Swiss Watchdog Rules Crypto Miner's ICO 'Seriously Violated' Laws
Switzerland's finance regulator has found that crypto mining firm Envion's $90 million ICO took deposits from investors unlawfully.
Switzerland's finance watchdog has found that the cryptocurrency mining firm Envion AG, which raised millions through an initial coin offering (ICO), held the sale illegally and “seriously violated” laws.
Announcing the news on Wednesday, the country’s Financial Market Supervisory Authority (FINMA) said that Envion unlawfully received public deposits worth over 90 million francs ($90.33 million) from at least 37,000 investors through its token offering early in 2018.
FINMA began investigating Envion in July 2018 for potentially breaking financial market rules. In Wednesday’s statement, the regulator concluded that Envion carried out the offering without the necessary banking license in place.
Envion issued EVN tokens to investors who made payments in U.S. dollars and cryptocurrencies such as bitcoin and ether, and granted them a claim to repayment after 30 years, FINMA said.
This acceptance of public deposits and “bond-like” arrangement falls under the country’s Banking Act and thus requires a banking license, according to the watchdog.
Furthermore, the conditions under which Envion issued its tokens were not equal for all investors, FINMA added. Its prospectus also did not meet minimum statutory requirements and an internal audit unit was not set up as required by law.
It was reported last May that the firm’s CEO, Matthias Woestmann, had claimed that the founders generated extra EVN tokens as part of a money grab. The founders counterclaimed that Woestmann had seized control of the firm and breached his contract.
Envion has been forced to undergo liquidation proceedings by the Swiss Cantonal Court of Zug, which found "organisational shortcomings." FINMA said it would not be taking supervisory action against the firm as a result.
It is not yet clear if and how investors in the project might be able to claim back their funds. FINMA indicated it is not able to provide information on Envion's financial state, as the bankruptcy proceedings are controlled by the Bankruptcy Office of Zug.
FINMA said it will continue to take action against unlawful ICOs that "violate or circumvent supervisory law."
Swiss flag image via Shutterstock
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.