The Case Ingredients: One Company, Two Parties, and a Legal Battle
A few days ago, we along with many others reported about the ENVION case, a blockchain company run by Germans with the official headquarter in Zug, Switzerland. According to the CEO of the company, Matthias WOESTMANN, the founders have illegally created 40 million tokens in the course of their ICO. Officially, so the CEO, only 86 million EVN tokens should have been created and sold to investors in the ICO that raised some US$100 million.
The founding team, on the other hand, filed a lawsuit against WOESTMANN on a shareholder level. Their company Trad
“o GmbH has taken legal action against Quadrat Capital GmbH, whose shareholder and managing director Matthias Woestmann is acting as a board member (CEO) of Envion AG. Allegedly, WOESTMANN unlawfully secured the majority stake in Envion AG in breach of contractual obligations.
The battle between the two shareholders happens on two battlefields:
- shareholder level – fight over shareholder control over Envion AG
- tokenholder level – fight over tokenholder rights (asset value, profit)
That sounds a bit complicated to you? Well, it is! The thing is that both the shares and the tokens (should) have a value to their respective holders. A company that successfully did an US$ 100m ICO is worth something, right? Thus the battle is about money and control.
A fraudulent action conducted by the Founders?
ENVION’s CEO WOESTMANN accuses the founders of the illegal creation of EVN tokens and refers to a report done by the Canadian blockchain security experts “Canadian Blockchain Intelligence Group” (BIG).
Envion’s CEO Matthias Woestmann: “It was our ambition to make crypto mining go green. I am all the more disappointed by this fraud, which has stricken not only our company, but also the entire Blockchain world.”
To WOESTMANN, the illegal creation of EVN tokens is a to be qualified as a fraudulent action conducted by the founders. Hence, he filed a criminal complaint and intends to replace all issued EVN tokens with new EVN2 tokens. The old tokens should no longer be valid and should be excluded from the dividend process. That’s at least the plan.
Or a fraudulent CEO?
In a medium post, the Envion founders stroke back and accused CEO WOESTMANN of taking away the shares and control of their company by having diluted them down to 33% in several rounds of finance:
Matthias Woestmann and accomplice Thomas van Aubel illegally took control of the majority of envion AG’s shares shortly after the company raised about USD 100 Million in an Initial Coin Offering (ICO) (Source: Trato GmbH).
The founders insist that they are still the rightful owners of Envion and thus they have sought a court ruling already against the CEO’s actions which potentially damage the company and prevents Envion from fulfilling the contract made with investors who purchased Envion’s EVN tokens in the ICO.
It now appears to the founders that the “beleaguered CEO” simply counter-acted against the ENVION founders with a disingenuous mediation process to prepare a disinformation campaign. Consequently, argue the founders, they are now faced with the challenge of “responding to fallacious allegations as they make their case against Woestmann“. The founders purport that Woestmann can produce no evidence supporting his allegations, and hence the Envion founders started a campaign to produce the necessary proof to allow investors to determine the truth based on verifiable documentation.
The founding team, led by Michael Luckow purports that the creation of all EVN tokens is in line with the published ICO white paper which was approved by the Envion board months before the ICO. Hence, Woestmann’s allegation that those tokens were generated without his knowledge and approval is verifiably false:
Woestmann’s scandal around extra tokens appears to be frivolous and desperate as there is an easy solution to the existence of extra tokens: destroying tokens. The existence of extra tokens has been public since the end of the ICO. Envion published blog articles and social media postings about the extra tokens and the process of burning them months ago (Source: Trato GmbH).
The founders call the CEO’s actions as “likely the first analogue ICO hack—illegally taking control of the entirety of the ICO funds without breaking into a single crypto wallet.” Analogue hack? Doesn’t this sound spectacular? According to Michael Luckow, WOESTMANN unlawfully took possession of Envion:
“Envion AG belongs to the founding team. Woestmann and van Aubel unlawfully took possession of the company and violated the trust of our investors. The team has done everything we can to make good on Envion’s promise to investors. By contrast, Mr. Woestmann has disappeared from sight.”
And the losers are – the company and its token investors
The founders medium post has obviously been written with the support of lawyers and PR experts. At the bottom of the post, the German legal services NAÏMA Strategic Legal Services GmbH, a specialist for Litigation PR, is given as press contact. Apparently, both parties are fighting on a high level with lot of funds. Consultants thus will be the winners as we media people are.
Meanwhile, the company changes into #RIPmode and investors may lose their funds – and their patience.
In any case, it is obvious that thr Envion case is evolving into a public shareholder battle, reminiscent of Tezos in some aspects.