that beyond this, the board members have actually removed from the board.

Update July 30, 2018 (11am): we would like to thank all readers for their critical comments and emails. Based on the discussion we would like to provide some explanations to our post. We have received a lot of information from people involved in the ENVION case, i.e. we received copies of contracts and legal opinions and communicated a lot with investors. Hence, we think we are able to make judgments and draw fact-based conclusions. We, of course, can be wrong with these conclusions and hence we are always open to discussion. We are not siding with any party except ICO investors. We do not hold any EVN token and we had no contact to any party before May 2018.

Based on the facts it’s obvious that TRADO GmbH holds and/or controls assets (including smart contract and wallets) that actually should be in ENVION AG – the issuer of the Swiss ICO prospectus (download here) and the EVN tokens and hence the legal counterparty for ICO investors. In the prospectus it was stated that ENVION is in control of all assets and rights it needs to run the business. And it’s not only WOESTMANN who provided false information. The very same impression of ENVION having control of all assets is given by the TRADO team on the ENVION medium channel for example.

And we think that it should be one of FINMA‘s targets to make sure that those assets are (re)-transferred into ENVION in the very best interest of ICO investors. And while we believe that ENVION controls “the bulk of the funds produced in the ICO” it’s still the question how much exactly is “the bulk” and on what legal basis does TRADO still control the remainings? It has not yet been disclosed to investors.

Furthermore, the TRADO team argues that a service agreement was established between TRADO GmbH and ENVION AG to provide services for the ICO and the operation. Neither TRADO nor this alleged service agreement were mentioned in the prospectus and hence not known to ICO investors. It was also not mentioned by Michael LUCKOW in the extensive communication we had with him. Hence, it should not come as a surprise that it’s discussed publicly and critically questioned.

Since the beginning of the shareholder battle, investors are served with a completely different scenario compared to the prospectus and the white paper. That’s a fact. Consequently, it’s not clear to investors how much funds were transferred from ENVION to TRADO for these services. We assume that this is another issue for the FINMA commissioner to check.

It’s this undisclosed structure and funds flow between TRADO and ENVION we are labeling as “re-funneling” of ICO funds. That explained, we concluce that it’s up to FINMA and its commissioner to check this arrangements.

Please feel free to challenge our view and conclusions. We will be more than happy to change them based on contradicting facts. And, of course, we appreciate the discussions with our critical readers.


Perhaps the most important event for ENVION‘s ICO investors since the closing went unnoticed for a few days. The founders also only made a statement after other media such as FinTelegram reported on it: the Swiss Financial Market Authority FINMA took control of ENVION AG with effect from 19 July 2018. Matthias WOESTMANN and Marc GUROV were removed from the Board of Directors. FINMA has appointed the Swiss attorneys at law GHR Rechtsanwälte AG as provisional heads of the company. Additionally, FINMA announced that it had commenced enforcement actions against ENVION.

The founders around Michael LUCKOW welcomed this measure and used it to once again point out that Matthias WOESTMANN alone would have been responsible for structuring the ICO. The old pattern is deployed again – WOESTMANN is the bad guy and the perpetrator, LUCKOW the good guy and the victim. This presentation is striking, well prepared in the media but definitely not correct and misleading. A press release from NAIMA Strategic Legal Services GmbH, mandated by LUCKOW and friends, blames WOESTMANN‘s serious management mistakes for FINMA’s intervention. Note: this press release was probably also be paid out of ICO funds.

Indisputable fact, however, is that both founding teams did not act properly. Neither of them is an honest actor in the ICO drama in our opinion.

The failure to integrate TRADO GmbH into ENVION AG, for example, is also attributable to the founders of TRADO GmbH. The re-funneling of ICO funds to TRADO GmbH has already been admitted by the LUCKOW team and, in our opinion, represents a possible misappropriation of investor funds to be investigated by FINMA. From our point of view, both parties must be called the “bad guys”. Perhaps the degree of “badness” can then be discussed internally between them before the Berlin or Swiss courts. The fact is that ICO investors were misled with a false prospectus and misleading public statements by both founding teams and FINMA or perhaps BAFIN (?) is responsible to address this allegation.

By preparing a prospectus in accordance with Swiss law, ENVION AG has placed itself under the supervision of FINMA and thus the Swiss regulator is responsible to ensure that investors are not cheated. In view of the facts now known and the publicly known court dispute between the two founding teams pending in Berlin, it is therefore only logical that FINMA had to take this action. Otherwise, FINMA itself was at risk to become subject to recourse and liability claims by ICO investors of ENVION.

If one tries to condense the many failures of the two founding teams into one consequence, then it is that it is by no means certain that the funds of the ICO investors are properly managed. On the contrary! It is already known that some of these funds are held by TRADO GmbH and thus outside ENVION AG. How can this happen? Where is the corporate governance? It’s most certainly a violation of the ENVION prospectus and the financial market regulations. In any way it needs to be properly explained. In our view, FINMA must take measures through its commissioners to ensure that all respective funds and assets of TRADO GmbH are transferred to ENVION. In our opinion, there are clearly civil and criminal facts that need to be clarified..

Based on the current state of knowledge about ENVION AG, the only sense-making measure seems to be the proper liquidation of the company and the reimbursement of the funds to the ICO investors. In doing so, the liquidator should also assert claims for damages against both founding teams. In any case, can it be that TRADO GmbH and Michael LUCKOW now simply point to Matthias WOESTMANN and otherwise play the “good guys” and use the ICO funds to finance their private lawsuits? In our view, this would be a typical case of misuse of investor funds

This is our opinion. What is your opinion? If you do not coincide with us, let us listen to your arguments.


Also published on Medium.

34 COMMENTS

  1. As an investor in Envion i am not at all in agreement with this statement “, the only sense-making measure seems to be the proper liquidation of the company and the reimbursement of the funds to the ICO investors.”
    What I want to see happen is the project to get back on track. Removing of matthias woestmann is a great first step. If the founders team is cleared of serious misdoings they are the best choice for running the company. If they are also found to be at fault they can be replaced too.

    • Thank your for your contribution. Much appreciated. I would like to comment that the way such regulators work will not make sure that one or the other party succeeds. The Envion fate is no longer at their disposal. They had their chance, greatly disappointed investors and now it’s the regulator(s) that decide. Additionally, we don’t think that the dispute between the founder teams will be settled any time soon.

      • Not sure if liquidation would be possible. A lot of EVN tokens have already been sold on exchanges, so a lot of them are owned by something else than original investors.

        • Good point, thx for that. I think that in the hypothetical event of a liquidation the funds can only be repaid to the EVN token holders at the time of liquidation. If ICO investors sold the token already the new owner may receive the repayment. Please bear in mind that, as such a scenario never happened before, we are talking about possible scenarios. That said, a practical way to request repayment would be to make a public request to all shareholders (maybe via a new smart “liquidation” contract) as usually made if a company is dissolved.

          Additionally, please don’t forget that the actual smart contract (subscription agreement) included a payback after 30 years anyway. Hence, the payback of the principal amount has always been part of the structure.

          ICO subscribers that feel cheated can, additionally, file a damage claim against the company and its people.

      • You are making an awful lot of assumptions here, and you have lost any credibility an impartial journalist might have.

        • Hi there, thanks for your comment. I don’t think that we made any accusation. This is actually what FINMA did but not us. We did our best to comment on that.

          • My friend has just told me that you would not publish his comment for some reason. Maybe it was because it was critical of your methods and questioned your journalistic standards.
            Two comments on Telegram to support our concerns about your publication:
            1. Why fintelegram would state this is unknown. They’ve gone from fact based investigation to issuing opinions.
            t.me/EnvionFounders/67293
            2. I suspect there are paid powers at work, here. Their ‘stories’ are now way too opinion based.
            t.me/EnvionFounders/67455

            Are you going to silence all of these comments as well?

          • sorry Jennifer to come back so late but I was offline for a short period. Actually I am not aware that we have not published a comment. We publish also critical ones. We never said that we do not issue opinions. We do our research and draw our conclusions, we are also open for discussions. So pls discuss with us… which facts are incorrect? and NO we are neither paid by WOESTMANN and also not by the founders or by anyone else. Neither do we own any ENVION Tokens. But we do not just take over press releases, we actually do our own research.

          • Hi Jennifer, we actually have published all comments to this article and will continue to do so. If you look closely at our stories, you will see that we are actually very critical against both sides. Our mission is to side with investors who paid some USD 100m in the ICO. We believe that (for whatever reason) both founder parties have not done their homework and mislead investors. Our opinion is based on information we received from the parties involved and on our own research.

          • Why did Maximilian Behrens comments get approved so fast, yet a guy on telegram who posted a rebuttal to this ‘opinion piece’ as you called, is still unpublished?
            Here is a link to it, published on Telegram envion chat. t.me/EnvionFounders/67460

    • Hi David, thank you for your comment. It’s more than fair to have a different view on the case and perhaps you are right. We just learned that WOESTMANN obviously has not been replaced and still is ENVION board member (see our update). Hence, the founder teams press release we referred to seems to be wrong.

      We doubt that there will be an arrangement between WOESTMANN and the TRADO founder team any time soon. Actually, we would be more than happy to be wrong with our assumption and see ENVION finally doing its business in the very best interest of all ICO investors and EVN token holder.

  2. Please clarify what you mean by “re-funneling of funds to Trado”. As I understand it from Trado GmbH, Envion is the investment vehicle and Trado carried on paid operations on behalf of Envion. Such operations included running the ICO and smart contract, collecting funds, KYC etc. So Envion is the mining investment vehicle and Envion contracts Trado to run its operations. This is standard practice in the corporate world. How the founders of Envion choose to operate the business is largely irrelevant as long as they operate the business and deliver on their Prospectus.

    Trado confirmed a few things:
    1. They operated the ICO, collected crypto and forwarded that crypto to Envion (Matthias Woestmann) on demand. Hence the reason why Envion now controls the bulk of the funds produced in the ICO.

    2. Envion initially paid Trado to conduct the ICO and eventual mining operations. This structure broke down when Envion (via Mr Woestmann) stopped paying Trado and essentially crippled the project. Not only did he stop paying Trado, but he did not communicate any of his suspected issues to the investor community.

    3. After Mr Woestmann initiated the hostile takeover of Envion with the capital raise, and refused to authorize all operational requirements; including refunds to ineligible investors, Trado stopped transferring crypto the Envion. They were transferring crypto as the funds cleared when KYC was approved. They stopped the transfers and held the crypto after Mr Woestmann’s actions (or inaction depending on your point-of-view). You can debate whether this is appropriate or not but the reality is that, in their situation, I would do the same. Why entrust anymore money to someone who has violated not only your trust, but the trust of investors.

    What do I mean by violating trust: Mr Woestmann claims to have suspected fraud around the end of the ICO (February 15/16). Yet he initiated a capital raise in Switzerland around January 26th. Did he have a time machine to see the future?

    Not only did he initiate the capital raise, effectively taking control of Envion, he:
    a) Did not communicate any issues to the investor community until months later (May) and only after the founders initiated court proceedings against him.
    b) He made no attempt to start operations as per the prospectus in the ensuing 4 months.
    c) He stopped paying Trado invoices effectively crippling their efforts to continue Envion development.
    d) He has not completed an independent financial audit of Envion yet; even after engaging (and disengaging) with 3 auditors. This is critical for transparency.
    e) The blockchain audit he initiated with BIG is still not public.

    Next time you issue an opinion on an issue, and make public accusations get your facts straight.

    • Hi there, thank you very much for your comments. We issued our opinion strictly on facts delivered by involved people (including the founders), our own research and information provided by ICO investors. We have no doubt that WOESTMANN breached the contract with the other founder team on the shareholder level. BUT we also have no doubt (based on facts) that the prospectus was false as were many official announcements of the team. Fact is, however, that neither the smart contract nor the control over the smart contract wallets was in ENVION. Neither was the mining technology and the intellectual property rights. Both teams knew that they actually sold tokens of a shell company without any assets to ICO investors. How can it be that a third part (Trado GmbH) controls the ICO smart contract? Doesn’t this violate the rights of ICO investors who believed that all assets are owned and controled by ENVION? It has been confirmed to us by Michael LUCKOW in writing that TRADO controls the smart contract and the wallets, including for example the QUADRAT CAPTIAL founder token wallet (!).

  3. Also, it would make sense to clarify what was meant by “re-funneling of funds to Trado”.

    Trado confirmed a few things:
    1. They operated the ICO, collected crypto and forwarded that crypto to Envion (Matthias Woestmann) on demand. Hence the reason why Envion now controls the bulk of the funds produced in the ICO.

    2. Envion initially paid Trado to conduct the ICO and eventual mining operations. This structure broke down when Envion (via Mr Woestmann) stopped paying Trado and essentially crippled the project. Not only did he stop paying Trado, but he did not communicate any of his suspected issues to the investor community.

    3. After Mr Woestmann initiated the hostile takeover of Envion with the capital raise, and refused to authorize all operational requirements; including refunds to ineligible investors, Trado stopped transferring crypto the Envion. They were transferring crypto as the funds cleared when KYC was approved. They stopped the transfers and held the crypto after Mr Woestmann’s actions (or inaction depending on your point-of-view). You can debate whether this is appropriate or not but the reality is that, in their situation, I would do the same. Why entrust anymore money to someone who has violated not only your trust, but the trust of investors.

    What do I mean by violating trust: Mr Woestmann claims to have suspected fraud around the end of the ICO (February 15/16). Yet he initiated a capital raise in Switzerland around January 26th. Did he have a time machine to see the future?

    You are losing credibility, fast.

  4. Very good article! You guys are one of the few sources with solid an well researched articles on the Envion case – most other articles are just re-written press releases.
    Keep up the great work, many Envion investors thank you!

    • One little correction, if I may:
      As far as the statement from Finma goes, the two board members have not actually been removed from the board, but rather stay on the board and are limited in their powers temporarily as long as Finma investigates. As such, they have to get approval for any action they plan to execute. In addition, the appointed law firm can fully act on behalf of the company.

        • Hi Tamir,

          Yes, but this information from the Founder’s press release is inaccurate.

          FINMA is detailing the precautionary measures it can take in an enforcement proceeding as follows:

          “Investigating agents

          Investigating agents clarify the facts relevant for supervisory law and implement the measures ordered by FINMA. Rulings issued by FINMA also state whether and to what extent investigating agents are empowered to act in place of the company’s ultimate management. The individuals concerned have their authorisation temporarily withdrawn while the agent is acting in their place. FINMA also publishes information on the use of an investigating agent on its website if the agent is entered in the Commercial Register.”

          (https://www.finma.ch/en/enforcement/enforcement-tools/precautionary-measures/)

          This is exactly what FINMA has done here. In their database, Envion now has the following entry:

          “The mandated investigator is authorized to act as sole representative on behalf of the company. The former signatories are no longer allowed to act on behalf of the company without consent of the mandated investigator.”

          (https://www.finma.ch/en/enforcement/enforcement-tools/precautionary-measures/investigating-agents-entered-in-the-commercial-register/envion-ag/)

          There is no information anywhere besides in the Founder’s press release (who are not party to the proceedings), that beyond this, the board members have actually removed from the board.

          • Thank you very much for your efforts and the information. I think that’s an important piece and hence we will update the post accordingly.

      • It will be more efficient if I answer the other way around: besides my rather pedantic comment above, the only other fact or argument which I cannot fully agree to is the claim that Trado is using investor funds for their PR firm or lawsuits. I just do not have information to that end. Everything else matches other investor‘s research that has been shared in independent Telegram groups.
        Is there anything in particular you think is incorrect?

        • Also, it would make sense to clarify what was meant by “re-funneling of funds to Trado”.

          Trado confirmed a few things:
          1. They operated the ICO, collected crypto and forwarded that crypto to Envion (Matthias Woestmann) on demand. Hence the reason why Envion now controls the bulk of the funds produced in the ICO.

          2. Envion initially paid Trado to conduct the ICO and eventual mining operations. This structure broke down when Envion (via Mr Woestmann) stopped paying Trado and essentially crippled the project. Not only did he stop paying Trado, but he did not communicate any of his suspected issues to the investor community.

          3. After Mr Woestmann initiated the hostile takeover of Envion with the capital raise, and refused to authorize all operational requirements; including refunds to ineligible investors, Trado stopped transferring crypto the Envion. They were transferring crypto as the funds cleared when KYC was approved. They stopped the transfers and held the crypto after Mr Woestmann’s actions (or inaction depending on your point-of-view). You can debate whether this is appropriate or not but the reality is that, in their situation, I would do the same. Why entrust anymore money to someone who has violated not only your trust, but the trust of investors.

          What do I mean by violating trust: Mr Woestmann claims to have suspected fraud around the end of the ICO (February 15/16). Yet he initiated a capital raise in Switzerland around January 26th. Did he have a time machine to see the future?

          • – smart contract was altered, MW maybe was informed by somebody about that
            – Founders Tokens were unlocked prior to the hostile takeover and shares dilution
            – MW was booted by ML while on the trip to China
            – other (to us) unknown fact could left to the decision MW made

            Enough to make one suspect the smell of the fish

            The bad guy – good guy strategy is a comedy by Founders

          • I agree with you. WOESTMANN doesn’t seem to be a good guy and obviously initiated a hostile takeover attempt. Yet it has to be said that this was only possible because things were not fixed contrary to the statements in the prospectus.

  5. Why did Maximilian Behrens comments get approved so fast, yet a guy on telegram who posted a rebuttal to this ‘opinion piece’ as you called, is still unpublished?
    Here is a link to it, published on Telegram envion chat. t.me/EnvionFounders/67460

  6. Why is there no detailed look into the court ruling from Berlin? The entire hostile overtook story is now a proven fact, as well as Woestmann’s plans to sell Envion starting in early February 2018. Sorry – but there is lots of stuff funny about that.

    Is there a relationship between FinTelegram and Woestmann or van Aubel?

      • So why *isn’t* there a detailed look into the court ruling?

        The official results have been available for some time now.

    • Hello Robert – the founder’s preliminary injunction win has been covered here in previous articles in some detail, but it is not relevant for the FINMA proceeding that this article is focussing on. FINMA is a regulatory agency enforcing financial market law compliance. It is not a regular court, and their mandate does not extend to judicature in shareholder disagreements.

  7. Hey Jen, it is me, your father. What is your point in coming here and trying to shut down critical voices. Your statements, my lovely daughter, are baseless. Time machine, criminal behaviour and so on is a broken record and we will see, who harmed investors in reality. You can try with your friend Matey, it will not make it better for the founders.

    They have bloody hands now after they sold their tokens and betrayed the investors. Period.

    And now…. come home, diner is ready!

  8. Facts : Laurent said in the founder believers TG group that refund is the worst option for he and founders. So be sure that they will use all their legal power and our money to avoid this.

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