FINMA papers leaked (Envion ICO)
The official FINMA decree (Verfügung) from the Swiss Envion AG and the follow-up investigation report (Untersuchungsbericht) by GHR lawyers from Switzerland, both dating back to the years 2018/19, have been leaked.
[ intro ]
We got hold on some internal documents from FINMA investigation and the court cases. The documents include the full-length, uncensored internal report from the FINMA investigation (and a summary in English made by us for those who don’t speak German), the original FINMA verdict, and a legal analysis demonstrating the existence of tokens not covered by the prospectus.
These docs are very detailed, precise and comprehensive, and a must read for all investors interested in the sordid details of the Envion disaster!”
[ a brief retrospect ]
Envion AG Zug (CH) was one of the successful start-ups entering the Cryptocurrency market in late 2017. Envion was placing the idea of “greener” cryptomining in non-stationary containers (MMU: Mobile Mining Unit). Placing those MMUs where energy costs are low, was innovative and hit the nerve of that time. The millions (USD 90+) during the crowdfunding (ICO) flushed into the coffers. But the business never started and a long legal battle began. The internal fights reached the public eye, investors were victimized, lawyers blamed and authorities were always wrong with their decisions. The ridiculous drama by the founders was then stopped by FINMA and the liquidation process meanwhile (2020) is in full swing. Hopefully, all of the remaining assets / money will returned to the real investors at the end.
Even with the liquidation in place, the founders refused to retreat and continue their false game by implementing a program that had the power to undermine the whole liquidation: gaining control over the liquidator via the so-called LUP (liquidation upgrade program), where investors are again, getting fooled by (allegedly false) promises from the same actors. In September 2020 the liquidator stopped LUP by publishing a statement on the official website http://www.envion-konkurs.ch and called the LUP illegal und Swiss law. The narrative was overstretched.
The FINMA papers now reveal the facts. The storyline of the founders paint a completely different picture. The documents, especially the one by the Swiss Financial Market Supervisory Authority, has sharp wording, naming the responsible persons.
The important aspect about the FINMA decree, compared to the investigation report, is that the FINMA formulates it more clearly and in particular, makes a legal assessment. The investigation report only collects facts.
The original documents are written in German. The papers contain relevant numbers, details about missing contracts, and specifics about the built MMU’s. Along with an assessment of the legal structure of the tokens and of affected documents like subscription agreement, prospectus or the SAFT agreement. This is an official report by Swiss authorities, unchallenged, proving that almost everything was done wrong. The FINMA papers are the missing link. The reports serve as a historical documentation of the rise and fall of one of the biggest ICO’s of all time.
Read and make your own judgement!
[ FINMA papers: download ]
FINMA Verfügung (deutsch) (e̶n̶g̶l̶i̶s̶h̶)
Untersuchungsbericht GHR Anwälte (deutsch) (OCR Version) (e̶n̶g̶l̶i̶s̶h̶)
[ a brief summary of the papers ]
1) FINMA makes it very clear in several places that Michael Luckow (ML) was operationally active for Envion and was significantly involved in the ICO (including legal drafting). This was also backed by numerous court case papers since. What is new (and important) is that only Michael Luckow determined the start of the ICO, and this was against the explicit advice of his lawyers, against the board of Envion, despite a still ongoing FINMA clarification and despite a reference by FINMA to a possible criminal liability of the action. This is highly negligent, and every lawyer clearly advises against it. This alone means that Luckow can be seen by all those involved as mainly responsible for investor damage.
2) Luckow had exclusive access to Smart Contract. We would like to remind you at this point that it is still not cleared up as to who changed the Smart Contract days before the ICO started. The intention seem to be clear retrospectively: creating a loophole to get access to the founder tokens before the advertised lock up period ends. This lock was removed with altering the Smart Contract. The Smart Contract therefore, was not audited (as advertised).
3) FINMA notes that not all investors have taken note of the second prospectus. Important detail: FINMA’s assessment of which prospectus is applicable appears to be based, among other things, on the point in time at which individual investors made their investment decision.
4) FINMA determines that there is a $1 value per token and that the token clearly represents a repayment claim. In addition to the (correct) interpretation of the documents, there is a new, subtle argument here: if they did not have a repayment claim, the subordination in the second version of the prospectus would be superfluous, therefore the parties were aware of this. Interesting in this context: FINMA repeatedly emphasizes that ML is stubbornly arguing against this interpretation, even though he presented it differently in seized e-mails and even though DWF, his lawfirm, told him that they see it like FINMA. The investor’s money was also recorded on the balance sheet as debt.
5) FINMA notes a large number of contradictory clauses and formulations in the prospectus.
6) Trado has withheld significant and important data from Envion, so Cyrill Stäger was not able to capture Envion’s financial position.
7) Luckow has engaged DWF in consultation with Matthias Wöstmann, former member of the board of directors of Envion AG.
8) The conditions of the token purchases were inconsistent and for this reason alone an exception (Banking Act) is omitted. In addition, the prospectus does not meet the minimum requirements in terms of content in order to allow for an exemption.
9) In particular and importantly, the prospectus requirements include information on the capital structure (absent) and financial situation (absent).
[ verdict ]
The founders are indeed the key figures in this mess and Michael Luckow, as the de-facto manager, was the one in control of the ongoings.
In the public and in front of the courts Michael Luckow is twisting stories to his liking. He is constantly withholding assets, data and information to gain advantages. He falsely presents him and his actions ( accompanied by big marketing) as benevolent to protect investors’ interests. None of this was true. All documents presented now show the truth about him and his actions. Nothing could have saved the project.
Whatever the future might have brought, FINMA would have ordered to dissolve the company in any event. Whether the founders wanted it or not. Period.
With the documents on the table, the deceiving strategy had come to an end. The authorities have the final word now. In Zürich and in Berlin.
In our follow-up article we go into the details and give you a more broader summary. Read up here
