$100 Million Crypto Startup 'Liquidated' By Swiss Regulators, 'Illegal Activity' Confirmed

Envion, a Zug, Switzerland-based firm focused on developing “mobile blockchain mining” software, has been accused of “unlawfully receiving deposits” from approximately 37,000 investors.

According to a report published on March 27th, 2019 by SwissInfo.ch, Envion’s management “unlawfully accepted over CHF90 million ($90.5 million)” through its initial coin offering (ICO). The firm reportedly did not have the required “statutory license,” however it still took money from “more than 37,000 investors” - who purchased Envion’s EVN tokens. Payments to Envion were made in USD, Ether (ETH), and Bitcoin (BTC).

FINMA: Envion Did Not Have Banking License Yet Still Accepted “Public Deposits”

Swiss Financial Market Supervisory Authority (FINMA), Switzerland’s financial regulator, has determined that accepting the payments “qualified as public deposits” under the nation’s Banking Act. In order to accept such payments, the Act requires that Envion (or any other firm) hold a banking license.

In addition to not having a banking license, FINMA revealed that Envion’s management did not issue the company’s EVN tokens “under the same conditions to all investors.” Moreover, FINMA found that there was “no international audit unit” - which is a requirement under Switzerland’s financial laws.

Feeling “Totally Exonerated” As All Proceedings Seemingly Come To An End

As noted by local news outlets, Envion is “now in liquidation” and FINMA will “not be taking any further action.” Notably, the “details of the bankruptcy proceedings” have not been disclosed, however they are currently being overseen by Zug’s bankruptcy office.

In response to FINMA’s investigation, Matthias Woestmann, the former CEO at Envion, said that the financial regulator had “not identified any misappropriation of the assets entrusted to the company.” Woestmann added that he was relieved because it seems as if there may be no further charges against him or Envion’s board of directors.

Woestmann also felt “totally exonerated” as he believes it’s “the end of the proceedings” against him and the firm’s board members. The former CEO told reporters that he hopes the funds will be returned to the investors as soon as possible.

Alleged New York Fraudster Indicted By US Department Of Justice

In a seemingly more serious crime, a New York-based crypto scammer is facing 9 different charges as he has been accused of stealing almost $200,000 from unsuspecting investors. The 46-year-old Staten Island resident has been charged by the US Department of Justice (DoJ) for “using smoke and mirrors to allegedly dupe investors into paying his company—CabbageTech, for advice and strategies on cryptocurrency trading.”

The defendant, named Patrick K. McDonnell, had allegedly been soliciting investments on Facebook and Twitter. However, the DoJ revealed in a press release (published on March 26th, 2019) that the “defendant reportedly stole the money for personal use.”

38% of Crypto Exchanges Interact With High-Risk Entities in 25% or More of Their Transactions

Leading cryptoasset data provider CryptoCompare has published an updated version of its cryptocurrency Exchange Benchmark. The report details that 38% of crypto exchanges interact with high-risk entities in 25% or more of their transactions.

According to CryptoCompare’s Exchange Benchmark, interactions with high-risk entities are considered when the cryptoasset data provider is raking exchanges. These interactions are measured according to CipherTrace’s Interaction Risk Score, which profiles transactional risk by “deanonymizing risky entities and illicit activities to identify criminal sources of funds and money laundering exposure.”

CryptoCompare then scores exchanges according to the percentage of transactions conducted with entities deemed high-risk. These include criminals, darknet markets and vendors, gambling projects, malware operators, cryptocurrency mixers, ransomware operators, and OFAC sanctions addresses.

The benchmark details that addresses with up to 25% of transactions conducted with these entities receive some points, but those above said mark receive none. Notably, 38% of cryptoasset exchanges were above it.

Data shared in the report detailed that Top-Tier cryptoasset exchanges, those graded AA to B in the report, interact less with these entities, while Lower-Tier exchanges, those rated C-E, interacted more. While both AA-related exchanges, Coinbase and Gemini, had no interactions with high-risk entities, some of the exchanges with A, BB, and B ratings did.

As CryptoGlobe reported, the Exchange Benchmark also revealed Top-Tier exchanges are gaining market share against Lower-Tier exchanges. It details that top-tier exchanges accounted for 32% of the global volumes in Q4 2019, while in the first quarter of this year they accounted for 36%.

In the second quarter of 2020, the Top-Tier exchanges already accounted for 40% of the global trading volume. In June these exchanges got to a 46% market share. Lower-Tier Exchanges, have seen their share of the space’s total trading volume drop from 68% to 60% in the last three quarters.

Featured image via Pixabay.