It has recently come to our attention that there is a website that has been designed to harm the reputation of the TokenPay company by making false and defamatory statements. This has been done in a well documented attempt to extort us for several hundred thousand dollars worth of cryptocurrency, namely Bitcoin and TPAY (ironically). Unfortunately, some community members believe this nonsense, or FUD. Therefore, we will address these preposterous allegations once and for all point-by-point in this post.
False Allegation #1
“TokenPay Token Sale was Illegal, Deceptive and Fraudulent.”
The allegations are that there was no TokenPay company at the time of the token sale, and therefore Derek Capo cannot be considered CEO because no actual legal entity existed as TokenPay. Furthermore, allegations are made that Derek Capo, as a US citizen, fraudulently sold TPAY coins to Americans and this would be considered illegal by the SEC and other regulators. Also, it is falsely alleged that funds have been misappropriated to founders and stakeholders of the project.
The Facts #1
“TokenPay Token Sale Exceeds Industry Best Practices.”
It is ridiculous and meaningless to even debate corporate titles. A little kid with a lemonade stand can take the title of CEO. There are multiple, and legally unrelated, TokenPay companies that exist around the world. It is common for a startup to wait until it is well funded before formalizing costly administrative procedures. While the initial plan was to offer TPAY coins without geographical restriction in exchange for Bitcoin during the token sale, a few days in to the sale the decision was made to refund American purchasers. US persons were therefore prohibited from participating in the token sale.
TokenPay Technology Ltd. is the only blockchain development company that we are aware of that goes so far as to block the download of its wallets to the USA in the Apple App Store, Google Play and on our own TokenPay.com website. US persons are further prohibited from registering and using TokenPay’s eFIN DEX and other related ecosystem products. Despite crypto-to-crypto wallets not generally considered to be Money Services Businesses, we continue to act on an abundance of caution. The allegations suggest that the SEC, which is a US regulator of the investment industry, would have an interest in our company. However, TokenPay has never sold investment products. We have never been contacted by the SEC and believe that the idea of any regulator’s interest into TokenPay is utterly absurd. We do not rule out the future entry in to new and different markets in a licensed and regulated fashion, but only after extensive legal review.
The TokenPay token sale consisted of the sale or barter of TokenPay’s own developed and fully live, functional and unique TPAY blockchain coin for Bitcoin. Fiat currency was never accepted. This in fact exceeds the industry norm of exchanging a non-blockchain security-like ERC-20 token for Ethereum. To our knowledge, no other company has ever conducted a token sale in this fashion by trading one working blockchain coin for another. Furthermore, given the lucrative bonus structure at the time of the sale, participants were able to exchange Bitcoin for TPAY at a rate that is generally considered to be favorable at all times since the sale. TPAY is an open source blockchain coin that has been responsibly maintained by TokenPay, as developers. Anybody can contribute to its development and adoption, and the community is actively involved in both. TPAY performs exactly as it was intended to do without any technological fails. Users of the product and the associated wallets and other infrastructure are generally very content.
Finally, the suggestion that the TPAY Token Sale generated $34.2 Million is completely false and detached from reality. The sale generated 2017 Bitcoin total. This occurred during a time period where the price of a Bitcoin varied from $9000 to $19000. Regardless of the market price for Bitcoin, it was not until the middle of Q1 2018 that we established the necessary International banking relationships to be able to transact in cryptocurrency. This was not an easy feat and required months of meetings around the globe with dozens of different bankers. By the time we had a workable solution in place, the price of Bitcoin was closer to $7000 and it dropped quickly after that. Only through various hedging within exchanges, were we able to achieve some level of semblance.
All of the Bitcoin collected and earned through Bitcoin hedging initiatives has been invested directly into the ecosystem. The founders work on this project full-time, 24/7, 365 days per year for compensation well below the industry norm. Unlike most projects from the 2017 bubble, the proceeds from the token sale are not viewed as a personal piggy bank and every bit is accounted for. There are no TokenPay Lambos. We are “all-in” on the TokenPay ecosystem and have been extremely transparent on spending, and that spending well exceeds $10 Million in “major purchases and partnerships” in addition to a monthly six-figure development spend. At this time we are directly responsible for the employment of about 40 people, most of them developers. TokenPay is a strategic partner of the Litecoin Foundation and Verge Currency, WEG Bank, TokenSuisse, Blocksize, TokenGaming and more. Many of these are equity deals as well, which affords us a certain amount of influence in decision making and push for TPAY adoption.
False Allegation #2
“TPAY Team and Founder Coins were never locked, and are being staked in order to deprive the community of staking rewards.”
The allegations is that the TokenPay Team has never locked its coins, as indicated in the TPAY Whitepaper, and stakes these coins in order to harm the community.
The Facts #2
“Not a single TPAY has ever moved from the Team or Founder wallets.”
It is very simple to prove that the allegations here are false. Simply put, not a single coin or transaction has ever been moved or transferred from the Team or Founders wallets. As a transparent open source blockchain project, this is very easy to see. Here are the links to the TPAY blockchain explorer of the two wallets in question:
In fact, the initial lockup period of the coins belonging to both of these wallets expired a year after the end of the Token Sale. This would be the end of 2018. Nevertheless, the TokenPay Team and Founders remain committed to the project and have not sold or transferred a single TPAY coin. This is indisputable fact, not an objective opinion. The suggestion that staking the coins shows malicious intent towards the community is nonsensical. With approximately 4 Million TPAY controlled by the Team and Founders, staking is not only responsible, but necessary for the blockchain network security and strength.
Accordingly, TPAY is a blockchain coin, and not an ERC-20. To stake an ERC-20 token for rewards has no technological impact or benefit. But with TPAY, staking is what drives its blockchain network. Because so many are staking TPAY in order to benefit from rewards, the blockchain is extremely fast and secure with multiple nodes all over the globe. For this reason TPAY transactions are nearly instant. Furthermore, we believe that the Team and Founders also deserve to benefit from the rewards of staking like anybody else. It is a decentralized blockchain protocol after all. Finally, the TokenPay Whitepaper promised 5% staking rewards for Year 1 and 1% in Year 2, and actual TPAY staking rewards have well exceeded this by an exceptional multiple as we are well into Year 2 now and even with increased benefits to staking TPAY, the reward payout is still 10%-15%. Therefore, it is again obvious that the community is not being deprived of rewards, but in fact the opposite is true as rewards have greatly exceeded expectations.
False Allegation #3
“2.5 Million TPAY were sold into the market to benefit the Founders in a fabricated domain deal.”
The allegations are that TokenPay enriched its founders by buying domains from itself with TPAY in an apparent act of embezzlement.
The Facts #3
“TokenPay has acquired from an unrelated third party, a nearly $15 Million portfolio of domain names for a new TokenPay ecosystem product”
Perhaps the most egregious accusation is that TokenPay fabricated a deal to purchase domains from a related party in order to enrich itself. This could not be further from the truth. We have been talking to and have had a working relationship with an industry renowned domainer named Oliver Hoger for less than a year. Prior to this time, nobody on the TokenPay Team or Founder or any related party has ever been in contact with him. Derek Capo met him on the boat in Amsterdam during the first Verge Currency event. Since that time we made small deals. For instance, EXM.com was announced and it was purchased with TPAY. The domain was acquired for a future ecosystem project. Following this deal we would regularly ask Oliver if he had any more domains. We are e-commerce junkies at heart and know the value in domain names for the TokenPay ecosystem. We also wanted to properly leverage our TPAY for the future benefit and sustainability of the ecosystem at a time when this was favorable.
In August 2018, Oliver approached us with an opportunity to obtain a sizable portfolio of domain names, almost entirely for TPAY. Multiple sellers were involved, and all agreed to accept TPAY. Consistent with our strategy of vertical integration and extensive experience on building consumer facing websites, our plan was to build out a domain name reseller and related services business and integrate it with the TokenPay Merchant platform. We have already launched TokenDomains.com and it features nearly $15 Million worth of resale domains. This valuation is from Estibot, a third party appraiser. We believe that TokenPay unquestionably owns one of the top domain portfolios in the world. We are in the process of adding related services like domain registrations, web hosting and a third party domain reseller platform to our platform. All of this is crypto driven and the proceeds from this enterprise are fed back into the TokenPay ecosystem in a very unique way which we have publicly discussed on social media. We are also building out many e-commerce sites in the same fashion with marquee domain names, like Suitcases.com, VegasDeals.com, Excavation.com and Toothache.com to name only a few.
Here is how it all works and benefits TPAY stakers. Among several other staking based rewards, TPAY stakers are eligible to receive Airdrops of the DOT coin which is tied to the platform revenues of the domain and e-commerce business. These revenues will be collected directly in both cryptocurrency and fiat. The fiat will be converted to TPAY and then further distributed to the holders of the DOT coin that are staking a pre-determined amount of TPAY. This is our staking rewards driven ecosystem. We believe that we have pioneered this and it is the most viable path to real crypto adoption. Staking TPAY has real technological benefits for the blockchain and we will reward these activities with Airdrops and revenue reward incentives.
Due to our always transparent manner of doing business, we immediately disclosed the acquisitions and also the details of the transaction. Approximately 2.5 Million TPAY were transacted in a short period of time, representing funds from our capital expenditures budget, as noted in the TokenPay Whitepaper, and different disclosed buy backs of TPAY that we performed in the months prior to this event. Unequivocally, there were no related party transactions of domains. The seller of the domains was either Oliver Hoger or contacts only known to him where he brokered the deals. We had no prior relationship with Oliver Hoger other than purchasing EXM.com before moving on to this larger deal. The domains that were acquired are not for personal use and represent a major part of our ecosystem. The reason this deal became so controversial is because many of the transacted parties clearly negotiated their TPAY in the open market which caused significant selling pressure absent of sufficient liquidity. We have since, at our own expense, added professional market makers and several new exchanges to the TPAY market. This has the effect of calming volatility. Also, we do not and have never sold any material amount of TPAY directly into the open market.
False Allegation #4
“TokenPay uses Twitter to pump and dump the price of TPAY.”
The allegations are that TokenPay is engaged in a deliberate scheme to use media to hype the price of TPAY and sell it to make a profit.
The Facts #4
“TokenPay has never sold any material amount of TPAY in the market.”
While we have sold some TPAY from time-to-time on different exchanges, the total value of these sales from inception is under $100,000 and hardly significant in a market that regularly trades several hundred thousand dollars per day in volume. We remain interested in the TPAY market, it is fascinating. In fact, our open market buys of TPAY have greatly exceeded this number by a wide margin. So while it is possible that there have been media events that have triggered a move in the price of TPAY, we have never benefited or attempted to benefit from this. We operate with a very strict code of ethics. Our corporate account trading records will prove this fact if ever questioned. The Team or Founders that are privy to any potentially market moving information do not have accounts anywhere TPAY is traded. As well, nearly the entire organization, including many Telegram Admins and Beta Testers have signed corporate NDAs. As mentioned previously, we are committed to enhancing liquidity and have engaged professional market makers to tighten the bid and ask spread of TPAY ahead of the imminent TokenPay Merchant Platform launch.
False Allegation #5
“TokenSuisse and WEG Bank are fake partnerships”
The allegations are that TokenSuisse does not include TPAY in its indexes and that WEG Bank is a failed real estate lending bank that will never be able to issue crypto debit cards.
The Facts #5
“TokenSuisse and WEG Bank are official strategic and equity partners of TokenPay Swiss AG that play a vital role in the TokenPay ecosystem”
Firstly, TokenSuisse was known as Coinlab Capital before TokenPay Swiss AG made a deal to acquire part of the company. It is a well known Swiss asset manager, and it has created two different crypto index investment products before any deal with TokenPay. These are the Crypto Star Index and the Crypto Venture Portfolio. Like any other financial index product, changing existing components following the launch is usually not feasible as they have been created with a defined investment strategy. So it is true that TPAY does not exist in these legacy index portfolio products. But this is because the partnership with TokenPay was formed following the product creations. Since then, there has been two new products released by TokenSuisse and both have featured TPAY. One is the Privacy Coins Portfolio, which can be seen at PrivacyCoins.com. It features four industry leading privacy coins at equal portfolio weight, one of which is TPAY and the other three are XMR, DASH and ZEC. The second product released by TokenSuisse since our partnership is the TPAY Tracker Certificate, which is an index product that directly tracks TPAY. It is clear that this partnership is alive and well and delivering above expectations.
It is also alleged that WEG Bank is just a failed mortgage lending shell bank when this could not be further from the truth. In fact, WEG Bank maintains a profitable niche lending business where it offers emergency loans at above market rates to home owners associations. The CEO Matthias Von Hauff deeply understands fintech, and has been working since early 2018 on a sensible structure that will work for many years to come. He recently announced that the bank is now accepting crypto corporate accounts. This is huge news in the banking industry and unfathomable structural, legal and compliance work was put into building the proper systems to enable this product offering. Lisk was the first corporate account beta, and that was successful. Charlie Lee and the Litecoin Foundation is another partner in the bank and TokenPay brought them on board as part of our overall strategic partnership. Other recent equity partners include another crypto project called Nimiq. Debit cards have been discussed by us since inception and we have seen cards (just like crypto bank accounts) come and go with no viable long-term solution.
We strongly believe that WEG Bank will be that long-term viable solution for debit cards and other crypto banking products. The wheels are turning and the results from this partnership has frankly well exceeds any expectations. The competition has literally floundered when it comes to crypto banking on the international playing field. Everything new represents a regulatory challenge. However, with an experienced leader like Matthias Von Hauff at the helm, we are very confident about the future of WEG Bank and the essence of our partnership.