Councillor calls for city to reconsider its acceptance of bitcoin

Councillor Astrid Estermann is calling for the city council to reconsider its policy of accepting bitcoin in payment for services it renders as she fears the reputation of the city could be tarnished.

This follows yet more shenanigans in connection with a Crypto-Valley company, this time Envion, which is based in Baar. It was following this company’s Initial Coin Offering (ICO) in January that no less than $100 million flowed in.

However, according to reports published in the Neue Zürcher Zeitung (NZZ), and as quoted in the Zuger Zeitung last Saturday, a dispute has arisen between the founders of the Envion company and its CEO Matthias Woestmann, an investor and former TV presenter, with both sides taking legal action. Woestmann is accusing the founders of issuing a further 40 million so-called tokens without the approval of the company’s board and subsequently laundering the profits through various crypto-currency exchanges. The CEO has duly opened legal proceedings in Berlin and also informed the Swiss Financial Market Supervisory Authority (Finma), though when asked about this they declined to comment. For their part, the founders of Envion claim that Woestmann assured his control over the company illegally through “increasing capital stock with convertible loans and call options”, a move the CEO described as a “protection measure”.

It was on reading this that Estermann, a councillor of the Alternative Green Party, decided she would write to the city council, asking it what sort of conclusions it drew from such a report, and to what extent it felt its reputation might be at stake.

As crypto-currencies can also fail, she felt any future such instances could have a deleterious effect on the reputation on the canton, a matter raised previously by the Zuger Zeitung, too. Bearing in mind this latest scandal, Estermann asked whether the city might re-think its preparedness to accept bitcoin as a method of payment.

This is not the first time conflict has arisen between the founders of a crypto-currency and the chairman of a Zug-based foundation set up to hold its assets, $230 million, following an ICO last year. The delay in the issuance of a new crypto-currency, which, six months on, still has not materialised, has led been to a number of law suits being filed in the USA.

In a separate article in the NZZ, it was mentioned how the reputation of Swiss Stiftungen (foundations) could be at risk, too, the one mentioned in the previous paragraph being cited as an example. Traditionally, these foundations were set up to finance philanthropic projects, not hold funds generated by crypto-currency ICOs while companies sort out related teething problems.