Crypto «Wunderkind» in Severe Breach of Swiss Regulations
Finma sanctions the Dornhii Foundation and its founder Dadvan Yousef. The accusations against the once-idolized young crypto entrepreneur are many.
The list of sins against the Dornhii Foundation and its founder Dadvan Yousef published by the Swiss financial regulatory Finma on Wednesday is long. The foundation, which sold digital tokens to private individuals, had no authority to act as an investment firm or a financial intermediary, according to Finma.
Among the accusations are that Yousef unlawfully accepted deposits from the public as a private individual and continued his activities despite being issued a cease-and-desist order during Finma's investigation.
Furthermore, both Yousef and the Dohrnii Foundation failed in part failed to comply with their duty to provide information to Finma during the investigation.
Investors Be Warned
The Dohrnii Foundation and its founder seriously violated supervisory regulations, the Finma said in the report.
Arriving in Switzerland as a refugee from Iraq at the age of three and, by his own account, becoming a crypto billionaire at just 21, the measures underscore the fall from grace of someone once hailed as a crypto whiz kid by publications such as «Forbes» and the «NZZ».
Finma has issued a cease-and-desist order against him and will be «admonished» not to engage in any further financial activities requiring a license. Investors will be warned against him, with the admonition remaining on Finma's website for five years.
The decision isn't legally binding and can be appealed to the Federal Administrative Court.
Foundation Goes Bust
The Cantonal Court of Zug declared the Dohrnii Foundation bankrupt in mid-March due to over-indebtedness and is currently in liquidation, leaving no additional measures for Finma to take against it.
The Dohrnii Foundation and Yousef launched an initial coin offering (ICO) in the spring of 2021 for a newly created token, the DHN Token. It was intended to provide access to a learning platform via the Dohrnii website, as well as a marketplace where users could purchase crypto services and products from other users with the token. The supervisory authority held that the Dohrnii platform was never operational and the DHN token was never usable in the form described.
Three Million Euros Raised
Enforcement proceedings opened in May last year now reveal the foundation sold DHN tokens to around 500 private individuals as part of the ICO, netting it around 3 million euros. The foundation's founder sold DHN tokens as a private individual and through his account to around 60 people for about 3.2 million Swiss francs. Starting in 2019, he accepted additional funds from over 20 investors of about 1.5 million francs, which were to be invested in the crypto sector, according to Finma.
By classifying the DHN token as an investment and because the tokens were to be used as a payment method on the Dohrnii platform, it had payment characteristics. It was based on that which Finma made its accusation of unauthorized activities.
