Cantonal court orders Envion AG to enter into liquidation

The cantonal court has ordered that the Envion AG company enter into liquidation, though an appeal could be made to the supreme court. If the company is forced to enter into liquidation, what is to happen to the $100 million invested in it?

The cantonal court ordered the liquidation of the Baar-based company on Wednesday 14 November following a report from the Cantonal Office of Bankruptcy and Debt Enforcement. One of the reasons for the court’s ruling was that the company failed to comply with auditing regulations.

The Envion company was actually set up just over one year ago. According to its own website, its aim was “to deliver smart, scalable off-grid solutions to maximise the value of renewable and traditional energy worldwide,” adding how it had created “a smart global network of satellite-connected modular crypto-mining units that transform energy into crypto-assets”.

Then, in January 2018, in a so-called Initial Coin Offering (ICO), the company acquired capital in the form of crypto-currencies from as many as 37,000 investors. What happens is that, whoever participates as an investor usually pays with crypto-currencies such as bitcoin or ether, receiving tokens in return. The greater part of these funds was then exchanged into US dollars and, at $100 million, this ICO turned out to be one of the biggest ever.

It was shortly after the ICO that a dispute arose between Michael Luckow and fellow co-founders on the one hand and CEO Matthias Woestmann, a former TV journalist, on the other hand. The latter claims the founders created a further 40 million tokens without permission from the board, laundering the ensuing profit through various crypto-currency exchanges. Luckow denies this and refers to Woestmann’s accusations as type of “putsch against the founders”.

It was in July that the Swiss Financial Market Supervisory Board (Finma) became involved, relieving Woestmann from his duties, a move taken to protect investors. Finma ruled the tokens were a loan-like tool, for which a special licence was required.

The question now arises, as mentioned, as to what happens to the $100million raised through the ICO, if liquidation goes ahead. Acting on behalf of some 100 Envion investors, one third of whom are thought to be Swiss, is Berlin lawyer Istvan Cocron, who estimates the value of the investment has already shrunk by half, owing to the fall in value of the crypto-currencies used. He is already in contact with a number of Swiss lawyers about this and thinks there is good chance investors can recover some of their funds. However, one problem is that the process of liquidation can take years, another being that the funds themselves are not in Envion’s accounts but in those of the founders. It is thought this is the first such case worldwide involving liquidation where the creditors are primarily owners of “tokenised rights”.

As mentioned, this liquidation is not final and could be disputed in a higher court, should the firm of lawyers appointed by Finma to do this, the GHR legal practice of Zurich, opt to go down that path. When asked about their intentions by a journalist of the Zuger Zeitung, they said they were unable to comment, with no conformation coming from the supreme court on this matter, either.

Michael Luckow said he did not want liquidation. “We have done everything possible to prevent it. But it is what Michael Woestmann wants, as this would mean he is able to benefit from what has happened to the investors.”

For his part, Woestmann said he thought investors in Envion would be able to get their money back.