Members of Gibraltar’s political and authorized elite are among traders to have misplaced money in crypto buying and selling group Globix, whose collapse has triggered a global hunt for a lacking $43mn.
Former chief minister Sir Peter Caruana and chief of the opposition Keith Azopardi are among high-profile figures within the British Overseas Territory to have invested utilizing the platform, which let traders use automated buying and selling methods to choose tokens, in accordance with folks aware of the matter.
The names have been then utilized by Globix sole shareholder and director Damian Carreras — a Gibraltarian — to advertise the platform to different shoppers, two of the folks stated.
While Gibraltar has sought to distance itself from the scandal, Globix’s collapse throughout a rout in cryptocurrency markets final yr has dealt a blow to the territory’s hopes of diversifying its financial system by changing into a significant centre for digital asset finance. The peninsula, which faces the prospect of a tough post-Brexit border with Spain, is mainly reliant on insurance coverage, on-line playing and the importation of alcohol and tobacco.
The collapse additionally underscores the dangers {that a} quantity of jurisdictions have taken within the rush to ascertain themselves as world hubs for digital asset exercise. The Bahamas and Singapore are among the international locations which have seen their ambitions undermined as scandals unfold of their territories.
“Gibraltar’s reputation will be badly damaged as a result of big names being involved directly as investors, but also the fact they have failed in their duty to a wider constituency,” stated John Christensen, an economist and offshore finance specialist.
“People look to financial centres like Gibraltar to provide the necessary regulation to protect consumers,” added Christensen.
Among different traders to have used Globix have been Anthony Provasoli, Aaron Payas and Justine Picardo, who are all companions at Hassans, a high-profile Gibraltar legislation agency that has lengthy had shut hyperlinks with the jurisdiction’s political institution.
Picardo not too long ago separated from the present chief minister, Fabian Picardo. Provasoli suggested Gibraltar’s regulators throughout their efforts to create guidelines governing crypto-related exercise, which have been launched in 2018.
Payas and Provasoli stated in a joint assertion that they thought of themselves to be “victims”, and their solely involvement with Globix was as “late investors” utilizing “only a relatively small portion of our personal crypto holdings”. They had “never promoted Globix or advised others to invest”, they stated.
They added: “We have never been made aware that our names were being used to attract investors and would never have agreed to that.”
Also Reported Here:
A LEADING politician and a number of leading lawyers are among the high-profile investors of a collapsed crypto scam that has shaken the Rock.
According to a report in the Financial Times various investors ‘occupied positions of influence in legal and political circles’ in Gibraltar.
“At least one investor was a sitting member of the Gibraltar Parliament,” revealed a source to the respected British newspaper.
“How could experienced investors, familiar with financial services, have invested in an unlicensed investment vehicle?” the source added.
The Globix scandal – which the Olive Press broke in March – has now been followed up in dozens of specialist financial sites, as well as Gibraltar TV station GBC.
We understand that a number of other ‘colourful’ figures also invested in the defunct exchange, run by a Russian and former Gibraltarian Damian Carreras.
“There is a lot more that has still to come out,” a leading Gibraltar lawyer revealed this week. “It will be quite shocking.”
It comes as the Gibraltar Financial Services Commission issued a consumer alert regarding the platform, as well as ‘Globix Cash’, both operated by Miracle World Ventures Limited.
According to the FSC website, Miracle World Ventures Limited is a company registered in the British Virgin Islands and is not authorised by the GFSC to ‘offer any regulated activities in Gibraltar’.
Meanwhile, a court order was granted last month freezing Globix’s crypto assets and forcing various rival exchanges to hand over customer information.
Injunctions were also obtained against CEO Carreras and CTO Pavel Sidirov, from Moscow, as liquidators hunt for €40 million that has gone missing from the company.
The saga around Globix has threatened to torpedo Gibraltar’s ambitions to become a world-leading centre for regulated crypto trading.
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The courtroom additionally demanded that rival exchanges together with Crypto.com, Bitstamp and Kraken reveal the identities behind sure crypto wallets related to the Globix platform, in line with the order, which has been seen by the Monetary Occasions. Insolvency attorneys are on the lookout for round $43mn, in line with an individual acquainted with the search. The asset injunction has threatened to undermine Gibraltar’s ambitions to turn out to be a world-leading jurisdiction that correctly displays digital asset companies.
The Supreme Court warned on Thursday that the director of collapsed cryptocurrency trading platform Globix could face sanctions if he fails to provide evidence to the court at a hearing due to be scheduled later this month.
The warning came as Puisne Judge Liam Yeats also ordered two Gibraltar banks to provide statements of accounts linked to Damian Carreras, the sole shareholder and director of Miracle World Ventures, a company registered in the British Virgin Islands that traded as Globix.
Both Mr Carreras and his Russian business associate, Pavel Sidorov, the company’s chief technical officer, have been asked to give public evidence to insolvency proceedings in which the liquidators - Adrian Hyde, Joanne Wild and Brian Simpson of corporate recovery specialist firm Begbies Traynor – are working to trace and secure around $42m they believe was held in the Globix system through various crypto wallets.
A large chunk of that sum is believed to be from investors in Gibraltar, including a number of high-profile individuals, and no assets have been recovered as yet.
The liquidators want to talk to the two men in the hope it will assist their efforts to trace Globix funds held through various crypto wallets held on different platforms.
The court heard that Mr Carreras had provided some information to the liquidators.
But neither he nor Mr Sidorov have complied with an earlier court order to provide oral evidence before the judge.
The court had previously heard that Mr Carreras, who has told liquidators he is seeking legal advice, claimed to have received ““many, many serious death threats” and feared for his safety if he returned to the Rock.
“The longer they fail to cooperate, the firmer the view is that this was a Ponzi scheme,” said Darren Martinez, a lawyer for the liquidators.
On Thursday, Mr Justice Yeats ordered that both men appear before that court at a date which has yet to be fixed but will likely be between July 17 and July 25.
“It seems to me that the public examination has to take place,” the judge said.
“Mr Carreras and Mr Sidorov should turn up.”
If they do not, the court heard, they could be held in contempt of court and liable to sanctions. The court hearing could be held virtually, although the details have yet to be confirmed.
Separately, Mr Justice Yeats also granted an order requiring two Gibraltar banks, Turicum Private Bank and Trusted Novus Bank, to provide liquidators with statements relating to accounts held by Mr Carreras.
Globix ran into trouble in February 2022 and liquidators are interested in reviewing statements for the preceding months relating to three accounts held by Mr Carreras with Turicum in sterling, Canadian dollars and euros, and an account he had with Trusted Novus Bank.
Mr Martinez said the liquidators wanted to ascertain whether any investor funds had been moved through those accounts.
The banks have seven days to provide the statements and have already indicated they will comply with the order, the court heard.
The court was also updated with information on disclosure orders previously made by the judge relating to crypto wallets on the Binance and Coinbase exchanges believed to be linked to Mr Carreras and Mr Sidorov’s wife, Alla Nicolayvna Babenko.
The court had previously heard Globix told investors their funds would be invested in “bots” which would in turn trade in different crypto currencies based on algorithmic strategies.
The investors were promised 1% profit per trading day, with Globix taking 50% of all profits.
Globix was incorporated in early 2021 but the liquidators believe it was experiencing problems paying investors as early as February 2022, telling the court there was “compelling” evidence of a fraud.
In earlier hearings, the court had also heard submissions pointing to lavish spending by Mr Carreras and investments in other crypto platforms, including $10.3m invested in a crypto platform called Garantex, described as “a sanctioned exchange in Russia”.
Daniel Feetham, KC, another lawyer representing the liquidators, said at the time that 1.327m euros had been spent on a credit card linked to Mr Carreras’ Binance account.
That included 527,000 euros on Louis Vuitton goods, 110,000 euros on luxury goods from Tagore, 80,000 euros spent in Fendi, 52,000 on Prada products and 116,000 euros on hotels and spas, the court was told.
The cross-border insolvency case will reconvene once a date has been fixed for the hearing later this month.
Financial Times names Sir Peter Caruana, Keith Azopardi and Justine Picardo as investors in collapsed crypto firm Globix
Prominent political and business people in Gibraltar who invested in the collapsed crypto firm Globix have been named by the Financial Times.
According to the paper they include former Chief Minister Sir Peter Caruana and Opposition Leader Keith Azopardi.
Also named is Justine Picardo, the Chief Minister's estranged wife.
Since the collapse of Globix, liquidators have been trying to recover more than 40 million dollars.
GBC understands more than a dozen local lawyers, some of whom are involved in the crypto space, have lost money as investors. The Financial Times has named two others apart from Sir Peter Caruana, Keith Azopardi and Justine Picardo who is now separated from her husband, the Chief Minister Fabian Picardo.
A full list of names has not been seen by GBC although several weeks ago we sought court documents containing details.
The list is not readily available to journalists who instead have been told they would need to become part of legal proceedings to access it.
The Government has declined to comment. In answer to GBC questions it said this is a matter which is presently subject of civil proceedings in the Supreme Court.
It added, Globix is a BVI company and not subject to regulation in Gibraltar.
This is a similar view to what the Minister for Digital and Financial Services told GBC's Viewpoint last month.
A public examination of Damian Carreras, the sole shareholder and sole director of Globix, and his business associate, Pavel Sidorov is scheduled to take place at the Supreme Court between the 17th to the 25th July, although this is expected to be via video link.
The Gibraltarian director of Globix denied on Friday that the collapsed cryptocurrency trading platform was an investment fraud, as he was quizzed by lawyers for liquidators trying to trace $42m in missing digital assets.
Damian Carreras, the sole shareholder and director of Miracle World Ventures, a company registered in the British Virgin Islands that traded as Globix, gave public evidence to a hearing of a cross-border insolvency case via virtual link from an office in Spain.
Pavel Sidorov, the company’s chief technical officer, also appeared briefly via remote link but was unable to give evidence as he only speaks Russian and had not previously alerted the court of the need for a translator. He will now give evidence on Tuesday.
During sometimes tense exchanges often stalled by problems with internet connectivity, Mr Carreras addressed the court via a large TV screen, where he appeared dressed in a white shirt and dark jacket.
The liquidators - Adrian Hyde, Joanne Wild and Brian Simpson of corporate recovery specialist firm Begbies Traynor – say there is “overwhelming evidence” that Globix was “a pyramid Ponzi scheme”, a type of investment fraud that pays existing investors high returns with funds collected from new investors.
But Mr Carreras rejected this “serious allegation” and told the court: “This is not true.”
He claimed the Globix system had been “stolen from us” and insisted: “This was a trading platform that made dividends for investors and not a Ponzi scheme.”
Globix was incorporated in early 2021 but liquidators believe it was experiencing problems paying investors as early as January 2022, telling the court there was “compelling” evidence of a fraud.
The company used investor funds to invest in “bots” which would in turn trade in different cryptocurrencies on various exchanges based on algorithmic strategies, with investors promised 1% profit per trading day and Globix taking 50% of all profits.
Working with London-based specialist forensic investigators from Grant Thornton, liquidators have spent months working to untangle a web of crypto wallets and transactions spanning multiple jurisdictions in a bid to trace the money invested in Globix and return it to creditors.
But the search has proved difficult amid claims of kidnapping and death threats, and a trail that at one point led to a company in war-torn Ukraine that worked with Globix but which the company now says betrayed its trust.
Until Friday, Mr Carreras had not addressed the court directly during previous hearings.
The Globix director has provided some documentation to the liquidators but said he and Mr Sidorov were still trying to garner data to assist them in their work.
On Friday Mr Carreras told the court he needed more time to prepare documents for the liquidators and the court, adding he did not want to answer questions without a lawyer present.
Minutes into the hearing, he sought an adjournment until September but this was refused by Puisne Judge Liam Yeats, who said there had been ample time for him to secure legal representation.
Faced with the prospect of a sanction for contempt of court, Mr Carreras opted to answer a battery of questions from Daniel Feetham, KC, the lawyer for the liquidators, though he declined on numerous occasions to provide full detailed explanations until he was able to have a lawyer present.
Mr Carreras, who said he had received numerous threats and feared for his safety, said he had been unable to retain a lawyer in Gibraltar, in part because “a massive amount” of them in different firms were investors in
Globix and were thus conflicted.
He had retained a UK lawyer but had yet to discuss the case in detail with him, Mr Carreras told the court.
CRYPTO EXCHANGES
Mr Carreras said Mr Sidorov had requested data from three different crypto platforms on which Globix trades had been conducted.
He said that data, which they were still collating, would show all the trades and payments made by Globix from inception to collapse.
“The person who was making all those transactions was Mr Pavel Sidorov,” Mr Carreras said.
“I was not involved in the actual trading of funds.”
Among the platforms were European cryptocurrency exchange Bitstamp, sanctioned Russian exchange Garantex and Hong Kong-registered Bitzlato.
During four hours of forensic questioning by Mr Feetham, Mr Carreras offered insight into how Globix had conducted business.
The court heard he had initially approached a group of around 12 investors – he declined to say who without first speaking to his lawyer - but that he had not sought to drum up business in Gibraltar beyond that.
But he added too that once word got round – “Gibraltar is a small place” – people would seek him out to invest funds in Globix.
“I was quite surprised with the amount of [Gibraltar] investors that were coming to see me,” he said.
“But this was something that was not planned.”
“I wasn’t promoting this, like certain people have been saying.”
The Globix parent company, Miracle World Ventures, was registered in the British Virgin Islands and there was no link to Gibraltar other than Mr Carreras.
He said he had established the company in the BVI on the advice of lawyers, dismissing Mr Feetham’s suggestion that the choice of jurisdiction was to hinder traceability of funds if things went “pear shaped”.
Mr Carreras told the court that many investors, particularly but not exclusively those who had come in early, made good profit from Globix.
“There are many people who made a lot of money from this,” he said.
PROBLEMS
Globix investors began experiencing problems extracting funds from the platform in January 2022, just weeks after the global cryptocurrency market began to plummet.
By February of that year, the situation was becoming “unbearable”, Mr Carreras said.
But the court heard too that some investors were still putting money into Globix after that date.
Mr Carreras, who said he had no IT knowledge, said Mr Sidorov had told him the platform was experiencing some technical problems and that he had informed some of the later investors of this, believing the issues would be resolved.
“If I had thought there were any problems with Globix in terms of liquidity, I would not have allowed anyone to invest,” he said.
“But the problems were technical.”
“It wasn’t a question of liquidity, it was a technical problem.”
Mr Feetham asked him why he did not halt investments in Globix given technical problems that had created “unbearable” pressure.
“If I had known things were going to develop as they did develop, I would obviously have taken a different course of action,” Mr Carreras replied.
The court heard that around $26.5m in investor funds had been received through a Globix wallet held in Mr Carreras’ name on the Binance platform.
Mr Carreras would then instruct Mr Sidorov to invest funds in each investor’s name on the Globix platform, which would then make trades using automated ‘bots’ on different exchanges.
But the court was told there was no ledger or record of those instructions, which were made using an instant messaging app called Telegram.
And in a twist to the case, Mr Carreras said Mr Sidorov had been kidnapped by two disgruntled investors in June 2022 and that all their Telegram exchanges had been deleted.
“The kidnappers deleted everything,” he said, adding the alleged kidnapping incident was under investigation by the Guardia Civil in Spain.
“There’s no record of that [ledger], to be sincere.”
“Everything was in our Telegram app system and in the Globix system,” he said, adding he and Mr Sidorov had been unable to recover either.
The court heard that Mr Carreras had spent hundreds of thousands of euros on luxury goods using a credit card linked to the Binance account in which most investors had deposited funds.
But Mr Carreras insisted he had only used his own money, claiming he had made $60m in profit on the Globix platform.
“I was an investor in Globix like other investors and I was cashing out profits made by my own funds,” he said.
“The only monies I took out were of my own personal profits.”
In a small number of cases, Mr Carreras had received funds from investors in an account held by him with the Turicum private bank.
The court heard, for example, that a “man and wife” – the investors were not named – had deposited £100,000 into that account and that subsequently, Mr Carreras had spent £93,000 in a luxury jewellery shop and £30,000 on import duty on a Mercedes valued at Euro380,000, before bringing the account back up to zero.
“These investors have received nothing at all, while you have £93,000 worth of jewellery,” Mr Feetham put it to Mr Carreras.
The Globix director said the couple had been credited with their investment amount on the Globix exchange and were “happy” at the time.
“What you are insinuating did not happen,” Mr Carreras told Mr Feetham.
The liquidators also sought information from Mr Carreras on spending from his wallets and accounts totalling around Euro5m, spent mainly on luxury goods and military memorabilia.
Mr Carreras said that, given he had made $60m in profits “thanks to the fact that the system was working and the bots were working”, he did not think spending Euro5m on goods was “too high”.
Mr Carreras said the initial investors numbered around 12 and that some had introduced others to the system in exchange for a commission on any profits those new investors generated.
He told the court he did not know what those "introducers" had told new investors but insisted repeatedly that he had only approached people close to him in the very first instance, when the platform was launched and tested.
“I wasn’t going around with a banner or a flag saying invest in this system,” he said.
“I wasn’t doing that.”
Asked by Mr Feetham if there was a record of those introductions and commissions, Mr Carreras added: “The ledger you are requesting is in the system that we lost.”
“It would be recorded in the codes of the system and that is something that Mr Sidorov would do.”
But he acknowledged too that “…a large proportion of Globix users came through the introducers.”
Mr Feetham asked what Mr Carreras would have said had an investor queried that the returns promised by the company were “too good to be true” and suggested “a scam from the very beginning”.
Mr Carreras replied that the data requested from the three exchanges would show the transactions carried out by the bots and the fact that many investors had made money.
“People made a lot of money with Globix, not just the introducers,” he told the court.
‘BASED ON TRUST’
Liquidators believe the funds paid by Globix into the three cryptocurrency trading exchanges were made from a wallet linked to Mr Sidorov’s partner, Alla Nicolayvna Babenko.
Mr Feetham asked whether Mr Carreras, as the company’s only director, had held any concerns that millions of dollars of investor funds were moving through a wallet in the name of a person who had no formal contractual link to Globix.
“It was all based on trust,” Mr Carreras said, adding Mr Feetham would have to ask Mr Sidorov for the reasons for that arrangement.
“It didn’t concern me whatsoever.”
The court was told too that when Globix ran into trouble and Mr Carreras began to receive threats, he had engaged Chris Finch, a consultant at Verralls law firm, to help him “calm the waters”.
The court heard 15 luxury watches and two vehicles, including the Mercedes, had been sold in order to pay a number of Globix investors who had suffered losses, including some to whom he had given his “personal word”.
“I handed over my assets and funds to Verralls and they would sort that out,” he said.
He said he trusted his lawyer, adding: “I do not know who those funds were used to take care of.”
“He was my lawyer and would act at his discretion as to what was to be done.”
But Mr Feetham pressed him on this issue, questioning why, as part of this process, Mr Carreras had made a transfer of Euro177,500 in July 2022 to another lawyer at Verralls, identifying him only as a partner in the firm with the first name Chris.
He asked why the transfer was made to a personal account rather than the law firm itself.
“Those funds were sent to take care of investors and cover some legal fees,” Mr Carreras said.
“There was a substantial list of individuals that were taken care of.”
The cross-border insolvency case will return to court on Tuesday morning.
Darren Martinez appears alongside Mr Feetham for the liquidators.
The RGP has launched a criminal investigation into Globix director Damian Carreras.
In answer to GBC questions, the police say this forms part of wider investigation into the operation of Globix and the alleged losses to investors.
Liquidators are in the process of trying to recover US$ 42 million of lost investor funds from the collapsed crypto firm
However the RGP says this is a very complex matter and won't comment further at this stage as it might prejudice their work.
Meanwhile the Supreme Court has approved a disclosure order for Alla Babenko. Ms Babenko is the partner of Mr Carreras's business associate, Pavel Sidirov.
Mr Sidirov was due to be publicly examined today but given that no Russian translator was available, this has been postponed until October. It's expected that Ms Babenko will also be examined.
Representing the liquidators, Daniel Feetham called Ms Babenko ‘an agent’ of Miracleworld, and central to Globixoperations. In his application, Mr Feetham described how capital was moved. Investors would give money to DamianCarreras, who would transfer it to the Globix funding wallet on Binance, registered in his name.
From there, assets worth $28 million were transferred to the Globix cash wallet - also on Binance - which was registered in the name of Ms Babenko. Mr. Carreras claims he has never met her.
Damian Carreras maintains Globix was a legitimate investment platform and that the money he spent was profit he was entitled to. He claims the system was stolen from him.
Liquidators say they are in close contact with lawyers in Madrid and in Moscow and prepared to initiate proceedings wherever necessary.
The matter has been adjourned until September 6th.
The partner of one of the key figures in collapsed cryptocurrency trading platform Globix could be held in contempt of court after failing to respond to an order for disclosure of information relating to the company.
Lawyers for the liquidators made a contempt application against Alla Nicolayvna Babenko at a hearing in the Supreme Court on Wednesday.
The application will be heard on October 5 and if the court grants it, Ms Babenko could face sanctions potentially including imprisonment.
Ms Babenko, who is believed to be in Spain, is the partner of Globix chief technical officer Pavel Sidorov and liquidators believe she played a central role in transfers involving millions of dollars of investor funds.
This is the latest development in a complex case that has liquidators working in multiple jurisdictions as they seek to untangle a web of crypto wallets and transactions in a bid to trace the money invested in Globix and return it to creditors.
Miracle World Ventures, which traded as Globix, was incorporated in early 2021 but liquidators believe it was experiencing problems paying investors as early as January 2022.
The company used investor funds to invest in “bots” which would in turn trade in different cryptocurrencies on various exchanges based on algorithmic strategies, with investors promised 1% profit per trading day and Globix taking 50% of all profits.
The liquidators - Adrian Hyde, Joanne Wild and Brian Simpson of corporate recovery specialist firm Begbies Traynor – had previously told the court there was “overwhelming evidence” that Globix was “a pyramid Ponzi scheme”, a type of investment fraud that pays existing investors high returns with funds collected from new investors.
That was rejected by Gibraltarian Damian Carreras, the director and sole shareholder of Miracle World Ventures, during evidence to the court via video from Barcelona last July.
Mr Carreras, who says he has received death threats and fears for his safety, insisted Globix was a trading platform that made dividends for investors until the system was stolen from him and Mr Sidorov.
Ms Babenko’s appears to have had no formal role in the company but liquidators have established that significant funds linked to Globix were moved through a crypto wallet in her name.
The court had been told most investors deposited funds in the “Globix funding wallet” linked to Mr Carreras on the Binance platform.
From there, some $28m including investor funds was later transferred to another Binance wallet in the name of Ms Babenko, described in court as the Globix “cash wallet”.
Trades were made from that ‘cash wallet’ on crypto exchanges including the Hong Kong-registered Bitzlato and Russian exchange Garantex, the latter sanctioned by US authorities.
Some $6m in crypto assets was transferred into the Hong Kong exchange from Ms Babenko’s wallet and another $10m into the Garantex exchange, the court heard.
In late July, the liquidators obtained a court order requiring Ms Babenko to disclose any information she had in her possession relating to the ‘cash wallet’ and any transactions made from it.
“Ms Babenko hasn’t complied with the order,” said Daniel Feetham, KC, the lawyer representing the liquidators.
The court had previously heard too that Mr Sidorov had obtained some data from the exchanges on the transfers and trades made from Ms Babenko’s wallets.
But on Wednesday the court heard Mr Sidorov had also failed to provide any data to the liquidators other than documents relating to a two-week “window”, despite a court order requiring him to do so.
“Mr Sidorov does not appear to have the intention to provide us with the documents in his possession and control,” Mr Feetham said.
Mr Sidorov, who is also believed to be in Spain, is due to give evidence via video link to the court on October 5.
Mr Feetham said it was likely the liquidators would also file an application to hold him in contempt of court for failing to comply with the disclosure order.
The cross-border insolvency case is being heard by Puisne Judge Liam Yeats.
