Hi fellow investors of Bankorus,
My name is Sonic Zhang.
I’m here to answer from my personal perspective:
What happened with Bankorus?
I’ve been asked this question a lot recently, since you might have heard from one source or another, likely from Greg himself, that I’m apparently the CEO of Bankorus now.
I am not the CEO of Bankorus. In the sense that, I have not accepted or signed any contract or agreement, or went through any sort of board approval process to take up this responsibility and become the CEO.
I am an investor. Just like you.
I’ve been introduced to Greg by Sebastian way back in December 2017, right before they were preparing to do an ICO for MICAI, the original company Greg founded that became Bankorus. I went to the MICAI office in Beijing, and sit down with Greg and Eagle, listened to them talked about the wealth management platform they have built, their experience in the financial and banking sector, and the vast connections they have built with wealth. I saw an opportunity and great potential, and it’s one of the best ICO project plans I’ve seen among thousands of other projects. I remember thinking: a Belgian and a Chinese together, they can take over the world!
So I decided right then I’m going to invest in their future. I invested 1M dollars myself, some in fiat, as they still need RMB to operate in China, some in crypto, for the tokens. And later on, raised another 2M dollars from my connections, also for the tokens.
I remember they are running around lots of conferences and spending a lot on media exposures during the first quarter of 2018, as you do in the ICO stage. It seems everything went great, they had a lot of media coverage and the community was growing.
Also during that time, Greg met TonyG, Antanas Gouga, the European parliament member from Lithuania. TonyG introduced the Rato Credit Union to Greg, asking for investment and capital infuse to convert Rato into a specialized bank. I remember Greg calling me asking if he should work with TonyG, because I know TonyG as a friend. I told him business is business, do all the duel diligence necessary before you make your decisions. Later I was told they have traveled to Vilnius with a group of experts, and found this was a really good opportunity and asset to invest for MICAI to become the next level. A bank in the crypto space is very attractive to have.
Then MICAI has been rebranded to Bankorus, because of the investment they made with Rato. Then as I am aware now, Bankorus has spend a lot of money and human resources on this bank deal afterwards.
Then the ICO bubble bursted, and the market crashed.
In April 2018, a team from tZERO came to Asia, Patrick Byrne the founder was one of them. He explained to me what is security tokens, and why that’s revolutionary to the stocks and financial market. I realized this is a much broader scope than just utilities, and will essentially become everything we own in the future. All of our assets can be tokenized securities. I followed the tZERO team through the Asia trip, watched them explain it to all the other VCs and investors. Looking at the reactions from various investors, I can see there was a giant gap between the crypto world and the financial world. Most crypto investors have no idea what security token is, and most traditional VCs think it’s amazing but doesn’t have the legal framework to invest into security tokens yet. That’s when I decided to found LedgerZ Capital, solely focuses on investing into security token infrastructures including ST exchanges, token issuance platforms and all other services. tZERO became our first investment.
Greg was also at those meetings with tZERO, he caught on the trend faster than I did because of his financial industry background. I think that’s when he decided to transition from an ICO to a STO, converting all tokens from utility to security, which means real rights and assets, not like the useless promises a company printed that’s trying to sell you their “economy”. I supported this decision because I think that’s the the responsible thing to do for any entrepreneur with well intentions for all your investors. Especially if Bankorus are thinking of owning a bank in the future. Everything need to be clean as a plate. But I also warned him about the lack of markets back then that can trade those security tokens, because not even tZERO has opened trading yet not til the start of 2019.
tZERO was also interested in owning a bank license somewhere, and their ventures arm Medici decided to invest into Bankorus, not for tokens but for equity.
Early 2019 during one visit to the newly renovated office of Bankorus in a much bigger space within a high end commercial building, Greg told me everything is going smoothly, the bank is on route to be successfully converted just waiting for approval. And they have raised another 10M dollars in a second equity round to support this bank deal and their plans of a licensed exchange in Europe. And the tokens will be converted to BKTS which represents 15% of the core revenue that Bankorus generate, paid back to the token holders in a buy and burn model.
Jump forward to July 2019, after spending 4 months in the US exploring opportunities for STO in the North America market, I came back to Beijing. Greg asked me for a dinner along with Eagle, his cofounder.
I was shocked to have been told the following:
- Bankorus has run out of cash, because the second round investors pulled their funds. Reasons been the management position they hope to get from the Rato Credit Union didn’t happen as they have planned. I’ve been told this credit union was operating under an old structure where there is no private equities, each of the 4000+ account holders has a vote, and each year in March there will be a member’s conference deciding how the credit union should be run and who should run it. And Bankorus didn’t have enough support from the board and management to have control. This has disappointed the new investors who signed convertible loan agreements for the investment and decided to pull out.
- All the employees already left including Eagle, because there is no money to pay their salaries.
- Greg also has to start looking for other jobs, because he need income to support his family.
- Both Greg and Eagle has forfeited their shares and they decided to give it to LedgerZ, because I’m the biggest token investor and knows most of the people involved, which will give LedgerZ Holdings a majority shareholding of 54% that has controlling rights of BK Group Limited.
- All that’s left in Bankorus is about 1M Euro capital investment into this Rato deal, that if Rato wants to convert without us, they have to buy us out at least 1:1. If we stick to this investment or increase the size, we will get private shares accordingly after the conversion. As it is standing, the potential shares are looking at close to 40% after conversion if Rato doesn’t gather additional fundings from other investors to increase the total cap. It they do, we will be diluted but the total valuation might also go up.
- And there is no outstanding bills or liability besides this asset in Rato. And they told me this give me an opportunity to own a bank if I wanted to.
- And the token holders doesn’t have any legal claims over this, based on the agreements they signed.
What would you do?
If you were me?
For anyone that’s reading this?
Here is what I did:
- I told both of them I’m very disappointed in them, in the way they have treated investors and the lack of communication before and after what has happened.
- I told Greg I don’t accept him quitting, because this project started with him and it should end with him too. He’s clearly more passionate and ambitious about this project and his personal achievement than anyone I know. If this is ever going to come to an end, it should be with him not without. He’s 29 years old and has two kids, he told me his wife wants to divorce him because of all the travelings and never home to take care of the new born baby. I told him if he can work out issues with his family, I will help him with income sources. Even if he decides to give up his shares, Bankorus will rehire him if necessary. But stick with me. Don’t quite now.
- I told them the tokens is the biggest liability doesn’t matter what you think or what the token agreement says. Been in this space long enough has taught me one important lesson: if you ever issue a token, doesn’t matter if it’s ICO or STO, your reputation will be tied to it as long as you live. And both of their reputations will be forever lost if they turn back on their token investors. And reputation means everything in this industry. If you still want to work in this industry for years to come. You have to be responsible to your token investors.
- I told them I will have to accept the shares, because if I don’t, I don’t even have control over how it will be used or how it will go from here, I have to make sure the investment I’ve made and the investment I’ve brought on will have maximum returns. But not before they provided me with detailed accounting documents and cash flow sheets and all the other legal documents they’ve signed, to understand exactly what went wrong and make sure there is no illegal conduct.
- I asked Greg to give me contact details of all the shareholders and investors, including the token investors.
- I talked to all the shareholders asking for their support in this Rato deal, and convinced them to be patient, because I think waiting for the bank to be converted is the best option, pulling out now means all efforts will have been wasted and it becomes a sure loss for all the investors.
- I talked to the current CEO of Rato, and told him I’m representing all the investors, and we are here to help and get maximum financial returns, not to take over. And confirmed that Bankorus does in fact have a investment still standing with them, and the deadline for the conversion to a specialized bank is March 2020 and still ongoing. He’s very cooperative and welcomed us to visit their Vilnius office later this month, during the week of 21st Oct. I’m bringing several other shareholders, who has experience in owning and converting banks, to travel to Vilnius together. I hope this will bring some good news to the table, and I will share it with everyone.
- I talked to most of the token holders I know and told them to also be patient, even their tokens technically has lost its value, because Bankorus is no longer operational, and there is no revenue to generate. I promised to all of them, and here to you as well, that this share that has been given to me, I will peg it 100% to the 35 million BKTS tokens that has been issued, which means whatever I get back from those 54% shares, I will chose some way to distribute it to all the token holders, doesn’t matter how you got your tokens. I’m a token holder myself, and my tokens are still sitting in my wallet, 4.5 million BKTS tokens to be exact. I can not convince the other shareholders to do the same because they were not issued tokens like we have.
Here is what I will do:
- Focus on the Rato deal for the next couple of months, try to offer any help they need to make the conversion go smoothly and according to plan.
- Seek additional investment for Bankorus, see if anyone is interested in co-investing into a potential bank.
- Try to push the security token issuance platform Bankorus just launched to be adopted by all the ST exchanges and find projects to use it for issuance for their STOs, though operational team is needed.
- Rebuild a team that can move Bankorus forward with new business plans, if additional resources and fundings can be secured from investors.
- When the investment into Rato paid off, and if the shareholders reach consensus to exit, for whatever return LedgerZ will get from the 54% shares, I will likely divide it into 35 million pieces, and put a big buy order on the market to let anyone that wants to sell be able to. And this is a personal promise, from my own fund.
As some of you might already found out, there is a BKTS token trading on a token exchange called CoinTiger.com.
This was not an official listing event, which is why it wasn’t announced from Bankorus. For my knowledge, It was a combined effort of some token holders in Asia that got this token listed. I can confirm it is in fact the real BKTS token, because it’s a ERC20 token even though it is security issued from Cayman, any token exchange that wants to list it can do so without Bankorus consent. Though I do not know how long it will be tradable on Cointiger, some people that got free tokens seems to be dumping it at a very low price. I’m not selling mine. I will wait with all the other holders for the Rato deal to payout.
I hope this answers some of your concerns, and I will keep being transparent and straightforward with all of. you going forward.