There's not being able to catch a break, and then there's the Swiss cryptocurrency mining firm Envion AG. In late November 2018, its founders, Michael Luckow and Matthias Woestmann, were ordered by a court in Zug, Switzerland, to shut down the firm and liquidate its assets. Yesterday, March 27, the Financial Market Supervisory Authority (FINMA), Switzerland's financial watchdog, reported its finding that Envion's initial coin offering unlawfully accepted up to 90 million Swiss francs from at least 37,000 investors.
FINMA officially launched an investigation into Envion's ICO in July 2018, making note of the way the mining company was issuing its EVN tokens to investors in a "bond-like form." In yesterday's released findings, FINMA highlighted the bond-like EVN tokens, stating Envion had promised token owners a repayment on their investments in 30 years. By accepting what FINMA calls "public deposits" of US dollars, bitcoin, and Ether from its investors – and promising repayment – the watchdog has ruled that Envion's ICO falls under the regulation of the Swiss Banking Act. In other words, before launching its ICO, Envion needed a banking license, which it didn't have.
Furthermore, FINMA stated the conditions under which Envion issued its tokens were not equal for all ICO investors. On top of that, FINMA found that the information provided in the company's prospectus did not meet the country's minimum requirements, and Envion never set up an internal auditing unit, which is required by law.
Drama surrounding the EVN token was behind much of the infighting between founders Luckow and Woestmann. In January 2018, Woestmann allegedly issued actual shares of the company to investor Thomas van Aubel (a German lawyer) instead of tokens, diluting Luckow's 81 percent stake to 33 percent, in what Luckow called the "world's first analogue ICO hacking."
In May 2018, Woestmann claimed Luckow and a group of founding members fraudulently created 20 million additional tokens to enrich themselves without the knowledge of the board of directors. As a result, Woestmann planned to take full control of the company, which might have actually panned out if it wasn't for a Swiss court that found Envion didn't really have a board of directors to begin with.
As for now, with the investigation into Envion's ICO complete, FINMA is essentially wiping its hands of the mining company. Envion appealed its liquidation order, but the appeal expired, and the company has been forced to enter bankruptcy proceedings. With those proceedings open, FINMA stated that "further supervisory measures against the company … will not be required," as Envion's financial situation is currently "controlled by the Bankruptcy Office of Zug."