EGW Capital: $40 Million “Scam” Project Divides the Digibyte Community

A little over a week after basking in the euphoria of a Binance listing, the Digibyte community is facing a test that has already divided investors and Digibyte Foundation leaders.

The controversy is centered around an announcement by Rahul Kumar, Indian CEO of EGW Capital, that his project will tokenize $40 million worth of real estate using Digibyte’s secondary tokenization layer, DigiAssets.

The news sparked a lot of excitement in the Digibyte community, admittedly because it would be a prominent use of the network’s functionality to tokenize real-world assets in a permissionless manner.

However, a closer look into the proposed tokenization project allegedly raised red-flags, with Digibyte proponents Xatoshi Digibyte and James Voller calling EGW Capital CEO, Rahul Kumar a “scammer,” in a series of Twitter rants.

Kumar, on his part, has sought to refute the allegations, telling Coinfomania in a chat that they are only leveraging Digibyte’s technology, and that there is no attempt or will there be “an attempt to sell anything to anybody in that community.”

He also noted that any initials on tokenized assets will be to traditional, instead of retail investors.

Digging deeper into EGW Capital

Rahul Kumar announced via Twitter on July 3 that EGW Capital will tokenize real estate with $40 million using DigiAssets. 

Here is the first real estate #tokenization project. #cyberwalkgurgaon spread over 150 acres near #delhi. This itself is $40 million project which will be tokenized on #digibyte soon. ? pic.twitter.com/QSLWAnOlFZ

— RAHUL KUMAR (@rahulegw) July 3, 2020

The property in question is the Cyberwalk Gurgaon building in Delhi, India, and according to what he told Coinfomania, EGW Capital has “entered into an understanding to tokenize the asset. The final terms are being drafted, and the research for the whitepaper has started.”

However, Kumar declined to provide evidence that EGW Capital has any financial interests in the Cyberwalk Gurgaon building, claiming that making internal documents public at this stage is against the project’s non-disclosure agreement.

Notably, the decline raises a red-flag since anyone could verbally claim ownership of the property. But Kumar insists that “the deal is sealed that [EGW Capital] will tokenize the property, and the project will not be stalled. He did admit that it could “be delayed if the financial markets disagree on valuation.”

Meanwhile, Xatoshi Digibyte and James Voller have shared archived internet posts showing claims dating as far back as 2011 that investors could buy into the project with the hope of receiving guaranteed returns. Additionally, an August 10, 2019 report from the Hindu Times mentioned a certain Rahul Kumar, 27, that was arrested and fined for masterminding a stock trading scam.

Regarding these claims, Kumar said in a video response that it was only until recently that EGW Capital received the approval to tokenize the project, and that they’re not in any way linked to the old fraudulent attempts to illegally sell ownership in the building.

EGW Capital tokens controversy

Another bone of contention in the latest saga is the token structure for EGW Capital. Information from the CEO and the internet confirms that there are two primary tokens associated with the project

One is the EGW Capital tokens, which Kumar claims are “security tokens and only traded over-the-counter (OTC)” at the moment, even though it had traded on retail exchanges at some point. 

A fundamentally flawed data from the aggregator site, Coincodex puts the price of EGW Capital at $11.30 with a market cap of $1.3 billion realized from only one exchange, a rarely visited BitLux trading platform.

Data from Ethereum blockchain explorer, Etherscan, shows that the last transfer of EGW Capital tokens took place 88 days ago. Similarly, both Coingecko and Coinpaprika show a token that hit an all-time high of $10-$11 before dropping sharply to $0.02 within February and March 2019.

However, Kumar tells Coinfomania that both Coingecko and Coinpaprika data are wrong, with Coincodex being the only aggregator pulling the said OTC-data. 

He also mentioned that talks for an IEO for EGW Capital have only stalled as a result of regulatory uncertainties facing the crypto space in India. However, the project plan will target an IEO raise in 2021.

EGW Academy

EGW Capital is reportedly developing EGW Academy tokens issued on Digibyte and will airdrop a fraction of them into the Digibyte community. As per Rahul Kumar, EGW Academy is an under-development platform that will provide online education on blockchain, allowing learners to earn money while doing so.

EGW Academy tokens will reportedly power the platform, which, according to its founder, has raised $1m in private placements. He also cites a possible December 2020 IEO for EGW Academy tokens, claiming that it would “come first as it is not a security token but a coin focused and created for internal token economics.”

Meanwhile, a poorly written paid guest post on CoinWorldStory dated June 24, 2020, and published under a similar name, Ritiek Kurma, claims that EGW Academy is also planning an ICO.

Forward-looking statements

It is worth mentioning at this point that most of the statements made by Kumar regarding EGW Capital and EGW Academy were forward-looking statements with little or no proof that the project is anywhere near realizing its ambitions.

He told Coinfomania that “EGW Academy is in the development stage and crypto bank is ready but seeking government nod.”

Regarding EGW Capital’s supposed plan to tokenize the property in Delhi, he said “the development is at the basic level and is protected by NDA at this stage. All guidance and development will be shared through press releases.”

Digibyte community controversy

As we noted at the onset, the EGW Capital saga has already divided the Digibyte community with people taking different sides. 

Rudy Bowman, chairman and secretary of the Digibyte Foundation, had called on the community to give Rahul Kumar the benefit of the doubt after red flags were raised. 

Being transparent, doing a live video and making himself vulnerable, is not typical behavior of a ‘scammer’.
I think @rahulegw deserves the benefit of the doubt.
Let’s not forget, #DigiByte is permissionless. We’re building a technology framework for others to build on.

— Rudy Bouwman (@RudyBouwman) July 5, 2020

James Voller viewed Rudy Bowman’s stance on the subject as a public endorsement of what he perceives as an obvious scam and reacted subsequently by selling off a large portion of his Digibyte (DGB) holdings.

When Rudy publicly endorsed a scammer yesterday from the foundation, I immediately sold my bags.

I will play the breakouts. Trust me I won’t miss opportunity. But no longer will I expose my capital to @RudyBouwman @jaredctate @dgb_chilling

This tweet is for transparency. ??

— James Voller (@VollerJames) July 6, 2020

Only time will reveal whether the growing rift within the Digibyte community will continue for long. But the fact remains that there are red-flags about EGW Capital and its founder. The latest controversy also calls into mind the controversial nature of permissionless blockchain technology, which is, its power to host both good and bad, or bring together or divide communities.