Arbitrade is to transfer its purported $16 billion gold bullion agreement to another company after an unexpected change in its ownership rights.

The Bermudian-incorporated cryptocurrency exchange and coin company will also no longer have any involvement in the cryptotoken called “dignity”, which was to be backed by gold bullion, nor will it be involved in three other planned bullion-backed cryptotokens.

The reason is the discovery that a business deal, announced more than a year ago, never closed due to timing problems and regulatory approvals.

As a result, Arbitrade’s purchase of partner company Cryptobontix Inc, revealed in March 2018, was not concluded.

The two companies have been under the Arbitrade umbrella for more than a year. Cryptobontix owns the family of Arbitrade-associated cryptotokens, including dignity, which trades at about half a cent per token.

The nature of the ownership situation between Arbitrade and Cryptobontix came to light in the wake of Sion Trading FZE announcing in January that it would become a major shareholder in Arbitrade.

Sion Trading FZE entered into a conditional agreement to acquire the shares in Arbitrade Ltd held by Leila Holdings Lt d, a Bermuda exempted company owned by Arbitrade founder Troy Hogg.

But after the revelation that the deal between Arbitrade and Cryptobontix was never closed, Mr Hogg is now working to close the sale of Cryptobontix to Sion, according to a statement issued by Cryptobontix and shared by Arbitrade. Cryptobontix said, “Sion Trading FZE’s owners and Troy have now separated themselves from everyone else to finish the final details necessary for closing the sale of the company.”

The firm added that both parties had agreed to use Canadian-based law firms to complete the transaction.

The statement said: “The board of directors, employees, and partners of Arbitrade Ltd no longer have any involvement in this negotiation nor operations of Cryptobontix Inc, its tokens, or the mining operations.”

Cryptobontix also announced that all the company’s profitable cryptomining rigs have been sent to CoinMint, a US-based digital currency data centre, and “all previous mining facilities have been terminated due to lack of service, high fees, or closing of those facilities”.

Arbitrade announced in November it had received title to 395,000 kilograms of gold bullion, worth about $16.2 billion at today’s prices.

It has not revealed the name of the independent public accounting firm which is said has verified the SKR, or safe keeping record, for the bullion. The firm said that was because it was bound by non-disclosure and privacy obligations.

The bullion is intended to be used to back the cryptotokens dignity, namaste, orectic and honour.

However, Cryptobontix said in its statement: “The original agreement for the gold shall be transferred to Cryptobontix as Sion Trading FZE moves to take over control and proceed with conducting business.

“Cryptobontix, under the new ownership, will continue procurement of gold, precious metals and further developments of its cryptomining programme, as set forth when the project began.”

It also said that once the sale was completed it was “understood that Sion Trading FZE would then move the company to another cryptocurrency-friendly country where they can move ahead with the plans and operations on the following tokens”.

Sion holds a commercial licence in the Ras Al Khaimah economic zone of the United Arab Emirates, where its activity is listed as trading non-manufactured precious metals.

It is a subsidiary of Scotia International of Nevada Inc, a mining equipment supply company based in Salt Lake City, Utah. Sion has been acting as precious metals procurement agent for Arbitrade.

Arbitrade acquired the Victoria Hall office building, on Victoria Street, Hamilton, as its global headquarters last October.

It did so, with Bermuda Government permission, through its subsidiary Arbitrade Properties (Victoria Hall) Ltd. The two listed shareholders of the subsidiary at the time were Mr Hogg and American James Goldberg.

Victoria Hall remains vacant.

Arbitrade’s earlier plans included setting up a cryptocurrency exchange and cryptocurrency mining operations and said last summer that it expected to create hundreds of jobs on the island.

Arbitrade has several incorporated entities in Bermuda, but to date it has not listed as a licensed entity on the Bermuda Monetary Authority website.

Arbitrade was asked for an update on its plans, but the firm did not respond.