Swiss financial regulator updates on proceedings against ICO issuer envion AG

Maria Nikolova

FINMA has found that envion AG (now in liquidation) unlawfully received public deposits from at least 37,000 investors.

Swiss

The Swiss Financial Market Supervisory Authority (FINMA) has earlier today posted an update on its investigation into the activities of ICO issuer envion AG. 

The regulator has determined that envion AG unlawfully received public deposits on a commercial basis from at least 37,000 investors. The company is currently being liquidated by the Zug bankruptcy authority.

In March 2019, FINMA concluded the enforcement proceedings against envion AG, which it launched in July 2018. As part of its proceedings, FINMA appointed an investigating agent to investigate suspicious activity on site. The probe showed that the company had unlawfully accepted funds amounting to over CHF 90 million from at least 37,000 investors in the context of an initial coin offering (ICO) without the necessary statutory licence. The company was thus acting illegally and seriously violated supervisory law.

In the context of its ICO, envion AG issued so-called EVN tokens. Investors were able to purchase these tokens by making payments in USD as well as in the Ethereum and Bitcoin. Envion AG granted the token owners a claim to repayment after thirty years. Furthermore, the conditions for the EVN tokens issued in a bond-like form were not equal for all investors, the prospectuses did not meet the minimum statutory requirements and there was no internal audit unit as required by law. In the present case, the acceptance of USD and cryptocurrencies therefore amounted to an acceptance of public deposits for the purposes of the Banking Act. This requires a banking licence.

While the FINMA proceedings were ongoing, the Cantonal Court of Zug opened bankruptcy proceedings against envion AG on grounds of organisational shortcomings. As a result, further supervisory measures against the company by FINMA will not be required.

FINMA will continue to consistently take action against ICO business models which violate or circumvent supervisory law. Ultimately, this can lead to the company being liquidated by FINMA. 

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