In The Beginning, There Was Hype
We have been warning about the collapse of COINTED for months (see our files here). It was obvious to anybody with a clear view doing some research and analysis, that the business model of COINTED can only work in an environment with constantly rising crypto-prices. In this respect, it is not surprising that 2016 and 2017 were excellent years for COINTED and all other crypto companies. During this period of crypto-hype, for example, Bitcoin, the leading cryptocurrency, rose from just over US$ 400 to almost US$ 20,000, and investors became greedy and simply wanted to join in the crypto game. FOMO fever spreaded worldwide.
Since December 2017, however, cryptocurrencies have fallen by 70% or more. Regulatory authorities in many countries have intervened, banned business models and enforcement agencies started to take action against the questionable methods of some crypto-companies.
The overall investment climate in the crypto-space has cooled off considerably. Even more so in the ICO environment as cryptographic tokens have lost much more value or failed to deliver the promised returns to their investors. In times of rising crypto prices, the returns of investors could be paid from the newly acquired investors’ funds and the daily price gains. In times of falling crypto-prices and declining investor interest (i.e. the inflow of new money is slowing down), it quickly became evident that the mining and trading business models are not able to yield the targeted and promised returns.
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The COINTED People
The Austrian COINTED GMBH was founded in December 2016 by Christopher RIEDER and Wolfgang THALER. Parallel to the incorporation of the GmbH (limited liability corporation), the predecessor company COINTED OG was liquidated in December 2016. According to RIEDER and the ICO White Paper and the then famous Transparency Report the business was transferred from the COINTED OG to the new COINTED GMBH. According to the Austrian companies register, however, there was no transfer! One of the reasons for the closing down of the “old” COINTED OG may have been that one of its partners, Johannes HEIMHILCHER, was involved in the OPTIOMENT scheme (read or telegram here).
During 2017 Charli AHO and Daniil ORLOV joined the team and apparently contributed the crypto-mining business of Crypto Unity OG (see below). In return, AHO and ORLOV each received 25% of COINTED LTD in Hong Kong, which became the official holding company of the Austrian COINTED GMBH at the beginning of 2018.
This core team has been reinforced for the purposes of the ICO, at least on paper and on the website. Daniil ORLOV‘s father, Eduard ORLOFF, AHO’s brother Jimi AHO and the marketing guy Albert SPERL joined the company. This team was responsible for the activities of COINTED in 2017.
After the collapse of the OPTIOMENT Scam, Christopher RIEDER allegedly withdrew from COINTED in spring 2018.
The diversified COINTED portfolio
The COINTED company presented itself as a diversified crypto-company and offered everything around the crypto-value chain: from crypto-mining and crypto-exchange to the operation of crypto-ATMs. There is probably no other crypto company in the world with such a broad product range. For good reason – it takes a lot of capital, many investors, and a large organization.
COINTED wanted to get the big money from an ICO and the issuance of up to 650 million CTD tokens. Unfortunately, the ICO did not work out and was a huge disappointment. Only 1% of COINTED CTD tokens were sold to investors. Instead of the more than USD$ 100 million that had been planned and communicated, “only” a little more than 4 million in were raised from investors. Actually, US$ 4 million is still an incredible amount for A-round financing, but it was far too little for COINTED‘s global ambitions and it’s already high level of fixed costs. At the time of the ICO, COINTED had already incorporated subsidiaries in several countries all over the world.
Moreover, the so-called “Transparency Report” (which was not transparent at all!) also mentioned that many millions had already been invested in crypto-mining equipment by the beginning of the ICO. Allegedly, mining equipment worth more than € 11.5 million would have been sold to investors with the help of partners (WACHSENDE WERTE?). It has to be noticed that it needs significant funds, organization, and people to run such a huge mining installation. Back then COINTED announced to be about to open the world’s largest Ether-Mining center in Sweden. This demanded a lot of investments, not to mention the purchase and operation of a worldwide crypto-ATM network.
Looking back, the logic of the all-encompassing business model could at least be seen in obtaining money from as many investors as possible through a wide variety of offers.
Inconsistencies and Accusations
The ATM partner General Bytes’ accusations
But even under the premise that the business model would have been coherent, there were many inconsistencies around COINTED‘s business. There was the open letter from the Czech manufacturer of the crypto-ATM’s, General Bytes, for example. The latter accused COINTED of fraud and infringement of its IP rights. The COINTED LTD in Hong Kong would only be an empty shell and thus a fraud to investors, according to General Bytes’ open letter.
The allegations of illegally acquired crypto-mining
In the crypto-mining sector, COINTED purported to have made a merger with the Austrian Crypto Unity OG. This company was founded in 2016 by Charli AHO, Daniil ORLOV with the support of a financial investor. The business model was simple – they wanted to operate crypto-mining with renewable and inexpensive energy from hydropower using mobile mining containers set up at hydropower plants. Crypto Unity OG called this “green mining”. As with INVIA’s business model, which is now regulated by the FMA, investors were offered crypto-mining packages promising future profits from mining activities. These mining packages were supposingly distributed by the Austrian company WACHSENDE WERTE and subsequently probably also by COINTED. According to the statements of the founding investor of Crypto Unity OG, the cooperation with COINTED started in 2016. The then COINTED CEO Christopher RIEDER would have also personally referred crypto-investors to Crypto Unity OG time and again.
By inspecting the accounting records of Crypto Unity OG, the investor found that the majority of the investors were referred by the Linz-based company WACHSENDE WERTE (respectivly the investors were represented by WACHSENDE WERTE). WACHSENDE WERTE is therefore for sure deeply involved in the crypto mining business of Crypto Unity OG. Upon request, the WACHSENDE WERTE CEO Dietmar JOWANKA informed us that he had hardly done business with COINTED after the alleged takeover and had only installed one of the company’s crypto-ATMs. Whether the mining hardware sold to investors is working today, where it is located and by whom it is actually hosted, all this information is not available. We could only find out, however, that some of the mining servers were temporarily operated in a Swedish mining center of the Austrian company BLOCKBASE.
There have never been more details about mining, but perhaps they will soon be available when THALER receives the requested report on the MINING activities of COINTED from ORLOV. According to the transparency report, the SWISS CRYPTO GROUP AG was founded by AHO and ORLOV to coordinate the mining activities. COINTED had a call option on the shares of this SWISS CRYPTO GROUP AG. Whether this call option was exercised is not known.
The fact is, however, that the founding investor of Crypto Unity OG, who to date still holds 50% of the company’s shares, has never agreed to transfer the shares or the business to COINTED. However, the business may have been secretly (and illegally) transferred to COINTED by Charli AHO and Daniil ORLOV. In return, each of them is likely to have received its 25% stake in COINTED LTD in Hong Kong. The founding investor then submitted a comprehensive statement of the facts to the public prosecutor’s office after extensive attempts to settle the matter. This investor has sent FinTelegram the following statement:
Since the publication of the COINTED White Paper, I have resisted the fact that Crypto Unity OG was listed as a subsidiary of COINTED. That was never the case. COINTED‘s ICO investors were definitely misled. Only after several written requests from me was the white paper was revised after a few weeks while the ICO was running. I cannot understand why this did not come to the attention of the accountands and consultants in the course of preparing the transparency report. In fact, the business of Crypto Unity OG may have been illegally transferred from AHO and ORLOV to COINTED. I feel deceived by these gentlemen. Consequently, I submitted a criminal complaint with the authorities with a request for official prosecution.
The accusations of false public statements
The accusation of deceiving investors with false public statements and representations is now raised not only by the founding investor of Crypto Unity OG, but from many other parties.
The OPTIOMENT Connection
One of COINTED‘s burdens is certainly its involvement in the fraudulent OPTIOMENT scheme, where up to 10,000 investors were allegedly cheated out of up to 12,500 bitcoins. OPTIOMENT collapsed in early 2018. Three of OPTIOMENT‘s key people claimed that COINTED founder Christopher RIEDER was THE or at least one of the masterminds of the system. RIEDER is a suspect in the investigations of the authorities and since then he is no longer available to the authorities. Evidently, RIEDER missed two hearings with the authorities. Instead, his lawyer filed a written statement. Some investors and their legal representatives are therefore trying to convince the authorities to issue an international arrest warrant.
Not only RIEDER but also COINTED was involved in the OPTIOMENT-Scam. Via COINTED‘s crypto-ATMs, millions of investor funds were transferred from Euro to Bitcoins (BTC) and then sent into the black hole of the OPTIOMENT system. OPTIOMENT‘s distributors and investors report that COINTED mobile crypto-ATM’s have been used at OPTIOMENT events to receive, exchange and send money from investors on site.
To be continued … for more information about the COINTED network and the legal activities around the company and its investors.[/pms-restrict]