Imagina FX founder Craig Massyn defends attempted kidnapping

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The liquidators of Imagina FX, the bankrupt investment firm that went into final liquidation in November 2020, have set their sights on founder and chief operator, Craig Massyn.

A claim has been filed with the High Court in Cape Town for the receivership of Massyn and his wife Mara-Lee on the basis of two claims for 9.1 million rand and 5.7 million rand due to two companies formerly under its control: Imagina FX and Octox.

The liquidators claim that the Massyns are insolvent and unable to pay their debts. Massyn opposes the request, saying it is an abuse of legal process and is not insolvent, but his court documents offer no indication of what happened to the $ 2 billion of the estimated rand that the liquidators claim to be owed to the investors.

Moneyweb previously reported on the failure of the investment program, which traded under various names including Imagina FX, Praesidium and Octox.

According to the liquidators, the companies have managed to attract more than R 2 billion of investors apparently posting annual returns of 43.5% and even up to 74.3% in one year.

It was all nothing more than a Ponzi scheme, liquidators say, with new investor funds being used to pay older ones.

Things started to take a turn for the worse last year when Covid hit

The company blamed this “black swan” event for a 40% withdrawal from funds under management. Just weeks after the “black swan” announcement, things seemed to be back on track. On May 26, 2020, investors were told that returns for that month would be around 1.5%. It was wrong, say the liquidators.

Several investors got nervous and started asking for their money. Their withdrawal requests were met with a series of messages explaining the technical and regulatory hurdles that had to be overcome before the money could be released.

In a letter to creditors dated March 9 this year, Imagina FX co-liquidator Christian Bester said many investors were putting funds into Octox’s ETF bank account, believing it to be from Imagina FX’s bank account.

“During our investigations, it was discovered that amounts totaling 1.5 billion rand had been deposited into the bank account of Octox (Pty) limited. An application was launched for the provisional liquidation of Octox and was granted on December 9, 2020, with final liquidation pronounced in the Western Cape High Court on January 22, 2021. ”

Request for Receiver

The liquidators of Imagina FX and Octox are now asking the High Court to sequester the Massyns and hold them personally liable for the debts and obligations of Imagina FX and Octox under section 424 of the 1973 Act on corporations.

On October 27 last year, liquidators obtained an order from Anton Piller to search (without warning) the business and the residences of the directors of the company for information on the location of the missing money.

Massyn claimed Anton Piller’s order was unlawfully executed and brought an action to set it aside on February 25, 2021. The court dismissed Massyn’s claim, and is now appealing.

Of the 1.5 billion Rand in Octox’s bank account, only 21,000 Rand remained

According to court documents from the liquidator, from July 2014 to October 2020, approximately R 1.5 billion was paid into Octox’s ETF account. As of October 2020, there were only about R21,000 left in the account. In total, more than R 2 billion was received into the bank accounts of Imagina and Octox.

Where did all this money go?

Massyn’s affidavit of response to the receivership case provides almost no clue. Last year, the Financial Sector Conduct Authority (FSCA) warned investors that most of their funds were likely lost, and this appears to have been confirmed by subsequent statements from Massyn himself and Primus Markets International, a platform – foreign form used by Massyn for currency trading.

Although Antoine Papayya was registered as the sole administrator of Octox, Massyn was the only person to control his bank account. He obtained the exclusive authority to transact on Octox’s bank account by fraudulently declaring to FNB that he was a director of the company when he was not, according to the affidavit of (co- liquidator) Bester.

Neither Imagina FX nor Octox were registered as a financial institution, bank, depository or financial service provider, nor did they comply with the Collective Investment Supervision Act.

The financial statements have also not been compiled as required by the Companies Act.

“Not at all cooperative”

“Massyn has absolutely not cooperated in the liquidation of the business of Imagina FX,” dismissed Bester.

“He has also given conflicting accounts on whether there is any money left and where the money is.”

Investors have been drawn to the promise of returns of 39-42% per annum, and it appears that is how he was able to pay older investors. Substantial commissions were also paid to those who introduced new investors.

In addition to having control of the company’s bank accounts, Massyn allegedly embezzled large sums for his own benefit, according to Bester’s affidavit.

On one occasion, he paid Papayya 2.4 million rand “apparently to make Papayya turn a blind eye to the abuse of Octox’s bank account”.

Although it has apparently roasted the rest of the market with yields of 39-42% over the previous five years, Covid has arrived and was a ‘black swan’ event that caused a 40.3% drop in the 5 May 2020.

But things got back on track in a matter of weeks. On May 26, 2020, investors were told that returns for that month would be around 1.5%. It was wrong, Bester said.

Freezing Forex Trading

On July 17, 2020, Enderstein & Van Der Merwe (EDVM), attorneys for Massyn and Imagina, wrote a letter to the Praesidium stating that the total funds held by Primus, the Cyprus-based forex trading broker used by Massyn, was of about $ 42 million. .

In July 2020, Primus’ attorney, Chrysses Demetriades, informed Imagina’s attorneys that a freeze had been placed on all trading accounts because “there is strong evidence to suggest that your client provided false information to their respective clients in terms of their investments ”.

Massyn later confirmed in an email to his lawyers that “the majority of the funds are gone.”

When a reconciliation was made by Primus, it turned out that there was less than € 120,000 in July 2020.

“It appears that Massyn not only falsified account balances, but also managed to rearrange account names and numbers,” Bester explains. “Massyn clearly manipulated the account statement balances. It follows that he did so to deceive the FSCA and to defraud investors. ”

Massyn’s modus operandi

Massyn appears to have had five categories of investors, each receiving a different percentage of return on their investments. Investors did not hold separate accounts, as promised by the company, but were grouped together, with Massyn assigning percentages of return to each group. According to Bester’s affidavit, his fellow director of Imagina, Carl Japhtes, has never seen documentary evidence of actual business results.

“The inescapable conclusion to be drawn from the facts and documentation obtained by claimants thus far is that the investment system created and operated by Imagina FX, and more specifically by Massyn, is nothing more than a system. illegal and fraudulent Ponzi scheme, which Massyn knew that Imagina FX would never be able to honor the returns promised to clients / investors, that the whole program would inevitably collapse [as it eventually did] and that the many clients / investors would suffer huge losses.

R6.67 million was paid in 14 Imagina transactions on Massyn’s Luno accounts and a Ricky Lee-Ann Vosloo, of which R4.17 million was transferred to Massyn’s Luno account . Massyn bought and sold bitcoin through his personal Luno account and withdrew funds from the account which then went to his personal bank account. He never paid any money into Imagina’s bank account.

Japhtes also received 4.86 million Rand from Imagina in his personal Luno account and then bought bitcoin which he transferred to Massyn’s wallet.

So far, claims worth 94.6 million rand from 85 claimants have been received, although this is sure to increase as the total liabilities of Imagina and Octox are known to exceed 1, 5 billion rand.

Massyn responded in his court documents that the liquidators are abusing legal process by trying to file a receivership claim against him, and that he is already engaged in a wide-ranging litigation related to the liquidation of the companies in which he was involved.

Bester responds that Massyn did not testify during the Section 417/418 inquiries and has filed several requests for postponement of proceedings, quashing of summons or stay of proceedings pending requests to be submitted to the court.

“The requests made by Massyn have only one goal in mind: to avoid being held responsible. ”

The application for receivership will be heard by the court next week.

Read: FSCA crackdown on Bitcoin after alleged Ponzi scheme


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