Economy

How Davos Locals Are Cashing In When The World Elite Comes Knocking

A view on Davos
A view on Davos
Catherine Bosley

When the masses descend upon snow-covered Davos for the World Economic Forum's annual gathering, Esther Heldstab is determined to swim against the tide. The purveyor of tourist mementos on the town's main street is one of the few shopkeepers who won't hand over their keys to multinational conglomerates who transform shoe stores and bakeries into lounges and cocktail party space for the week.

While the likes of Zurich Insurance, Credit Suisse and Deutsche Bank take over prime space on Promenade, Heldstab and her sister who run Swissalp Fantasy at no. 79 — where the window display features a stuffed Bernese mountain dog — simply stay put. "On this mile, you can pretty much ask what you want," said Heldstab. No one interviewed for this story would speak on the record about rental costs, though Heldstab said she could double her money if she rented out her shop in a half-timber house festooned with Swiss crosses. Still, "it's so nice when the people from all over the world come — it's like Hollywood."

This year actress Cate Blanchett, singer Elton John and Bollywood icon Shah Rukh Khan kick off the WEF with the Crystal Award ceremony on the evening of Jan. 22. They join the ranks of Angelina Jolie, Charlize Theron and Matt Damon. John Kerry visited Heldstab's shop when he attending as U.S. Secretary of State, she said over lunch earlier this month.

Sledging in Davos — Photo: Stewart Butterfield

Other local businesses have opted for the money instead. Schneider's bakery and cafe is being rented out to the Indian delegation. Furniture is shipped in and the chocolatier"s 95-person staff takes care of the catering and service, said owner Urs Wipraechtiger. Right next door is Russia House. Now in its fourth year, it has this year decamped to this larger space close to the conference center, according to organizer Roscongress. Energy Minister Alexander Novak will speak at an event. Just a few steps away, M&G Investments will be hosting an evening of live jazz, drinks and canapes, while ConsenSys, a Brooklyn company that develops blockchain applications, is setting up an "Ethereal Lounge."

If a WEF participant came back during the summertime, he or she wouldn't recognize the town.

Making its debut on the strip is Ukraine House, which is taking over the Timberland shoe store. The location has been booked since last summer, and both Ukraine's President Petro Poroshenko and former world boxing champion Vitaliy Klitschko, now mayor of Kiev, will make appearances with the hope of enticing investors. "We realized that there's this tradition of having the country houses in Davos," Chopivsky said. He wants to showcase cuisine and hired a Ukrainian catering company to make borscht and golubsti (meat and rice-filled cabbage rolls). Wine, cognac, vodka and chocolate from Lviv will be flown in. While the University of Chicago is holding a reception with Microsoft CEO and alum Satya Nadella at the five-star Steigenberger Grandhotel Belvedere, business school INSEAD has opted for the Kirchner Museum, close to the conference center.

Each year the gallery installs a kitchen in its basement, and the library and meeting space are transformed into sitting rooms with sofas and lamps. "These events are a big source of income," said Dolores Mark, who heads the private museum's administration and declined to comment on the rental fee.

And while red wine can't be served for risk of damaging the works of the German expressionist to whom the museum is dedicated, that's not putting off potential tenants. "Many book immediately after the event for the next year," said Mark. "One or two companies have three-year contracts."

With ad-hoc sites sprouting up like mushrooms, to locals Davos seems utterly transformed during the week of the forum. "If a WEF participant came back during the summertime, he or she wouldn't recognize the town," said Kirchner's Mark.

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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