Rise ICO, an Envion copycat?

note: this story was first published on 19th of October 2018

Do your own research before investing in Rise (RSE)

We would like to reach out to you regarding the upcoming ICO initiated by the German limited company RISE WEALTH TECHNOLOGIES GmbH: the Rise ICO (also referring as RiseSTO).

Before we dive in, a short introduction: We are a group of Blockchain specialists, ICO investors and we care about investors’ money. Yes, you read correctly: we care about your money. Our research and support helped investors during the Envion ICO to find the answers they were missing. We did this with passion, regardless of all the scorn, mockery and ridicule we received from Envion employees. Now we do research on the Rise ICO. And yes, we have concerns as well.

Investing in ICOs these days is tough. For Start-ups and for investors, mostly because of stalled or SCAM projects, that makes it hard to attract investors or because the lost faith in crypto in general. You should do a lot of your own research, understand the underlying business and you need a gut feeling to make the right investment decisions. Always ask yourself: Do I believe in the promoted idea? Or do I believe in the flashy ads I see all over the place?

We suggest, that you should think twice before investing in the Rise ICO. Read the article and form your own opinion! We will point out our concerns and show you facts, that were not dragged into the spotlight by Team Rise. Some issues might be controversial or minor, but we offer our arguments as accurately as possible by presenting facts and patterns.

The marketing (how you start the hype):

catchy advertisement by Rise

Rise began with a nice marketing campaign. Remember the Cruise ship? Sailing with the big guys on the Mediterranean Sea. Top location. Pictures with John McAfee. Indeed, a nice plot. Kudos for this.

Marketing is always the key to get attention. Nothing wrong with that. In fact, the marketing of Team Rise is top notch. Even if we all know, that there is a fine line: Telling the truth versus just telling something that is almost true. And pumping up social media channels with a fake audience (like bots) or paid accounts / press releases is also nothing unusual. The Rise Telegram group has been filled with such bots. 10k users in 4 weeks. All saying “hello” to each other. No content, no questions. And all very happy with such an “awesome project”. We saw the same pattern before, with the Envion ICO. They pushed the limits. The website is/was full of with unverified slogans, articles on Medium every 3rd day. Even posted pictures of some boxes arriving at the airport was a sensation. Similarities?

Now, the same with Rise: low content articles or a copy of the whitepaper as an article. You all remember the Instagram video, that went viral with the Lamborghini, right? Now, that they have your attention, you are on the hook. They are telling you about the lifetime payouts (read this 10x loudly) and the patented algorithm. Sorry it’s maybe patent pending (ooops, same happened with Envion). With absolute certainty: no patent for now (Please show the application form to us!). And then they are telling you about uncorrelated returns, HFT, Wall Street-calibre tools, high yield Crypto trading, Rise “Uber” AI, Sharpe ratio optimization, relative momentum and so on. Sure, you understand all of these, don’t you?

No? So, now you should start thinking and maybe sit down and learn about those terms. Yes, a highly complex matter. Maths, statistics, AI and ML is not for everyone. Actually, most of us have no idea what they are doing, how Rise intends to make profit. Why do they not JUST keep it for themselves? All those beautiful returns. Oh, wait, we are gonna “Democratize Wealth by using A.I. algorithmic trading”. Yikes. It needs some time, to digest this slogan.

The companies and the main actors

Who are the people behind all this? Let’s have a closer look. Quantumrock (QR) Capital is run by Thomas Lorenzen. Prokura has Stefan Tittel. No other employees on the payroll. The company started in 2010, producing net losses most years. Side note: Mr. Lorenzen was also on the board of the company MSValue AG (until 2010). You might want to dig deeper about this company by using Google.

QR Research & Trading (now Rise) is the one with the mathematicians. Well, actually there was only one in 2016, plus Morsch and Tittel as board members (in total the company had 3 full time employees). Now, according to a Youtube video, they have around 25 employees. Rise generates the intellectual property (ip), like the algorithms. These employees are not additional mathematicians, more into marketing. Some of them are talking to you over social media. Like Laurent Martin, a former Opera singer, who later became Head of Communication at the scandal-ridden Envion ICO. Yes, Mr. Laurent is on board and takes care of you in Telegram. He just changed name: Clay. Asking him about his history at Envion could lead to an instant ban in the Telegram channel. Rise confirmed, that former Envion employees work with them. Those former Envion employees are now part of the BerlinTechnologyGroup (BTG) cooperating with Rise on Marketing and Blockchain level. None of them will show up in public with their real name. Additionally: the CEO of Envion Matthias Woestmann and Stefan Tittel are connected via Linkedin (but this could be a coincidence).

real performance (facts and numbers)

The balance sheet of QR Capital looks like this: net profit of EUR 21k (2017), a net loss of 18k (2016) and a net loss of 59k (2015). They’re managing around EUR 10–12mn of assets. QR Research & Trading GmbH (now Rise Wealth Technologies GmbH) produced a net loss of EUR 400k (2015) and a net loss of EUR 100k (2016). We are not a tax experts, but it is clearly visible, that the 2 board members both earn salaries in the higher 6 digits (2016). The stated 50mn of assets (wp p4) cannot be confirmed. All information taken from public sources, like www.bundesanzeiger.de

annual report: QR Research (PDF)
annual report: QR Capital (PDF)

QR Capital has been trading for years in commodities, traditional markets and forex. We assume, they do HFT (high frequency trading). For such a business, you need fast servers close to all major exchanges (London, Chicago, New York, Frankfurt). Only with the right equipment at these places, and the algos of course, you have a chance. The trading itself is mostly automated. We will cover HFT/AI/ML trading perhaps in another article. Due to the nature of Rise’s business over the few last years, the clients and strategies of QR Capital have been kept quiet. They mostly did the job for their own profit and selected clients. But, as mentioned above, the balance sheet was mostly negative. How you can advertise this as a proven track record (“Benefiting from more than 6 years of proven history and development”)? “Outperforming DAX” sounds nice too. Placing a chart with huge gains on own website might impress. But the real numbers don’t lie. We don’t see “outperformance” or “performing at 15–18% in the last five years (wp p21)”. If there is proof, than it is the net losses of Rise over the last years.

How come? Outperforming and producing losses due to high salaries? Let’s double check their trading assets. QR issued exactly 5 certificates publicly traded. See the list here: finanzen.net. The detailed view shows nicely the performance vs DAX (the correlating PDF prospectus with a risk score 6/7 can be also downloaded via the given links):

sample Rise certificate chart

A2HDY1: QR Absolute return

A2HPGM: QR Copernicus

A2HPGN: QR Volatility

A2HPGP: QR Commodity

A2HPGQ: QR Crypto&FX

.
Looks pretty bad, huh? Well, most of them down around 10% (as of mid October 2018). Wait, didn’t they tell you, the algos and strategies are able to make profits even when markets are plummeting? Doesn’t fit, right?

promises (and even higher numbers)

Rise has a well made website. We all agree, it’s catchy. Yes, well done. The design and slogans in total harmony: the proven track record (since 2012), a stack full of clients, cool profit calculator. All “Made in Germany”. Would you ever think, that’s too good to be true? This all shows the same patterns, that we saw with the Envion ICO in early 2018. Even the ICO token fundamental data matches (cap 150m, token sale 0.7/0.8/0.9/1.0).

The track record of QR Capital has been covered above. The mentioned clients (Client testimonials) on their website look like a funny mix to be honest. Christoph Böckle was managing director of Rise until mid 2017. Now he is, with Liechtenstein Life — a small 25 employees insurance company in Liechtenstein — suddenly a client. Sure, friends help each other. Volker Rofalski (misspelled) is probably a serious angel investor. Nothing can be found about the guy named Michael Eisenhardt and the last guy, Stefan Ehgartner, is in the marketing business, probably working also for Rise. Some random students with misspelled names completes the list of clients. Hey, you can be a client too, just put in some bucks and you get listed. But the serious question behind is: What exactly is the definition of a client on their website? Is it enough to show interest in the ICO and token and you get a front row seat?

The token. First of all, a security token IS a security. If you are not familiar with the matter, read here. The token will be issued in Germany and BaFin, as head of financial authorities, will need to give approval (wp p14). The mandatory prospectus and smart contract are also not published yet (as of Oct. 19th). The smart contract needs to be audited as well (no sign of that either). The average investor will not have too much time to look through all of this stuff, less than 2 weeks to go. We remember well: at the Envion ICO the prospectus was published in the last minute before the ICO started. Accepting without reading is a no-go.

Rise calculator

Speaking about the profits (this is, why you want to invest). Profits are only a promise.
135% pa payout per year sounds like heaven. But, don’t be fooled! High yield comes with high risks. And there is not a single word about the risks in the whitepaper. This missing disclaimer is a serious issue. Not to speak of the missing explanation: Where will all the profit be coming from?

…and even more issues not covered yet

If you think, all of this is too critical, then you should have a peek at the list of other issues, we haven’t covered yet:

  • no prospectus, probably issued only in the last moment, is a serious issue
  • no lock up period for team token announced (they can sell all their tokens, bought at minimum expenses whenever they want)
  • no proof of existing clients, like “several large Hedge Funds”, “financial institutions” besides LiLife and BayWa (see wp p4).
  • update: BayWa confirmed in an Email “ “we don’t know the company” (Link)
  • no Reddit, no Bitcointalk, no Github repository for the smart contract
  • no documentation about the “full compliance of strict German regulation”
  • unrealistic returns (no back testing for Crypto published)
  • deleting critical comments from Telegram and other social media
  • update: manipulating score on Trustpilot review website (before)(after)
  • no information about the “patent pending technology” (“we currently license our patent-pending algorithms to large banks, partners and institutional investors.”)
  • update: a screenshot of the filed patent was published, but it shows Oct 4th as the filed date. The story about “patent pending” goes back to August
  • Uptick app: the advertised app with over 100k users (sometimes 150k+, sometimes 100k downloads) is a simulation = game
  • whitepaper: no explanation of the business model, just scientific chit chat (but 9 pages of screenshots from the iOS app), no Android app for now
  • hidden agenda for private Pre-sale investors (private Pre-sale conditions: USD 100k minimum, token price USD 0.50), other agreements remain unknown
  • misleading comments about listings on major exchanges (security tokens cannot be listed on any of the major exchanges)
  • fake users (bots) on Telegram
  • inconsistency with project names: RiseResearch (facebook), RiseSTO (Telegram), RiseGlobalTech (twitter), riseeco (medium, instagram), Rise Technologies (youtube)
  • their own ICO is not even mentioned on the QR homepage
  • sense and purpose of the newly (08/2018) created Ltd. THE RISE BLOCKCHAIN GmbH
  • some of the given awards are actually pretty worthless (AI Global Media is known for selling award packages), awards by the way were given to QR Capital and not Rise (See Facebook banner)
  • the slogan “BaFin licensed” was removed recently. Rise has no BaFin license (QR Capital has one, but is an independent and different entity)

conclusion

The Envion ICO worked exactly the same way: same pattern, same flashy promises, but no proof of work. We all know, how it ended: Disenchanted 30k investors.

We cannot give you a recommendation to invest in Rise. It is your responsibility to make a proper decision. We will NOT invest a dime. Before any investment, make sure to DYOR (Do your own research)! We did.

This article can be used as a basis for more and deeper research. Also, feel free to join an unofficial Rise Telegram channel here: Link (edit: group was renamed after the company did a name change)

We are an independent watchdog of Envion led by a group of concerned investors, exposing unethical and potentially illegal actions of Envion's internal parties.