Bitcoin made in Germany (Advanced Blockchain AG + Smart Equity AG)

Part of the Portfolio since ~2017...

In late 2017 a sleepy Berlin-listed micro-cap called BrainCloud AG performed the single most lucrative act available to a company with very little going on: it changed its name.

Out went BrainCloud; in came Advanced Blockchain AG. The magic word had been spoken, and the market, as ever, came running. Around the same time, across the Atlantic, Long Island Iced Tea Corp. rebranded itself Long Blockchain and watched its shares jump by as much as 380 per cent. The winter of 2017 was a good season to own a thesaurus.

The business model is a venture-style holding company: it takes stakes in blockchain projects and start-ups. Its first investment was a firm called nakamo.to – a wink at Satoshi Nakamoto – and in 2018 the two announced peaq, a project to build a machine-economy blockchain; Polkadot positions and various DeFi plays followed. Nothing inherently disreputable; venture investing is a legitimate trade. The trouble is what happens when you wrap it in a listed shell during a speculative frenzy.

Because the assets here are a basket of illiquid stakes and tokens, and illiquid things are worth precisely what the last excitable print says they are. In the 2021 crypto mania that print kept rising, so the company’s net asset value – and its share price – went vertical, reaching €21.90 in April 2021. Then there is peaq itself: when its token finally listed in November 2024, Advanced Blockchain held some 88 million of them. At $0.60 apiece the stake would have been worth over $50 million; at the roughly $0.25 where the token settled after launch, analysts put it at about $22 million. On paper, in both cases.

This is the central conjuring trick of the genre, and it is worth naming plainly: net asset value built from things that do not trade is net asset make-believe. As long as the tokens are ascending and nobody needs to sell, the marks hold and everyone is a genius. The valuation is real in the way a dream is real – vivid, convincing, and gone the moment conditions change.

Conditions changed. The 2022 crypto winter repriced the entire asset class. In June 2022 Advanced Blockchain warned that it would post a loss, the CEO and the chief strategy officer announced their departures, and the shares halved overnight, from €7.18 to €3.50. Worse was to come in the accounts themselves: after a new supervisory board took over in 2023, the company began re-auditing its 2021–2023 figures, and its research coverage reported that an earlier €57.5 million portfolio valuation had rested on an erroneous figure supplied by the former sole executive; the restated NAV was €26.5 million. The share has since surrendered well over 90 per cent of its manic peak and today trades at around €1.20, a market value of roughly €4.4 million – about where it stood before it discovered the word ‘blockchain.’

The second name on the label, Smart Equity AG of Cologne, is the same story in a smaller frame: another listed micro-cap and early peaq backer, which at the token launch announced it was entitled to around 50 million tokens – of which, it conceded, only about three per cent were free of lock-up and vesting. A treasure chest with ninety-seven per cent of the lid nailed shut.

The museum is careful here: this is not an allegation of fraud. It is something more universal and more instructive. It is the specimen that shows how a name and a narrative can, for a season, manufacture an enormous valuation out of assets that no one can actually liquidate at the marks – the same mechanism that powered the dot-com ‘-online’ suffixes, and that powers every ‘AI’ rebrand you will read about this year.

Museum note: like the portfolio it once represented, this exhibit is valued at the last price at which anyone admired it.

Further reading

• 4investors – Advanced Blockchain: Aktie stürzt ab – die Gründe (2022)
• GBC AG – Research study on Advanced Blockchain AG (new NAV, re-audit) (2024)
• GBC AG – Advanced Blockchain: comment on the peaq token launch (2024)
• Kapitalmarktexperten – Advanced Blockchain AG: Erfolgreicher Token-Launch von peaq (2024)
• Smart Equity AG – Ad hoc: Erstnotiz des PEAQ-Token (2024)
• stock3 – Advanced Blockchain: Krypto-Aktie mit Freudensprung (2021)
• Wikipedia – Long Blockchain Corp. (ongoing)
• Wikipedia – Cryptocurrency bubble (ongoing)