Token Swap

At A Glance

Token Swap

At A Glance

Zurich, 12 June 2020 – The Board of Directors of modum.io AG (Modum) has signed off on the updated Token Swap proposal for its MOD tokenholders. The Token Swap offer has been expanded and now includes the possibility to opt for a monetary compensation or a swap against participation certificates with the addition of a guaranteed cash payout.

Based on the fairness opinion by BDO (one of Switzerland's leading auditing, fiduciary and consulting firms), Modum’s board has decided to extend the exchange terms with a choice for tokenholders. For those who would like to swap their MOD tokens, the final offer includes the swap of MOD tokens against participation certificates (shares without voting rights) with a guaranteed payout of a cash amount. For MOD tokenholders who do not want to or for regulatory reasons are not allowed to swap, the final offer includes an exchange of MOD tokens against a monetary compensation.

The token swap period starts on 12 June 2020 and ends on 21 August 2020. Every tokenholder, regardless whether they wish to swap against participation certificates with guaranteed cash payout or against monetary compensation, must register via the Modum Token Swap App (Token App). The Token App can be downloaded from the public app stores as of 12 June 2020.

The token swap offer is addressed and only made available to MOD tokenholders. Tokenholders must identify themselves in the Token App. After successful onboarding and identity verification the Token Swap Terms will be made available including the BDO fairness opinion with all relevant financial and legal information. For eligible MOD tokenholders the allocation of participation certificates with the related guaranteed cash payout or, as elected, the monetary compensation will be performed no later than in the fourth quarter of 2020.

The Procedure in Detail
To start, MOD tokenholders need to download the Token App. Android Users can download it from the Google Play Store and iOS Users can download the Token App via Testflight. For more information on how to access the Token App, please refer to the FAQ below, questions 6-8. Once you have downloaded the Token App, please follow the instructions therein.

After the successful onboarding, identity verification and eligibility check in the Token App, access to the Token Swap Terms is granted. In the next step, MOD tokenholders can select whether they want participation shares at the exchange rate of 4 MOD against 1 participation certificate plus a guaranteed cash payout. MOD tokenholders who do not want to or cannot swap for regulatory reasons may opt for a monetary compensation per MOD token instead – provided such monetary compensation is permitted. More information and the exact amounts are published in the Token Swap Terms and the BDO fairness opinion.

The detailed procedure as well as any exclusions or restrictions are published in the Token App Terms and in the Token Swap Terms. For those who choose none of the above during the active swap period, the termination procedure described below applies, with the compensation remaining valid for a 10 year limitation period.

Termination of Rights Attached to the MOD Token
After the Token Swap period and the implementation period of the swap are over (presumably no later than the fourth quarter of 2020), Modum will amend Modum’s Terms of Token Sale of 2017 and terminate the token sales terms, e.g. terminate all contractual rights attached to outstanding MOD token. For more information and legal background, please refer to question 24 in the FAQ below.

Tokenholders whose rights have been terminated unilaterally can actively contact Modum during 10 years following the announcement of the termination in order to get a compensation for their MOD token at the same rate as the monetary compensation offered during the Token Swap period.

The Future of Modum
We are convinced that with the above outlined offer we have a good solution for all stakeholders. We are also convinced that with this we are securing the future of Modum and are setting the basis for continuing our success story on a solid foundation. Serving our clients and continuing our ambitious product development trajectory.

For further information please read the FAQ below. 

FAQ 12 June 2020

When we did the ICO in 2017, we were unsure on how the token market was going to develop. With the further clarification and development of regulations with regard to digital assets, crypto exchanges face increased requirements from regulators when hosting tokens with security-like functions. With this Token Swap we are clearing the ambiguous circumstances around regulated and non-regulated exchanges the MOD token has been and is facing. Participation certificates are a classical financial market instrument and are a more reliable for both future participation certificate holders and Modum as a company. The MOD Token Swap is only successful for all stakeholders if 100% of the MOD tokens can be replaced.

According to the relevant regulatory bodies that were consulted, modum.io AG is not required to publish a prospectus because the Token Swap is addressed only to MOD tokenholders and does not constitute a public offer. Due to this private nature, tokenholders need to go through the KYC process in the Token App in order to access the Token Swap Terms.

According to the relevant regulatory bodies that were consulted, modum.io AG is not required to publish a prospectus because the Token Swap is addressed only to MOD tokenholders and does not constitute a public offer. Due to this private nature, tokenholders need to go through the KYC process in the Token App in order to access the Token Swap Terms.

The following embargo and sanctioned countries are entirely excluded from the offer: Belarus, Burundi, Central African Republic, Cuba, Democratic Republic of the Congo, Guinea, Guinea-Bissau, Iran, Iraq, Lebanon, Libya, Mali, Myanmar (Burma) North Korea, Somalia, Southern Sudan, Syria, Venezuela, Yemen, Zimbabwe. This list is subject to change at Modum's sole discretion, depending on the list of embargoed / sanctioned countries of the Swiss State Secretariat of Economic Affairs, SECO and global economic, legal and political developments.

The following countries are excluded from the option to swap MOD token against participation certificates but may swap MOD token against the offered monetary compensation: China and USA.

For all other countries the offer applies, subject to selling restrictions described in the Token Swap Terms.

If you have any have issues with the onboarding process or with the token app itself, please reach out to us via our token app service desk. Please sign up for the dedicated service desk (Jira), and then describe the issue you are facing. Make sure to include steps to reproduce the issue and add a description explaining the issue in more detail.

As an iOS user you can download the Token App via Testflight. First, download Testflight in the App Store. Then click on the Token App download link on your iPhone to download it and you are good to go. If you already have Testflight on your device, you can directly click on the Token App download link.

If you need support, please open a service desk request.

Android users can download the Token App directly through the Google Play Store.  

We decided to distribute the Token App via Testflight since Apple does not allow apps to be distributed to limited groups via the app store.

The Android version of the Token App is available in the Google Play Store and can be accessed here.

We wanted to also offer an option to MOD tokenholders who do not want to or cannot swap for regulatory reasons. A monetary compensation is the fairest solution. For details on how this was calculated, please refer to the BDO fairness opinion, available to tokenholders who successfully onboarded in the Token App.

Cashback is offered for tokenholders who are not interested in becoming participation certificate holders or who are not eligible for the token swap due to regulatory reasons but may be eligible for a monetary compensation.

You will have to provide your IBAN in the token app. If your bank account has no IBAN, you can set up a free account through eg. Transferwise and receive the payment there.

Yes you can. You need to set up two accounts in the Token App, and do two (or more) separate transactions: Send the amount of tokens you wish to swap for cash, and then through the other account - with a separate email address – the amount of tokens you wish to swap into participation certificates. Please note that for each email address you use you must go through all the steps in the app.

A participation certificate is a classical financial instrument and is thus widely recognized. This provides greater legal clarity to both the participation certificate holders and the company and puts Modum on a solid basis for the future.

No. The participation certificates will not be publicly listed and thus will not be tradeable. A private sale will have to comply with the formalities required under Swiss law in order for the new participation certificate holder to be recognized as such by the company.

You will receive a written statement from our share register provider once the participation certificates are assigned to you – which we plan to do not later than the fourth quarter of 2020. The participation certificates will have an ISIN and we will provide you with a safekeeping account free of charge as long as you hold the participation certificate.

The ISIN is the most popular global securities identifier. Trading, clearing and settlement systems in many countries have adopted ISINs as a secondary measure of identifying securities.

Having an ISIN allows the participation certificates to be transferred to any depository account of a bank. You may request to transfer the participation certificates to a depository account of your bank by submitting a respective request to our share register provider and to your bank. Depending on how your bank is connected to the SIX central securities depository, different transfer procedures may apply and different fees might be charged for a transfer. All costs related to such a transfer are at your expense. Please check with your bank prior to requesting a transfer to avoid excess fees.

All financial figures that are relevant for the swap assessment are published in the BDO fairness opinion available after onboarding and identity verification in the Token App.

As a participation certificate holder, you can view the annual report, which will be made available for review at Modum’s head office once published (annual report 2020 in H1 2021).

To simplify the calculation, if it is assumed that 100% of tokenholders choose to swap all of the outstanding MOD tokens into participation certificates, then the participation certificates represent roughly 36% of the modum.io AG equity. Read the BDO fairness opinion for details (available after onboarding and identity verification in the Token App.).

Our terms of token sales state that everybody is investing at their own risk and modum.io AG will not cover anybody’s loss of owning MOD tokens. It furthermore states that any acquisition and use of MOD tokens is speculative and carries significant financial risk up to the possible loss of all value. In no situation whatsoever is modum.io AG liable for any losses resulting from the volatility in the pricing of MOD tokens. If modum.io AG would cover a portion of the MOD tokenholder losses, they would create a leading case for anybody who ever owned a MOD token. This would open the door for a series of potential lawsuits, which would be putting the company at an existential risk.

We heard the community about providing a third-party opinion, we have talked to the relevant authorities and derived the offer from it.

For a limitation period of 10 years following the the termination of the token sale terms by Modum (in or after November 2020) modum.io AG makes provisions. During this period, any MOD tokenholder may request compensation for the termination of its token rights.

The token sale terms provide a right for Modum to unilaterally amend the token sale terms. On that basis Modum introduces a right to unilaterally terminate the terms. The consequence of the unilateral amendment and unilateral termination is a right of the tokenholder to compensation.

Based on its unilateral amendment right in Section I, 4. of Modum’s Terms of Token Sale of 2017, Modum will publish amended terms and conditions adding the following new provision at the end of Section I: “5. modum.io AG may unilaterally terminate all rights attached to the MOD Token at any time and at its sole discretion. In case of such unilateral termination by modum.io AG, the MOD token becomes functionless and worthless. Therefore, modum.io AG must pay a compensation to holders of MOD tokens at the moment of termination in a form determined according to its sole discretion and only upon such holder of MOD tokens actively contacting modum.io AG within 10 years from the exercise of such unilateral termination by modum.io AG.”

Following the unilateral amendment of the Terms of Token Sale, any tokenholder at the time of the amendment has the right to terminate all rights attached to the MOD token with written notice to Modum within 30 days of the announcement of the amendment. Modum will pay a compensation to tokenholders who terminate the Terms of Token Sale and thus the rights attached to the MOD token. The compensation will be provided as monetary compensation as outlined in the Token Swap Terms.

Termination of Token Sale Terms: After the Token Swap Period and the implementation period of the swap are over (no later than the fourth quarter of 2020), Modum will terminate the token sales terms, e.g. terminate all contractual rights attached to outstanding MOD tokens.

Tokenholders whose rights have been terminated unilaterally can actively contact Modum during 10 years following the announcement of the termination in order to get a compensation for their MOD token at the same rate as the monetary compensation offered during the Token Swap period.

This issue is known to us. Any MOD tokens incoming from IQfinex are blocked from the swap for the moment (MOD tokens coming from IQfinex are not burned). Please submit a service desk request including any proof of ownership you have. Additionally mention all known wallet addresses of IQfinex – so we can make sure we block all of them. We will elaborate then with our lawyers, whether we can help impacted MOD tokenholders.

Token Information published prior to 12 June 2020

For all information on the Token and the Token Swap published prior to 12 June 2020, please refer to the following sites.