This post addresses community questions regarding over-the-counter trading of AERGO tokens, the AERGO token generation event, organizational matters, and other miscellaneous items. Some answers are found in our newly-released Quarterly Project Update available on our website or below and will be referenced accordingly in the course of this article.
We have received many questions in the past few months from our community. There have also been some concerns. We are happy to address these in this article. Furthermore, we urge our community and other stakeholders to continue to raise any questions they may have. We strive to answer all questions in an open, frank, and transparent manner.
Over-the-Counter Trading of AERGO tokens
We have received concerns regarding PATHWAY, our private over-the-counter (OTC) trading desk and its apparent contradiction with the bounty program we ran to crowd-identify potentially fraudulent, unauthorized OTC transactions.
We noticed an increase in demand in general from investors to release cryptocurrency positions throughout the second half of 2018 due to changing macroeconomic conditions, which changed the way that any and all institutions viewed various kinds of assets. This desk was a proactive response to this observation.
PATHWAY was organized by the AERGO Organization for purposes of enabling safe post-TGE trades of AERGO tokens to selective parties. We looked to establish a fully-regulated OTC desk (dubbed PATHWAY), to facilitate the trading of AERGO tokens after the token generation event. This was to be run by a leading Swiss asset management firm.
The purpose of this desk was to allow direct token purchasers who took part in the AERGO private token sale to exit positions in a fully-regulated and completely safe environment. We merely sought to prevent trades from being executed in unregulated, unsafe environments on other secondary markets.
We want to ensure that our token holders are in it for the long run. We wanted to release those looking to exit their positions to make sure that those holding tokens truly believed in our vision. We can confirm, however, that this desk was not used, as the OTC desk did not operate in any capacity or form. This was due to a number of complicated reasons.
We ran a separate program to crowd-identify fraudulent OTC transactions with our community. This was a resounding success as it informed us about potentially fraudulent transactions before they even took place. We strive to lead the industry in legal and regulatory operational models and to prevent fraudulent token exchanges from taking place is one such initiative.
We are currently working to establish this third-party fully-regulated OTC desk for token holders post-TGE in January. This will effectively lessen the impact of large token releases in the future by transferring large token holdings from those wanting to sell to those who wish to hold longer-term and truly believe in the project.
Why was it kept a ‘secret’? A trading desk like this is typically not something a project would talk about for regulatory reasons. The amount of information that I have just divulged is also unusual.
The desk is also not open to the public, with the form link having been provided selectively to direct existing token sale contributors and selected interested parties. The point of this desk is for it to remain private and only open to exclusive parties for obvious compliance reasons, as a means of completing safe and regulated trades. It was a means of preventing those very unregulated trades that we sought to put an end to.
Token Generation Event
Some members of our community expressed worries that the AERGO token generation event schedule was designed and executed in a way to benefit certain parties involved in the AERGO token private sale. This belief stemmed from the token first being accessible in Korea before being accessible globally. We can confirm that this was not the case.
Only a very small portion of the private sale purchasers were Korean citizens, so the schedule of the AERGO token generation event had almost no effect on the vast majority of token holders. We can also confirm that many of the largest international funds, who took part in our private sale, encouraged and actively pushed for this approach. Kicking-off the AERGO token generation event in BLOCKO’s home market, where it has a significant brand and customer recognition, could only help AERGO build market awareness.
The primary rationale for the token generation event schedule was purely for business operations reasons as our strategic partner BLOCKO is based in Korea. We took legal and tax advice from specialist law and accounting firms. To establish a legally compliant process for paying BLOCKO for its work on AERGO, AERGO had to schedule its token generation event so that the token would first be accessible to Korean users. Once AERGO was accessible in Korea in a regulated manner, it could pay BLOCKO for its technology development and business development efforts during 2018. There were also other reasons for the AERGO token generation event schedule. These can be found here.
We can also confirm that all changes in our private sale agreement with AERGO purchasers, were conducted in a legally compliant manner. With this change, we delayed the vesting schedule for purchasers and also other token holders. The change was agreed with eight out of ten of our largest token purchasers.
We will always respect our backers, who have put their faith in our team, our technology, and our strategy. The vesting schedule change was a critical business requirement in order to achieve a successful token generation event. We believe we managed this — even at perhaps the worst time as the market was at its lowest point in years.
Contrary to some reports, no refunds have been made to date to any original AERGO private token holders. Also, it is simply not possible for any large AERGO token investor to sell all their tokens as most of their tokens are locked up and have not been released. Rumors about large AERGO investors liquidating their allocated tokens are simply untrue.
We can also confirm that AERGO has not sold, and has no plans to use its Foundation Reserve tokens. AERGO is currently considering moving many of its Foundation Reserve tokens into an independent, trusted, and audited third-party escrow service. This will help to ensure these tokens are only released gradually and on a smaller-scale basis over the next five (5) years.
AERGO Organizational Matters
Some individuals have expressed a few concerns to us regarding the leadership team of AERGO such as there have been mass layoffs and that members of the team are under pressure to resign. These could not be further from the truth.
The team goes from strength to strength. Sometimes we do make minor adjustments in leadership roles, but this is standard practice for fast-moving and agile startup projects like AERGO. In fact, we are growing the dedicated headcount working on AERGO by 28% during 2019 as described in our ‘Financial Plan’ for the year in our Q1 QPU.
As Chairman and CEO of the AERGO Organization, my job is to do what is right for the project. I am tasked with ensuring all AERGO’s actions align with the long-term success of the AERGO platform — not only regarding technology development completion but also on the very important matter of true commercialization of the solution. I am also tasked with regularly communicating with all stakeholders and particularly the management board and shareholders of BLOCKO as well as with AERGO’s own private token sale purchasers. AERGO has formed strong relationships with many of its stakeholders.
Our investors not only believe in our vision of the future, our project, and our strategy; they have expressed strong belief in the AERGO team and its leadership.
We are also happy to announce that I have been promoted from co-CEO to CEO of the board of management at BLOCKO. As BLOCKO is perhaps the most experienced blockchain infrastructure provider in the world, and one of the very few with a multi-million-dollar revenue and a real client base, this appointment speaks well for the future of the AERGO project. It will allow us to truly drive adoption of the AERGO platform amongst real clients and real customers globally — by leveraging our excellent partner BLOCKO.
AERGO is likewise considering inviting the BLOCKO Chairman to join the AERGO Organization board. As part of our plans to explore the strengthening and deepening of the relationship between BLOCKO and AERGO, these steps will provide substantial leverage to the parties.
Other Miscellaneous Concerns
While we have many supporters, we have also unfortunately attracted attention from some parties that are seeking to damage our project. Our website has been attacked on multiple occasions; scammers have managed to extract money from innocent members of our community, and members of our team have had individuals attempt to scam them.
It has been reported that we completed our private token sale in one round for Ether and at a price close to US$600. Statements have also been made that we will not be able to run the project. There has been speculation from various anonymous sources about the AERGO Organization’s funding and subsequent cash needs. One source has indicated our project is in serious trouble; that we are downsizing; that our investors are abandoning the project; and that we have serious management issues within AERGO.
We do not usually respond directly to such rumor and speculation. However, these reports are simply not true. We trust you will agree after reading this report and you have a much better understanding of matters relating to financial and management of the AERGO Organization and our great progress to date.
We are very pleased by the outcome of recent events in 2018. We are happy that our community is actively voicing their concerns directly to us; we ask that in the future, before making assumptions, our community waits patiently for full comment from us.
We look forward to sharing many of the things we are doing with all our stakeholders. We look forward to publishing regular Quarterly Project Update Reports in the future and to operating transparently with all our stakeholders.