As more and more countries enforce regulations, cryptocurrency exchanges not toeing the line, are coming under scrutiny.
In March, the Swiss regulatory body, the FINMA said that a cryptocurrency exchange, Envion AG, which is now in liquidation, unlawfully received deposits from atleast 37,000 investors. The investigation started by the regulatory body in July 2018, appointed an investigating agent to investigate suspicious activity on site.
It was discovered during this that the company had unlawfully accepted funds amounting to over 90 million francs from at least 37,000 investors in the context of an initial coin offering (ICO) without the necessary statutory licence.
For the uninitiated, the company issued so-called EVN tokens. Investors were able to purchase these tokens by making payments in US dollars as well as in the Ethereum and Bitcoin cryptocurrencies. 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, this acceptance of US dollars and the Ethereum and Bitcoin cryptocurrencies therefore amounted to an acceptance of public deposits for the purposes of the Banking Act. This however requires a banking licence.
Following the analysis, Envion’s former Chief Executive Officer (CEO) had said regulator had not identified any misappropriation of the assets entrusted to the company. Woestmann considered that the end of the proceedings against him was a “clear signal” and that the board of directors was therefore “totally exonerated”. He hopes that the Zug bankruptcy office will “do everything possible” to return the money to investors.
The regulatory body stated that it would continue to take action against ICOs that violate or circumvent supervisory law.
Interestingly, while a lot of companies are opting for maximum regulations, the Swiss Federal Council had proposed for minimal regulations, in December 2018.
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