Cantonal director of finance dismisses Crypto-Valley in-fighting

What is currently Crypto Valley could become Crypto Rift Valley if in-fighting between various factions continues. For his part Heinz Tännler, the cantonal director of finance dismissed any concerns about these bringing the canton into disrepute. “Such disputes are typical of all fledgling industries,” he said.

The latest shenanigans in Crypto-Valley relates to Cardano, which, like so many companies involved in blockchain technology, has set up foundation in Zug. The Cardano company, founded by US citizen Charles Hoskinson, launched the ADA crypto-currency and is now valued at over $2 billion, it being one of the ten largest crypto-currencies in the world. Now the Swiss economic specialist journal Handelszeitung has reported how, in an open letter, Hoskinson is accusing the foundation, chaired by Michael Parsons, of lack of commitment, lack of transparency, mismanagement and nepotism. On this latter matter, Hoskinson is perturbed by the fact that Parsons’ stepson and wife are also involved in the foundation. Furthermore, a movement called Guardians of Cardano, is claiming that the actions of the foundation could have a deleterious effect on the company’s projects, with various software developers looking at taking out criminal and civil proceedings.

For its part, the foundation denies any wrongdoing, stating that the Cardano company was made up of three units, of which the foundation was the smallest. In addition, unlike other crypto-currency foundations, it had neither received nor paid out any money acquired from fundraising nor exerted any control over the company’s software.

This in-fighting is not unlike that seen last year in the case of Tezos. It was in the summer of 2017 that this company, through its Zug-based foundation, raised as much as $232 million in an Initial Coin Offering (ICO). Not long later, a dispute arose between the chairman of the foundation, Johann Gevers, and the company founders, Arthur and Kathleen Bauman, in this case about the use of funds raised by the ICO. While the Tezos community backed the married couple, they attacked Gevers, leading the latter to resign from the foundation in 2018. To this day, Tezos has not launched any commercial applications.

Then, not long after Gevers’ resignation, further conflict arose in May this year at the Baar-based Envion company, which specialises in crypto-mining in containers. The founders of this company, now in liquidation, are in dispute with management about the $100 million raised by an ICO, with as many as 30,000 investors worried about ever seeing their money again.

In another case it has been alleged the Zug-based crypto-exchange Shapeshift has been misused for the purposes of money-laundering.

With such negative reports circulating over these companies, is Tännler not perturbed about the possible damage to the canton’s reputation? “I do not know the details about any individual case. What I do know is that we in Zug must establish the appropriate framework conditions for such companies to allow start-up firms in this sector to flourish. Of course, there can be setbacks, but you get these in any fledgling industry. What has to happen is that the wheat has to be separated from the chaff. Zug could well benefit from the crypto branch in the future. While there are negative reports in a few individual cases, let it not be forgotten many firms operating in this area have created hundreds of jobs.”

In an article published subsequent to this one, it was announced that Heinz Tännler (archive photograph) has been elected chairman of the Swiss Blockchain Federation.