Arbitrade Ltd has terminated its gold trading agreements with Sion Trading FZE and divested itself of all interests in the gold which was provided to it by Sion under the agreements.
The Bermudian-registered company has also stated it never assumed any liabilities for the crypto tokens called dignity, namaste, honor and orectic.
Arbitrade said its business and contractual relationships with United Arab Emirates-registered Sion have now been assumed by Cryptobontix.
In its statement, Arbitrade made no mention of its future plans. It acquired Victoria Hall, on Victoria Street, last October as its global headquarters, but the building has remained unused.
The company’s relationships with Sion and Cryptobontix have featured a number of turns. Arbitrade announced in March 2018 that it was to acquire Ontario-registered Cryptobontix Inc, which owned the suite of crypto tokens.
Since then Arbitrade has made numerous mentions of its tokens, and also a multibillion dollar gold agreement to back its tokens with precious metals.
In November it said its directors had secured “in excess of $10 billion in gold to back their tokens”.
This was in relation to a safe keeping receipt, or SKR, for 360,000 kilograms of gold that was said to have been verified by “an independent public accounting firm”. The identify of the accounting firm has never been publicly revealed.
In January, Arbitrade said it had completed the purchase and vaulting of an additional $3.8 million of hallmarked gold bars through Sion. It issued photographs of some gold bars next to a card featuring Arbitrade’s name and the names of the crypto tokens dignity, namaste, honor and orectic.
Len Schutzman, Arbitrade’s chief executive officer, said: “With our alliance with Sion, and their gold-mining network, we are able to expand our family of precious metals-backed crypto coins”.
Also in January, Arbitrade’s gold procurement agent Sion announced it was to purchase a major shareholding in Arbitrade by acquiring the shares in the company held by Leila Holdings Ltd, a Bermuda exempted company owned by Arbitrade founder Troy Hogg.
However in May, Arbitrade announced it had never completed the 2018 purchase of Cryptobontix due to “timing issues and regulatory approvals”, and that Mr Hogg was working to close the sale of Cryptobontix and its tokens to Sion. The following month Sion announced the completion of that deal.
In an announcement from Arbitrade’s directors, released yesterday through Bermudian-based law firm Trott & Duncan Ltd, further information was given on the history and background to the deal.
It said Cryptobontix issued the digital asset tokens, or ingot tokens [dignity, namaste, honor and orectic], which were designed to be backed by precious metals.
“It was intended that once Arbitrade had been set up in Bermuda, Cryptobontix, which was in majority common ownership with Arbitrade, would be brought into the Arbitrade group and as part of this the ingot tokens would also transfer. In preparation for this Arbitrade contracted with Sion to provide gold in order to back the ingot tokens,” Arbitrade said in its statement.
“Arbitrade’s agreement to acquire Cryptobontix was conditional with the major condition being adequate proceeds from an initial coin offering. Following a number of regulatory challenges and approval delays, generally being faced in the fintech market in Bermuda, along with market conditions affecting the ICO market, the proposed ICO was not undertaken, the acquisition of Cryptobontix did not proceed and consequently the ingot tokens remained squarely with Cryptobontix.
“As a result, Arbitrade has never owned Cryptobontix nor assumed any liabilities for the ingot tokens.”
Regarding the gold agreements, the company said: “With Arbitrade having no requirement for gold in relation to any exchange, mining or other business activities that it might undertake, negotiations for Sion to move all contractual obligations in relation to the gold to Cryptobontix were aligned when Sion identified a business opportunity in the ingot tokens and indicated their desire to acquire the shares in Cryptobontix.
“As a result, Arbitrade’s business and contractual relationships with Sion have now been assumed by Cryptobontix.”
Trott & Duncan provided legal advice on the transaction.
Arbitrade’s announcement comes two weeks after newly-formed Dignity Holdings LLC, registered in Delaware, claimed its subsidiary Dignity Gold had acquired Cryptobontix and its tokens and would continue the relationship with Sion through the SKR for 395,000 kilograms of gold. That amount of gold would be worth $18 billion at today’s prices.
The CEO of Dignity Holdings is Stephen Braverman, the former chief operating officer of Arbitrade Exchange (Bermuda) Ltd. In a court document in January, Mr Braverman also referred to himself as being an officer and director of Cryptobontix.
Investment and real estate businessman Kent Swig is chairman of Dignity Holdings. He is also president of New York-based Swig Equities LLC and Helmsley Spear LLC.
During the past two weeks, requests by The Royal Gazette to Sion, Dignity Holdings, Dignity Gold, and Cryptobontix for information about the reported acquisition of Cryptobontix by Dignity Gold have not been answered.