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 email@example.com . 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 firstname.lastname@example.org 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.