Millions at Stake in Envestio case – Investors Calling for Answers

The website is down. Several investors voiced complaints on Facebook, Twitter and forums, about not receiving withdrawals within 5 working days, the time-span that the company used to tell investors is the normal processing time. Social media profiles of several management members were deleted today. The European Crowdfunding Network reported them to authorities after receiving multiple investor complaints.

The platform Envestio was launched in spring 2018 and promoted business loans of a wide variety of types (crypto, real estate, working capital, …). Founded by management with Latvian origins the platform was officially run by Envestio SI OÜ, a company registered in Estonia. Business loans (not consumer loans!) are currently not subject to specific regulations in Estonia.

Initially most of the offered projects came with loan sizes of 100K EUR to 300K EUR, but recently offered projects got much bigger. Offered interest rates where high, often around 20%. Shortly after the start, Envestio started to offer a ‘buyback guarantee’ (later renamed ‘Repurchase Guarantee‘) under which it would repurchase loans prematurely for a fee of 5% should the user request it.

To date Envestio seems to have collected around 33M EUR of investor money from about 13,000 investors throughout Europe (number according to Envestio website before it went down). Analysing web traffic, which probably correlates to investments, I would estimate that most of the investors came from Italy, Denmark, Spain, Germany and Portugal.

All seemed to go well for Envestio. Certainly the investments looked extremly high risk. I never invested as it was way beyond my risk appetite, but nobody suspected a scam.

In summer 2019 the company announced it was sold to a new owner.

Then there were allegations from an anonymous Twitter account (@RPeerduck, meanwhile deleted), published on Dec. 18th 2019. These linked the new Envestio COO to fraudulent promotions for an investment scam years ago. I asked the Envestio management for comment and received an email explanation on Dec. 20th, 2019, in which the COO said ‘… At the same time, the only personal experience in this sphere that I have is making a presentation of crypto-project, management of which was able to prove that their company can be trusted and does not have any signs of scam at the moment of making this presentation.. ‘. I did not find the offered explanation convincing at all.

Combine that with a media article in the Latvian press where a team member of Envestio was accused of misconduct in a former job (she denied any responsibility or misconduct), that left me wondering if Envestio is complying with all legal obligations.

All these bits of information were discussed on various forums. Nevertheless many investors seemed undeterred. As late as yesterday many investors on Facebook were defending Envestio’s arguments. The last one was a DDOS attack by hackers that disrupted the service.

The last withdrawals payouts that users actually received according to investor postings, were requested on or before the morning of January, 12th.

The last statement Envestio published on its Facebook page yesterday reads ‘…Simultaneously with the recent concerns within the industry, we tracked repeatedly various technical attempts targeted to influence dramatically on stability of Envestio platform. They were performed through hacker attacks on our web site and platform’s internal structure and database.

At the same time, we noticed that destructive public relations campaign against Envestio has been initiated and which consisted of spreading knowingly false and unconfirmed information by numerous internet resources questioning financial stability and reliability of our platform, denigrating the reputation of the Envestio owners and key employees.

We tend to consider these attempts as a consistent and well-planned set of actions aimed to cause significant financial and reputational damage, as a result of which the Envestio platform should inevitably begin to experience substantial difficulties with current payments to its investors.

We assume that the ultimate goal of all these actions is to devalue overall Envestio’s business, and the subsequent potential raider takeover of the company or an attempt to eliminate the company from the industry, getting rid of as strong competitor. The implementation of the aforementioned scenario is evidenced by a number of factors and hostile actions that occurred precisely at the moment when a serious crisis of confidence reigned in the crowdfunding market and which actually was caused by the scandal surrounding the activities of the Kuetzal platform. …’

What options of actions do investors have?

Investors believing that they are victim of a fraud could complain to the authorities e.g. the Estonian police, email ppa@politsei.ee . Clearly state what you are complaining about, provide documents, state your identity. I reached out to the press department of the police today, but have not yet heard back from them.

Investors could also elect to have a lawyer represent their interests.

EDIT: 23.01.: One team member posted claiming innocence/not knowing what was going on (I have no means to verify if the post is really from the person with that name)

EDIT: 23.01., 14:50: Statement from a press officer of the Estonian police in response to the inquiry of P2P-Banking: : ‘In the past few days, the Estonian police have received several complaints regarding the crowdfunding platform Envestio. We are currently working to specify all details, but there is no investigation underway. However, if signs of crime do surface, we will start an investigation.Head of the Fraud and Economic Crime Division of North Prefecture Juhan Ojasoo: „Not every unsuccessful investment is fraud, however, if one really believes they have been deceived, we encourage to get in touch with us.“

A statement can also be submitted via e-mailing ppa@politsei.ee and describing the case in as much detail as possible. We ask to provide contact details, amount of money lost, dates for transacations etc.

We also advise checking the Estonian Financial Supervision and Resolution Authority website for alerts prior to investing in any company: https://fi.ee/en/alerts.’

EDIT 24.01., 14:59 There are serious concerns (source) too, regarding the Estonian platform Monethera. Monethera has claimed a relationship in the past with Richly Pacific International Ltd, from Hong Kong, register number 1543697. A search in the document register shows that this company was dissolved in December 2018 already. EDIT 24.01. 21.32: Monthera stated ‘It’s a mistake and we already contacted Hong Kong companies register’

EDIT: 24.01. 17:35 Further concerns surfaced about Wisefund, a company with a model that has similarities to Monethera. An investor claimed a borrower listed on Wisefund denies having asked for a loan . There is a statement that Wisefund gave to another investor as an explanation, which does not convince me personally. You can read about this here.

EDIT 24.01. 18:03: J. V. (name shortened) on FB has shown a direct connection between a team member on Monethera and Envestio. The team member owns 50% of the sponsor Baltic Real Estate Holding (Barona 72 sponsor) which was a project on Envestio.

International P2P Lending Volumes December 2019

The table lists the loan originations of p2p lending marketplaces for last month. Mintos* leads ahead of Ratesetter* and Zopa. The total volume for the reported marketplaces in the table adds up to 594 million Euro. I track the development of p2p lending volumes for many markets. Since I already have most of the data on file, I can publish statistics on the monthly loan originations for selected p2p lending platforms. This month I added Boldyield*. I removed Landbay (institutional only now) and Lending Works (monthly data not available anymore).

Milestones in cumulative volume lent crossed this month:

  • Iuvo*: 100M EUR
  • Zopa 5000M GBP

Investors living in national markets with no or limited selection of local p2p lending services can check this list of international investing on p2p lending services. Investors can also explore how to make use of current p2p lending cashback offers available. UK investors can compare IFISA rates.

p2p lending statistics december 2019
Table: P2P Lending Volumes in December 2019. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.

Links to the platforms listed in the table: Ablrate*, Archover*, Assetz Capital*, Boldyield*, Bondora*, Bondster*, Colectual*, Credit.fr*, Crowdproperty*,  Dofinance*, Estateguru*, Fellow Finance*, Finansowo*, Finbee*, Folk2Folk*, Geldvoorelkaar*, Growly*, Grupeer*, Investly*, Iuvo Group*, Kameo*, Klear*, Landlordinvest*, Linked Finance*, Look&Fin*, Mintos*, MyTrippleA*, Neofinance* , October*, Peerberry*, Proplend*, Ratesetter*, Rebuilding Society*, Savy*, Smartika*, Soisy*, Sourced*, Swaper*, TFGcrowd*, ThinCats*, Twino*, Viainvest*, Viventor*, Zopa*.

Notice to p2p lending services not listed: Continue reading

Thin Cats Calls it a Day For Retail Investors – Puts Loans in Run-Off

British p2p lending marketplace Thin Cats* announced that it will cease to offer new loans to retail investors. Thin Cats had facilitated about 556 million loans to UK business clients on its marketplace.

UPDATE: The headline has been edited compared to an earlier version to clarify that the company only stopped to offer retail p2p loans. This confusion resulted from the fact that the announcement below made no mention that the company will focus on institutional clients in future.

The Thin Cats announcement reads:

You have probably noticed that the number of new loans for investment
on the P2P platform operated by Business Loan Network Limited (BLN),
one of the ThinCats Group companies, has fallen significantly over the
last two years.

Following a thorough review, we have concluded it is no longer cost
effective and practicable to raise funds in this way, so have decided to
close the P2P platform to new business and initiate a run-off process
for existing investors.

This proposal has been discussed with the Financial Conduct Authority
(FCA) and we have made a voluntary request to the FCA that the
permissions to operate an electronic platform be closed to new business.

Our decision to initiate the ThinCats P2P Platform run-off has had the
following impacts which became effective at 12.01am on 9 December 2019.

No new loans will be offered on the ThinCats P2P Platform
The secondary market has closed and any loan parts listed for sale at the time of closure have been cancelled
No new accounts, including ISA accounts, can be opened
No new lender deposits can be accepted

Please note that investors can continue to log in to their account(s) in
the usual way until such time as their account closes as part of the
run-off process.

Crucially all of our existing systems and controls will remain in place
to ensure investors’ interest and capital is collected when due or
otherwise actively recovered. Investors can continue to withdraw any
cash balances to their nominated bank account following the usual lender
withdrawal request process. It is no longer possible to add new funds
to your account(s), although loan repayments collected on your behalf
will continue in the normal way.

The effect on different categories of investor is detailed below:

1. Lenders holding performing loans

Lenders with status “A” loans that are performing as expected will
continue to receive interest and capital repayments in line with the
original loan schedule. We would encourage you to withdraw your cash
balances periodically.

Following the closure of the secondary market, you can no longer buy or
sell any loan parts and any loan parts currently listed for sale will be
cancelled.

For any performing loans that may subsequently become non-performing, these will be treated as described in section 2 below.

2. Lenders holding non-performing loans

For lenders with loans that are not performing in line with the original
loan schedule, we will continue to endeavour to maximise the returns to
lenders through our normal monitoring and recovery process. There will
be no additional impact from the introduction of a run-off period and we
will continue to email you with updates on specific non-performing
loans.

Once we have secured the maximum value from non-performing loans,
lenders will be asked to withdraw any remaining cash balances and close
their account.

3. Investors in Diversified Loan Portfolios (DLPs)

DLPs have a minimum Target Term, typically two years, during which it is
not possible to sell underlying loan parts. Following the closure of
the secondary market, performing loans within DLPs will no longer be
offered for sale via the secondary market towards the end of the Target
Term. Payments from these loans will, instead, continue until the loan
matures.

We will contact you separately with the proposed run off schedule for
each DLP that you hold and you will continue to receive DLP statements
on a quarterly basis.

Any non-performing loans within a DLP will be treated as described in section 2 above.

4. Registered investors with funded accounts but not holding loan parts

For investors that have cash balances in their ThinCats account(s) but
do not hold any loan parts, we encourage you to withdraw your cash to
your nominated bank account as soon as possible in the usual manner.

Once your account has a zero balance we will close your account. If you
do not withdraw any remaining cash balances, we will contact you again
to remind you of the need to transfer all monies out of your account.

5. ISAs

If you hold a loan or DLP within a ThinCats ISA, we will contact you
separately with details of the options open to you. It is no longer
possible to open a ThinCats ISA for the current tax year.

6. ThinCats Lending Clubs (“TLC”)

All TLCs have now come to the end of their term and those that remain
open are still to receive future realisations from non-performing loans
in each portfolio.

Once all possible realisations have been achieved the respective TLC will be closed and you will be notified accordingly.

In summary

The main impact of the platform run-off process is that no new loans
will be offered on the ThinCats P2P Platform and it is no longer
possible to open a new account.

In most other aspects, other than the closing of the secondary market,
the platform will continue very much as now: you will continue to
receive interest and capital repayments for performing loans and we will
continue to monitor loans and invoke recovery procedures in the normal
way. You will be able to log in to your account in exactly the same way.

We are committed to treating all customers fairly during the run-off
process and recognise it may raise a number of questions with investors.

Mintos Invest & Access Seems to Have Left ‘Normal Market Conditions’ for the First Time – Leaving Some Investors Surprised

In June Mintos* introduced the Invest & Access product which was designed to make it as easy as possible for investors to invest on Mintos. You can read my article about the introduction here. One main aspect offered was that it promised high liquidity, which came with the disclamer ‘you should be able to access your money anytime under normal market conditions’. Another restriction was that this applied only to current loans, so with a typical portfolio of about 20-30% lates, investors could cash out about 70-80% of the portfolio fast.

I doubt that many investors observed the “under normal market conditions” part of the offer. And those who did, probably saw it as a theoretical definition, rather than a real possibility.

Well now, 6  months later, we observe the first time Mintos Invest & Access have left the ‘Normal market conditions’ state. Investors requesting withdrawals from their Invest&Access account since Friday report they received only part of the requested amount so far (about 700 out of 2000 Euro here; and 780 out of 9800 Euro here; there are further examples known to me.). Several investors expressed surprise that they could not cash out current loans fast.
Cashouts requested up to  Thursday are reported to have been completed as expected

The cause of course is that the liquidity of Invest&Access is dependent on Mintos being able to sell the loan part of investors wanting to cash out to other investors.

On Friday around noon, the Central Bank of Kosovo announced that it had revoked the licenses of Monego and Iute Kosovo loan originators which both had loans listed on Mintos. In the afternoon many investors sold loans from those originators through the Mintos secondary market until Mintos suspended the trading of these loans around 5:04pm (CET).
Following these occurences this seems to have for the first time on Mintos created higher cashout demands than requests for investing on reinvesting on the Invest&Access product and this is why some investors are seeing partial/delayed withdrawals currently. It is unknown whether the I&A product has a buffer to soften the impact of such cases, but it seems not (or it has been depleted in this instance)

Edit to clarify: the Invest&Access product behaves as described in the small print, it is just that some investors seem to have different expectations and gauged the associated risks differently. Investing in p2p lending is a high risk investment.

I’ve contacted Mintos for comment on the current liquidity situation of I&A but have not yet received a reply.

If you are an Invest&Access investor and want to cashout, you might not be aware that you have the option to normally list the loans on the secondary market. Therefore if you want to skip the invest&access selling queue (which I assume exists), you can just list your loans. Offering 0.1% to 0.2% discount might be sufficient to sell them. I am not advocating this, just informing you that it is possible to try that.

 

Platform Moneything In Wind-Down

Moneything logoThis morning british p2p lending platform Moneything announced that it will wind-down operations citing difficulties to compete in current market conditions. The platform facilitated 92.3 million GBP in loans since launch in 2015. 20.3 million GBP of the loans are still outstanding.

The full announcement sent to investors reads:

We have taken the decision to place MoneyThing into orderly wind-down and we are no longer taking any new investments or new customers.

We have found it is increasingly difficult to compete in the current market conditions and we expect there is a tougher economic environment to come.

During wind-down the business will continue to be managed and administered by the existing directors and our aim will be to minimise any disruption to our customers and ensure the safe return of funds.

We have provided detailed information on the platform on why we have taken this decision and how it affects our lender customers. Please log in to view.

We would like to thank all of our lenders for their support over the past few years. We made a commitment to lenders to provide a service and we would like to reassure lenders that that commitment will continue until the wind-down has been completed.

We have not been able to make MoneyThing a success. We will however aim to exit the market quietly with minimum disruption to our customers and the industry as a whole.

Please contact us at support@moneything.com if you have any questions or comments.

Moneything further states

Over the past few years there have been significant changes in the lending markets in the UK. The huge influx of institutional capital into the market has caused a reduction in lending rates, which is good for borrowers, but not for lenders.

The current economic uncertainty and likely future uncertainty means that there are less potential borrowers committing to projects and growth in borrowing is slowing. This means there is greater competition for borrowers and this places increased pressure on lenders to further reduce rates and perhaps to relax risk criteria or accept lower margins.

More recently the collapse of Lendy and then Funding Secure has had a big impact on lender confidence. Having spoken with a number of our lenders in recent weeks, it is clear that while the vast majority remain confident in MoneyThing as a platform, most also expect to reduce their investments across P2P or to continue to lend at a much lower level.

As a small, self-select P2P platform entirely funded by retail money, we cannot be certain that we can fund new loans with the current low level of lender confidence. As a result, it has become increasingly difficult for us to compete and we expect those market conditions to continue.

As such we have taken the decision to wind-down.

Moneything will continue to manage the existing loan book and aims to wind down the existing loan-book within 12 months.

 

International P2P Lending Volumes November 2019

The table lists the loan originations of p2p lending marketplaces for last month. Mintos* leads ahead of Zopa and Ratesetter*. The total volume for the reported marketplaces in the table adds up to 658 million Euro. I track the development of p2p lending volumes for many markets. Since I already have most of the data on file, I can publish statistics on the monthly loan originations for selected p2p lending platforms.

Investors living in national markets with no or limited selection of local p2p lending services can check this list of international investing on p2p lending services. Investors can also explore how to make use of current p2p lending cashback offers available. UK investors can compare IFISA rates.

p2p lending volume november 2019
Table: P2P Lending Volumes in November 2019. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.

Links to the platforms listed in the table: Ablrate*, Archover*, Assetz Capital*, Bondora*, Bondster*, Colectual*, Credit.fr*, Crowdproperty*,  Dofinance, Estateguru*, Fellow Finance*, Finansowo*, Finbee*, Folk2Folk*, Geldvoorelkaar*, Growly*, Grupeer*, Investly*, Iuvo Group*, Kameo*, Klear*, Landbay*, Landlordinvest*, Lending Works*, Linked Finance*, Look&Fin*, Mintos*, MyTrippleA*, Neofinance* , October*, Peerberry*, Proplend*, Ratesetter*, Rebuilding Society*, Savy*, Smartika*, Soisy*, Sourced*, Swaper*, TFGcrowd*, ThinCats*, Twino*, Viainvest*, Viventor*, Zopa*.

Notice to p2p lending services not listed: Continue reading