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THE ENVION COURT ORDER AND ITS POSSIBLE IMPLICATIONS FOR ICO INVESTORS

The Court Order is not final


The ENVION founders around Michael LUCKOW were delighted to announce their victory in the Berlin court on their blog last Friday. No attention was paid to the details of the judgment. Another article on the founders’ blog on June 24, 2018, explains the court order more in detail. From this guidance, we may assume that the “ENVION case” is far from over. Although the founders are quite bullish, we have to remain cautious.

Swiss cryptocurrency mining company Envion AG’s tens of thousands of investors can rejoice after a Berlin court ruled in favor of envion’s founders’ interests and passed an injunction on behalf of Trado GmbH against the Quadrat Capital GmbH and Sycamore GmbH.

It’s indeed a promising beginning for the TRADO founder team. Nevertheless it’s not necessarily good news for ICO investors at this stage. In addition, the defendants around Matthias WOESTMANN have the opportunity to appeal against the verdict. According to information from the founders around Michael LUCKOW, the ruling is not yet legally effective (as of June 25, 2018).

Decision of Principle for Further Procedure


Even in the event that Matthias WOESTMANN and the defendants do not appeal the judgment, the ENVION case for the ICO investors is far from being decided. The decision of the court in Berlin is likely to be a decision of principle setting the stage for future legal proceedings. The Berlin court obviously decided that ENVION AG’s capital increase carried out by Matthias WOESTMANN in January 2018 may have qualified as unlawful and as intentionally damaging immoral action (collusion behavior) pursuant to § 826 German Civil Code.

The court in Berlin has also forbidden WOESTMANN to dispose of investor funds from the ICO. The first consequence of this is that the costs of the legal dispute no longer have to be borne by ENVION AG (i.e. ICO investors), but by QUADRAT CAPITAL, WOESTMANN, and the other defendants. This is the really very good news for ICO investors and EVN token owners. It should prevent the defendants to go on with their legal actions for too long. Such legal procedures can be very expensive.

No Decision on the Prospectus or Smart Contract


In the judgment, the court may also have rejected WOESTMANN‘s objection that this capital increase was carried out to protect ICO investors because of illegally produced EVN tokens. In view of the facts, we expected this decision.

Envion founder Michael Luckow
Michael Luckow denies any wrong-doing regarding Smart Contract and token transactions

However, this does not mean that the court has already ruled that the founders are relieved of the accusation of manipulation of the Smart Contract. This should not have been the subject of the Berlin Court decision, we assume.

These accusations are still held up by some ICO investors (read this analysis on Medium for example). Furthermore, the Berlin court did not decide whether the prospectus was correct or whether the ICO investors were misinformed. This was not the subject of the proceedings and has therefore not been decided. But actually,  these are the pieces of the ENVION case that are of utmost importance to ICO investors.

Michael LUCKOW explains on the ENVION founders’ blog that further legal proceedings are required to recover the shares of QUADRAT CAPITAL and SYCAMORE.

Trado’s Michael Luckow explained the importance of the decision, saying, “Further lawsuits are necessary to force a return of shares to the founders. Thursday’s ruling confirms the legal basis for a series of more comprehensive cases, including restoring our rightful majority ownership. We are very satisfied that our arguments were fully accepted by the court while Woestmann’s fictitious accusations were thrown out.”

According to LUCKOW, the court ruling established the legal basis for further legal proceedings. As far as the ICO investors are concerned, nothing has been decided yet.

In other words, Matthias WOESTMANN still seems to have control over ENVION AG. This probably also means that Michael LUCKOW and the founding team around TRADO GmbH have no control over ENVION AG‘s funds and that the start of mass production of the “Mobile Mining Units (MMU)” could be further delayed.

The Possible Way out for Investors


Based on the information and representations available, nothing has been decided for ICO investors at this time. This preliminary (i.e. not yet final) decision of the Berlin Court is only of interest to the shareholders of ENVION AG but not to the ICO investors. From our point of view, it has no direct impact on the ICO investors and investors protection issues.

The only way out of this complicated situation seems to be an out-of-court settlement between the two battling teams. In this respect, however, last week’s verdict could have done a lot of good for ICO investors. It is hoped that Matthias WOESTMANN and his partners have thus become accessible for an out-of-court settlement. Maybe they are more willing now to go back to the table and negotiate solutions.

However, we are still confronted with ICO investors who continue to accuse the founding team around TRADO GmbH of manipulation around the smart contract, illegal dilution and the sale of the founder tokens during the lock-up period. We will report in detail on this shortly. Furthermore, it’s not yet clear if the prospectus was correct and thus investors have not been misled.

 

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