To our respected envion investors

by Matthias Woestmann

I know that the latest press releases of envion AG and the founders team caused irritation and I would like to answer the most frequently asked questions. I hope that this will address your most urgent concerns.


The money

has not disappeared to the Caribbean, but sits in three locations:

  • in our accounts at Bank Frick Liechtenstein and Bitcoin Suisse
  • some crypto is left in the wallets of the founders
  • exact numbers will be published early June when the audited financials will be ready – signed by a Swiss state licensed auditor

Corporate Governance

  • PWC stepped back after a fraud was discovered
  • BDO has signed an LoI to replace PWC conditional to an audit of the company;
  • Preparations for the audit are under way since early May
  • A new supervisory board member from Switzerland has been elected on the 2nd of May: Marc Gurov, CEO of OpenLimit AG, a public Swiss company; his election has been send to the company register, publication pending due to generally slow processes

Tokens

  • During the ICO 86m tokens were placed; according the prospectus this allowed for an additional 17m token for company, founders and bounty, altogether about 103m tokens
  • Actually created were 127m tokens; the supervisory board was not informed – neither about the creation of the free token nor about the illegal tokens (of course not).
  • Presale tokens can’t be added to the total supply because they were not mentioned in the prospectus. They have to be taken from the founders and possibly the company pot
  • Founders argue that the needed some buffer capacity for a larger investor from Russia who finally cancelled; this is true, his ticket was 7m tokens; leaves 13m unaccounted for.
  • After the creation tokens were distributed to several wallets; large transactions were in blocks of 1m tokens each; smaller transactions in blocks of 100.000 went to decentralized crypto exchange IDEX.
  • Canadian Watchdog Blockchain Intelligence Group has produced a detailed forensic report; news release to be expected.
  • Token destruction: founders offered to destroy 5m of the illegal tokens, which leaves 15m illegal tokens in the market – a substantial dilution for investors.

New Tokens

Technically it is not possible to identify and destroy all illegal tokens.
The choice is:

  • to let the fraud persist or
  • to swap the tokens

I am obliged by law to do the latter.

Token-Swap-Structure:

  • All holders of original ICO tokens will get one new for one old token
  • Buyers of legal tokens on exchanges will be traced as far as we are able to; our blockchain developer (will introduce him to you later next week) has created his new tool “Etherlytics” for this purpose
  • Buyers of illegal tokens will have to go via a law firm to make claims against the creators of illegal tokens

This is the solution we suggested to the Swiss regulator yesterday. Original Subscribers to the ICO will be protected by our solution, but we can’t guarantee for investors that bought tokens at exchanges. Issue will be discussed further with lawyers.
Development of Smart Contract will be coordinated by our in-house blockchain guy and developed by an external team; audit will be done by two auditors in order to be safe this time.

Capital Increase

  • After I discovered the first traces of a potential fraud I decided to protect the company with a capital increase
  • Goal: to prevent the suspects to gain the majority, replace the board and cover their traces;

The capital increase was done in accordance with Swiss corporate law, says the law firm of envion (which is neutral towards individual shareholders); to be sure BDO is cross checking the procedure; founders are filing a court case against the other shareholders.

Operations

  • MMUs will be in operation by Q3
  • Technical development in crypto mining has been fast over the last 12 months: while envion was a pioneer last year there are now a dozen similar solutions on the market and some more competitive than envion’s MMUs.
  • Therefore it makes sense to compare the envion solution to others and decide for the most efficient one. We are in discussions with 3 producers. Key parameters:
    • 0,8 to 1,2 MW power intake per MMU (instead of 100kW)
    • 8 to 10 PetaHash/sec (instead of 1 PH/s)
    • price between 1 and 1,3m USD per MMU
  • Decision will be taken in June, delivery time 3 months for the larger solution.

I hope that clearifies a couple of things. Over the next weeks more precise information will come out, especially from our auditor.

Best regards
Matthias Woestmann