EPOS, short for “Everything is Possible,” was preparing to release its own ERC-20 compliant cryptocurrency and platform to lend it, but the project has been abruptly canceled due to “legal regulations.”
The project's website currently contains only a single page explaining the cancellation, but its Facebook page is still active. EPOS’s sudden failure should serve as a reality check for investors carried away with ICOs, and startup companies moving too quickly to obey the law.
Due to its abrupt cancellation, little information is available about the company behind EPOS; even the whitepaper is no longer posted online. Searching the internet did not reveal the founders, development team, or even which country the EPOS project originated in.
Interestingly, the project's Facebook page remains active and makes no mention of the cancellation, though it had attracted only 47 followers. The page probably contains the most information about the company available on the internet; it includes mockups of their wallet and lending software that was nearing completion, and its two weeks of posts show a company very eager to attract attention from cryptocurrency enthusiasts.
The company had also set up a Telegram group, which had attracted considerably more (540) followers, but it includes generally the same information as its Facebook page.
The EPOS Product
While the company's website no longer contains any information about its products, some can be gathered from its Facebook page. Before its cancellation, EPOS was most focused on its ICO, which was scheduled to begin on February 18, 2018.
In addition to its cryptocurrency, the company was also planning to release a lending platform, where users could loan the currency and earn up to 48% returns on their investment; it's not clear if borrowers were to pay this much in interest, or if the value would be gained in some other way.
The lending service was scheduled to begin five days after the end of the ICO. The company also mentions a platform for “high-volume trading,” but no further information is available about this.
The EPOS Opportunity
Since the project has closed, EPOS no longer offers any investment opportunities. However, it presents a critically important opportunity for similar companies to learn the importance of complying with regulations; countless companies are trying to jump into the world of cryptocurrencies without thoroughly researching the legal environment.
EPOS does not disclose what sort of legal trouble it was in, but so-called “know your customer” regulations intended to prevent money laundering are a common source of grief for digital currency companies.
“Know your customer” regulations vary between countries, and became particularly important after 9/11 as governments grew concerned about funding for terrorism. In the United States, the Patriot Act of 2001 mandated that all banks verify customers' identity, and many jurisdictions are enforcing the same laws for cryptocurrencies, much to the chagrin of those with “crypto-anarchist” sympathies.
Many of the most popular services involved with cryptocurrencies, such as Coinbase, scrupulously verify users' identities, and are careful to comply with the varied regulations of all the countries they serve.
Other services simply restrict access based on users' countries of origin, forbidding those from countries with onerous laws. EPOS's abrupt downfall could very well have had nothing to do with “know your customer” laws, but the wording of their press release seems to suggest that these were responsible.
The EPOS Verdict
EPOS's failure should serve as a valuable lesson for both companies and investors interested in cryptocurrencies. The cryptocurrency industry has gone on with only minimal regulation for several years, and in fact its most enthusiastic adopters are often drawn to it by a mistrust of banks, governments, and other institutions. However, the lack of regulations could be coming to an end, and companies offering ICOs may need to become far more careful about verifying the identities of their investors.
EPOS's sudden cancellation should also remind investors how volatile and sometimes ephemeral these companies can be. In a matter of weeks, EPOS managed to gain a moderate following on Facebook and Telegram, only to disappear as quickly as it arrived. Would-be investors should be grateful that the project ended before accepting any money.