The owner of one of Malta’s most prominent blockchain companies has admitted in court that he was facing huge financial problems while he was sponsoring a major summit last year.

Kristian Haehndal’s DQR Group was one of the main sponsors of the 2018 Malta Blockchain Summit, which saw several international crypto players fly over to learn more about ‘Blockchain Island’.

However, Haehndal last month filed a court application to be placed under company recovery, which would place DQR under the control of a special controller who will ensure its debts are paid.

He confirmed to judge Joseph Zammit McKeon that DQR’s business partners Genesis Mining, a cloud Bitcoin mining company, had warned them in October 2018, a month before the summit, that they were experiencing financial difficulties.

“The market conditions of cryptocurrencies had fallen by around 18% and they had asked us to consolidate and restructure the company, and later on that month asked us to file for insolvency,” he testified.

However, Haehndal warned Genesis that DQR going insolvent would damage the blockchain space and cause economic problems for Malta, seeing as they had been front and centre of promoting ‘Blockchain Island’.

Eventually, they agreed that Genesis would transfer its shares to Haehndal, who would take over their liabilities. DQR then sacked the vast majority of its staff, reducing its workforce from 108 to 10 people, and started focusing on delivering a product for the institutional banking market.

There was no mention of this at all as Haehndal and Genesis CEO Marco Streng were publicly interviewed at the Malta Blockchain Summit, and indeed DQR won the best career programme award at the event.

Parliamentary secretary for the digital economy Silvio Schembri had hailed DQR as one of the largest blockchain companies in the world and said its presence “will cement Malta’s reputation as the Blockchain Island”.

In his testimony, Haehndal said that his original plan was for the Maltese government and the MFSA to use his company to encourage other blockchain companies to move here.

However, it had become immediately obvious upon landing on the ‘Blockchain Island’ that it was going to be tough to establish banking relations. It was then that Haehndal decided to set up a second company which would address the needs of other Maltese blockchain companies. To that end, it teamed up with Genesis Mining, a cloud Bitcoin mining company.

By October 2018, Haehndal had invested his entire life savings (€2 million) into the project, while the other investors had invested €1-2 million, with Genesis investing a “significant” amount of it.

Eventually, DQR’s creditors came banging on its doors, at least one suit was filed for €55,000, and some took the law in their own hands and stole equipment from their offices .

“We have contacted all the major creditors and told them please submit a proposal so we can pay [the debt] off over a period of time,” Haehndal said. “We have received many different letters from legal officers, which are of course threatening to disrupt or cause psychological disturbance to our process here.”

“Of course, we meet with creditors on a personal level and we have had many instances where people have stolen equipment from our offices, they have taken different things, and we’re trying to deal with it on a humane level.”

However, Haehndal believes he still has a future in Malta and confirmed his new blockchain project has earned the backing of the Falcon Private Bank, a Swiss bank involved in blockchain banking that is owned by Abu Dhabi’s state investor Mubadala. Also, one of DQR’s creditors has been roped in as an investor to support this new project.

“We’re in a critical stage when in four to six weeks we will launch our product and commence generating fees on the trading that is conducted on the platform,” he said.

“I wanted to use the infrastructure that was developed, and all the hard work that was developed in the Maltese company, and I didn’t want to abandon Malta and simply set up another company in a different jurisdiction. I felt that as a blockchain company and as promoters of technology we had to set an example for the rest of the community that if we have problems we face them and we find solutions.”

Cover photo: Parliamentary secretary Silvio Schembri with Kristian Haehndal

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Tim Diacono

Tim is interested in the rapid evolution of human society and is passionate about justice, human rights and cutting-edge political debates. You can follow him on Instagram or Twitter/X at @timdiacono or reach out to him at [email protected]