Swiss Court Orders Bitcoin Mining Startup to Shutdown
December 1, 2018 12:29 pm
The Bitcoin mining startup Envion AG has been ordered by a Swiss court to close due to poor corporate governance. In January, the startup managed to raise $100 million in an initial coin offering (ICO). But a series of disputes have resulted in a corporate failure, putting a stop to all the operations.
Constant disagreement between the founding members, Michael Luckow and Matthias Woestmann, has led to a court battle. Both have repeatedly made court trips to sue each other over the allegation of subterfuge. According to a report released by Handelsblatt Global, discord between the two has been occurring since the ICO or immediately after. Woestmann has since resigned, accusing Luckow of manufacturing more coins than agreed on, in retaliation, he engineered a capital increase resulting in Luckow’s share to dilute.
Instead of tokens, Woestmann allegedly issued actual shares that successfully diluted the 81 percent stake of Luckow and his partners to 31 percent.
Switzerland’s cryptocurrency haven, the cantonal court which is located in Zug has passed an order to Shut down Envion, specifying its dysfunctional board of directors and “the complete lack of any auditing function.” According to the court’s ruling, the company is soon to be liquidated.
As per Urs Schenker, a Zurich based lawyer, Envion’s liquidation is “unavoidable”
Between December 2017 and January 2018, when the cryptocurrency value was at its peak, Evion successfully raised around $100 million, attracting 30,000 investors. Enticed by Envion’s promise of over 160 per cent and economical mining approach and using renewable energy, investors paid $1 for each token in the offer. At present, the token is worth just $0.05.
Handelsblatt Global’s report states that both the founding members are being investigated by financial regulators in Switzerland and Germany. It was revealed that Envion’s operations and finances were being carried out from Berlin by Micheal Luckow’s company, Trado, despite the fact that the startup was registered in Switzerland.
“Woestmann continues to blame Luckow, accusing him of not providing information about the ICO. Luckow says Woestmann always planned to push the firm into liquidation, but he will fight it and believes the original concept can still work.”
Either party can still appeal the decision as the Zug court ruling is not final. Meanwhile, the friction and improper functioning among the directors have kept the investors guessing of the company’s fate.