The Swiss Financial Market Supervisory Authority (FINMA) has just concluded (Press Release) that the cryptocurrency mining firm Envion AG, which raised over 90 million francs through an ICO, held the ICO illegally and was in serious violation of the Swiss laws.
Pursuant to the ICO in early 2018, Envion issued tokens to investors in exchange for payments in U.S. Dollars, Bitcoin and Ether. Investors were promised repayment after 30 years.
Announcing its findings on Wed, March 27, 2019, FINMA said Envion AG was in breach of Swiss law as it did not have a banking license to receive ‘public deposits’ as defined in Swiss banking laws or to enter into a “bond-like” arrangement with its investors. Furthermore there were other irregularities such as the absence of an internal audit unit and the tokens being not equal for all investors, which are minimum statutory requirements for the issuance of prospectuses.
FINMA’s investigations into Envion’s activities and potential breach of Swiss laws began in July 2018. The March 27, 2019 statement by FINMA essentially concludes that Envion carried out the ICO without the requisite banking license in place.
In the meantime, the Swiss Cantonal Court of Zug, in proceedings before it, found organizational shortcomings in Envion AG and has issued an order for the liquidation of Envion AG. It should be noted that, this order for liquidation has made any further supervisory action by FINMA against Envion superfluous.
Can you recover your investment in Envion AG?
In a bankruptcy/liquidation proceedings the liquidator would collect and assess the firm’s liabilities and assets and distribute the collected property in accordance with the law. Creditors have to file a 'proof of debt' with the liquidator to make a claim. If there are secured creditors they will be paid first in accordance with their prior interest and then only the unsecured creditors. Token holders, in all probability, are unsecured creditors and therefore will be paid only after the secured creditors have been paid. After having paid the secured creditors, if the firm still has assets remaining, this remaining assets will be distributed equally among all the unsecured creditors. Hence, an unsecured creditor, if he/she is lucky enough, will get a percentage of his/her original investment.
N.B. Bankruptcy/liquidation laws are extremely complex. For the sake of easy understanding, and at the risk of being imprecise, I have simplified and condensed some of its principles in my narration above. For instance, in some jurisdictions there is a clear distinction between bankruptcy (dealing with persons) and liquidation (dealing with legal entities like corporations) and in other jurisdictions, it appears, there is no such distinction with consequent differences in the usage of legal terminologies.
How to submit Proof of Debt (Register Claims)?
Please go to https://www.envion-konkurs.ch/en/ and read through the various links provided. In particular read “Bankruptcy Proceedings” and “Creditors”. Then click “Forms”, complete the form provided and send it by ar registered mail to the given address, all as per instructions on the form.
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