Founders sue Envion CEO Matthias Woestmann’s Corp. for world’s first analogue ICO hacking. Outsider CEO faces charges after grab for $100 million ICO company, attempts to sell to highest bidder
The founding team of the Envion project have taken legal action against the shareholders of envion AG (Switzerland), namely Quadrat Capital GmbH, whose shareholder and managing director Matthias Woestmann is also acting as board member (CEO) of Envion AG, after he unlawfully secured the majority stake in Envion AG in breach of contractual obligations. The company has been left paralyzed with no word from Woestmann for many months.
Envion AG is a blockchain startup operating out of Berlin which produces cryptocurrency mining containers powered by renewable energy. After an Initial Coin Offering (ICO) that raised $100 million, plans to create mobile blockchain data centers which install on-site at power plants have now been put on hold by an acrimonious legal battle that pits the CEO against the rest of the company.
The founding team, led by Michael Luckow, partnered with the former newsman and energy industry investor Matthias Woestmann under the impression the elder businessman would bring in investors and advisors to the project from his network and could take up administrative responsibilities while the founders focused on the highly technical project. Woestmann instead proved to be a liability with investors and exploited administrative maneuvers to take control of the company without any visible attempt to execute on the business plan.
This is likely the first analogue ICO hack — illegally taking control of the entirety of the ICO funds without breaking into a single crypto wallet.
Woestmann was tasked with forming envion as an AG company in Switzerland and later appointed CEO with a 19% stake in the company. The founders pooled their 81% of shares via a jointly-held company, Trado GmbH. Woestmann pushed for an agreement in the name of expediency whereby the CEO would control the founders’ shares to speed up decision-making for the initial set-up of the company and transfer them to Trado shortly before the ICO. Instead, he didn’t comply with the founders’ request to transfer shares and covertly issued more shares via a capital increase which left them with only 33% ownership. And no information whatsoever prior to that to the founders.
Luckow and the founders have made every effort in the intervening months to find common ground with Woestmann but to no avail. Rather than restore ownership to the founders as agreed, Woestmann transferred a majority of shares to his codefendant Thomas van Aubel’s company.
The massive success of the $100 million Initial Coin Offering was the work of the founders and executed by their company Trado. Trado has continued operations for envion with the founders financing preparation for mass production of mobile mining units with their own money until a solution could be worked out with Mr. Woestmann. Hopes for a peaceful solution were dashed when they received proof Woestmann had been secretly soliciting for buyers — going so far as to make up a story that the founders were exhausted and wanted out — and envion could be sold out from under them. The courts are now the only option for the founders..
According to Michael Luckow, “Envion AG belongs to the founding team. Woestmann and van Aubel unlawfully took possession of the company and violated the trust of our investors. The team has done everything we can to make good on envion’s promise to investors. By contrast, Mr. Woestmann has disappeared from sight.”
The large amounts of cryptocurrencies flowing through ICOs make them a frequent target for hackers who use electronic means to steal funds raised by blockchain startups. Armed with barely a basic knowledge of cryptocurrencies and blockchain technology, Woestmann’s hack exploited the founder’s trust in covert boardroom procedures.
With the founders in possession of the intellectual property required to build envion’s product, Woestmann and van Aubel are unable to execute the legal requirements of the investor prospectus and whitepaper. They cannot build the containers which mine cryptocurrencies and pay profits back to investors. Meanwhile, the founders have exhausted all efforts to continue operations without ICO funds and are looking for the courts to bring an end to the chaos caused by Woestmann.
We are ready to build the product. Containers should be rolling off the assembly line and we should be installing mining units. The plan was to pay back dividends to our investors by now. We can’t do that because we are blocked by Mr. Woestmann. It’s not clear that he is making any positive contribution to envion’s business,” said Luckow.
He continued, “We are fighting for a solution — for our idea and for our investors who entrusted their money to us. We tried for a long time to reach an amicable agreement with Woestmann and van Aubel. We regret that it has come to this, but we cannot continue to stand by and watch as Woestmann destroys the trust of our investors.”