Swiss regulator commences proceedings against ICO issuer envion AG

The regulator says envion AG accepted funds amounting to around CHF100 million from more than 30,000 investors in return for issuing EVN tokens in a bond-like form.

The Swiss Financial Market Supervisory Authority (FINMA) today announces that it has commenced enforcement proceedings against envion AG. FINMA has evidence that the company may have violated financial market law in relation to an initial coin offering (ICO).

The action against envion AG was launched in July 2018. The proceedings focus on possible breaches of banking law resulting from what is suspected to be unauthorised acceptance of public deposits in connection with the ICO for the EVN token. Investigations carried out by FINMA to date indicate that, in the context of its ICO, envion AG accepted funds amounting to approximately one hundred million francs from more than 30,000 investors in return for issuing EVN tokens in a bond-like form.

FINMA reiterated its commitment to ensuring that serious innovators can launch their ICO projects lawfully. It published guidelines with regard to ICOs in February 2018. However, the regulator also consistently takes action against ICO business models, which violate or circumvent supervisory law. FINMA has also repeatedly drawn attention to the risks that ICOs pose for investors.

In September last year, the Swiss regulator said it was investigating a number of ICO cases in order to determine whether certain regulatory provisions have been breached. Earlier that month, FINMA said it had taken action against providers of fake cryptocurrency E-Coin.

FINMA has found at least since 2016, the QUID PRO QUO Association has been issuing E-Coins, a crypto currency developed by the association itself. In cooperation with DIGITAL TRADING AG and Marcelco Group AG, the association provided interested parties with access to an online platform on which E-Coins could be traded and transferred. The three entities accepted funds amounting to at least CHF 4 million from several hundred users and operated virtual accounts for them in both legal tender and E-Coins. FINMA noted that these activities were similar to the deposit-taking business of a bank and were illegal unless the company in question holds the necessary licence.

Blockchain, cryptocurrencies and ICOs accounted for the bulk of enquiries handled by the Swiss regulator FinTech Desk in 2017. FINMA’s FinTech Desk handled 453 enquiries last year, up from the 270 enquiries received in 2016. The digital asset enquiries accounted for 60% of the total last year.