In January 2018 the Envion ICO entered the list of ten biggest ICOs and even crowdfunding campaigns in history, raising $100 million.
Aimed at disrupting and democratizing the cryptocurrency mining industry with state-of-the-art Mobile Mining Units and an expert team, the Swiss-run project seemed destined for great things, reportedly closing deals with IBM and the leader of Dubai.
Obviously, things have not gone according to plan. The team claim that the deals fell through, and the goals outlined to investors are nowhere close to being met, nor is it clear if they ever will be.
The company has now become embroiled in a massive scandal with the founders and CEO turning on each other, accusing each other of fraud. The company, which should have been paying dividends to investors by now, is deadlocked with investors crying out for their money back on social media.
Eligible investors are not able to request refunds. My eligibility was not proven and I have emailed you once a month for 6 months and you will not refund! Refund now!
— Nicholas (@ExstedNicholas) June 1, 2018
CEO Matthias Woestmann, a man who financed one of the biggest solar energy operations in Germany, claims that the founders fraudulently created over 40 million additional tokens to enrich themselves without the knowledge of the board, while the founders claim that Woestmann illegally took over the company and refused to burn tokens that were in his possession.
Two days later Woestmann released a video, now saying that 20 million tokens, not 40, were illegally generated. Asked about the apparent contradiction in token amount, Woestmann toldffCCN:
"There is no contradiction: 41m Tokens have been created without the knowledge and permission of the board. 24m of them are totally illegal because they are not covered by the prospectus.
And I general i would say that the German judicial system will bring light into the suspected large-scale fraud."
In his video statement below, Woestmann went on to tell investors that a new token is being created to nullify the value of the old tokens and pay out investors the dividends that they are owed when operations begin. He explains his two-month silence on the scandal by saying "I could not go to the public with these problems without having a solution."
He states that the financial regulator of Switzerland has been informed of his version of events and that a criminal complaint has been filed in Germany. "We will replace the old Envion token by a new token that carries the full payout rights for you," he stated.
He also added that he only had $50 million of the raised funds available, claiming the founders lied about the amount of money raised. On the issue of operations, Woestmann said:
"Mass production hasn't started yet."
Michael Luckow is leading the founders, and have a very different story to tell. The founders' names and credentials have been removed from the Team page on the Envion website, but they've launched their own site to reach out to their investors directly through a series of blog posts and video updates.
They level a number of complaints against Woestmann, addressing the sudden change in Woestmann's story regarding the 20 million token difference in his two statements.
"In the wake of his legal troubles, Mr. Woestmann has reinterpreted the ICO prospectus, its guiding legal document, to exclude tokens sold to pre-sale investors from the greater pool of sale tokens."
The founders say he cut contact with them and then informed them in a meeting that he was taking full control of the company, an action that they refer to as the world's first 'analogue hacking' of an ICO wherein funds were illegally hijacked without breaking into the cryptocurrency wallets. They cite his reasons for doing so as a lack of communication on their part, which they deny.
They accuse Woestmann of unlawfully acquiring a majority share in Envion AG and are now suing the company.
"Woestmann was tasked with forming envion as an AG company in Switzerland and later appointed CEO with a 19% stake in the company. The founders pooled their 81% of shares via a jointly-held company, Trado GmbH.
Woestmann pushed for an agreement in the name of expediency whereby the CEO would control the founders’ shares to speed up decision-making for the initial set-up of the company and transfer them to Trado shortly before the ICO. Instead, he didn’t comply with the founders’ request to transfer shares and covertly issued more shares via a capital increase which left them with only 33% ownership. And no information whatsoever prior to that to the founders."
According to the founders, Woestmann is responsible for not burning the additional tokens unallocated after the ICO ended despite this being part of the investor proposal. They posted emails dated May 3 from them to Woestmann requesting that 5 million tokens be burned at minimum as a show of good faith, with no response from Woestmann in the email and no public explanation for that as of yet.
“We are ready to build the product. Containers should be rolling off the assembly line and we should be installing mining units. The plan was to pay back dividends to our investors by now. We can’t do that because we are blocked by Mr. Woestmann. It’s not clear that he is making any positive contribution to Envion’s business,” said Luckow.
The founders have not responded to CCN for comment at this time.
The New York Times spoke to 21-year-old Jessica Smith who invested $28,000 in Envion, almost all the money she had made after two years trading cryptocurrency. Smith is now looking for new work, saying this "has been very painful."
Featured image from Shutterstock.