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.