Crowdestor Scam Accusations: Official Response

With the recent chain of events at Envestio and Kuetzal, Crowdestor made a statement to clear things up.

Here it is:

Dear investors,

Recent fraudulent and dishonourable activities carried out by several crowdfunding platforms has been a big shock for all involved in this industry, has caused huge losses to more than 15 000 investors and has seriously damaged the reputation and trust of crowdfunding in general. 

We are receiving hundreds and hundreds of emails with questions:

  • Is CROWDESTOR financially stable? Is CROWDESTOR going to face “Bank-run”?
  • Is CROWDESTOR running business in a legitimate way? Can you prove that you are not “Ponzi”?
  • Are your Borrowers real companies or empty shells with no real operations?
  • Can you become more transparent?
  • Can I with withdraw funds before Loan term?

We have been trying to answer individually to each question by all means of communication to our furthest extent, but in case if some of you haven’t received an answer yet, we hope this statement will help.  

We want to inform our investors with the following.

About financial stability of CROWDESTOR

CROWDESTOR has never offered “Buy-Back with a penalty at any time”, “Crowdestor Care with Buy-Back” or other weird, but well know combinations of words. We haven’t offered this as CROWDESTOR wouldn’t have funds to cover such claims in full amount in a legally correct way even if 10% of investors would ask for early exit. CROWDESTOR earns 3-5% from raised funds, which is a market typical average. The money earned is then spent on the payroll, administrative, marketing costs, IT costs and further development. So it is simply to do the maths. CROWDESTOR, as a platform, in essence, is a mediator between investors and borrowers, a marketplace. 

So we are not experiencing increased/uncontrollable out-flow of capital and we are not going to face the so-called “Bank-run”. 

Is CROWDESTOR legit?

CROWDESTOR is not offering the Ponzi-type early exit by paying out investors funds which are raised from new investors. 

Investors funds are held in a dedicated bank account, separate from CROWDESTOR operative funds. Since first day of operations CROWDESTOR bank account is opened in the LHV Bank, a reputable bank founded in 1999 with half-billion EUR assets on its balance sheet. We have AML procedures in place and are cooperating with a bank on any questions they ask on our operations. 

CROWDESTOR transfers money to Borrowers, the Borrowers are real existing companies, funds are used for the Loan purpose. For each deal CROWDESTOR performs due diligence.

Investors see “real funds” in their investors account not virtual funds as it has been the case in other platforms noticed by a large number of investors in last 2 weeks. 

We are eagerly waiting and ready to support development of ECSP regulation in EU level (European Crowdfunding Service Providers), which would decrease potential fraudulent and dishonest activities in crowdfunding industry. Our aim is to be amongst the first ones to receive it. 

We are also ready to initiate an establishment of Association which would join members who share same goals.

What are we going to do next?

We understand that today, when an enormously huge number of people have been cheated and the whole industry is damaged, these seem just words from us. But we will take great pains and do real actions to regain the reputation and trust in us and industry in general. 

Currently we are working on a detailed action/development plan how CROWDESTOR in Year 2020 becomes more transparent, more open to investors, improves process standardization, becomes more automated etc. We will present action plan by end of February, beginning of March 2020. The plan will include topics regarding:

  1. Transparency
    We plan to disclose as much information as possible in following areas:
    • Borrowers. More financial information, info on management, contacts, registration documents. All possible information to extent not disclosing confidential information on borrowers.
    • Partners. We plan to show you with that partners do we work on due diligence, legal, banks, KYC and all other possible partners.
    • Team. To make our team more public – shareholders and management will be show on our website, with detailed CVs, experience and links to LinkedIn.
    • Decision making. Creating and presenting an understandable and transparent procedure on how we make our due diligence and finally a decision on what project to put next.
  2. Technology
    • How we will automate due diligence. We see great potential in maximally automating the decision making of borrowers risk assessment. 
    • How we will implement united risk assessment/scoring. 
  3. Growth
    • We have our growth plan and on how we see CROWDESTOR in future. Plans consider expansion, process standardization, strengthening the team, following and aligning to regulation. 
  4. Investors Meetings
    • We are going to organize webinars with our investors to answer their questions. More information will follow. 
    • We plan to organize twice per year Investors-Borrowers meetings in cities across Europe giving an opportunity for investors to meet Borrowers and CROWDESTOR in real life, socializing, getting more information about them and CROWDESTOR. More information will follow.

Early exit option

As mentioned previously, CROWDESTOR does not provide Early exit option. 

However, during last 2 weeks we receive numerous emails with questions if it is possible to exit. 

In the light of recent shocking news, we understand and respect this. We have agreed with several investors who would consider to buy-out a part of other investors loan with a discount in projects which we have funded.

This will not be a buy-out made by CROWDESTOR. This will be a buy-out from other investor/investors, so it will not make any burden or profit to CROWDESTOR books.  

In couple of days we will establish a procedure how to submit an application for an Early exit and we will follow up with more explanation.  

Last but not least

We invite prospective honourable investors to be vigilant and diligent before committing their financial resources to any platform and please pay attention to any small details – is the management presented in webpage, who are the real decision makers, what is the background of owners and management, do they had real, proved business before, do you know who are the beneficial owners of platform, where is the legal and factual address of platform, where does the platform has bank account, did it had interruption in sending out the money, etc, etc. 

29.01.2019

Best regards

Janis Timma

Founder & CEO of CROWDESTOR

So, that was Crowdestor’s response regarding the recent rumors. What do you think?

8 Replies to “Crowdestor Scam Accusations: Official Response”

  1. I hope really it’s coming :
    “We are eagerly waiting and ready to support development of ECSP regulation in EU level (European Crowdfunding Service Providers), which would decrease potential fraudulent and dishonest activities in crowdfunding industry. Our aim is to be amongst the first ones to receive it. “

    Like

    1. Well, you can’t really abandon Crowdestor since it does not have a buyback option but I don’t believe Crowdestor to be a scam. Then again, I would have said the same if you would have asked me last month about Envestio.

      Like

  2. Would be nice if anybody who has information about Envestio and Kuetzal could help to clean up situation as soon as possible. Best for everyone will be to renew trust to crowd fundig industry.

    Liked by 1 person

  3. I thought Envestio was a scam so I did a rebuy after they hired that crazy new COO that was involved in a Ponzi sceme in the past. I do not think this of Crowdestor. But the more transparency the less doubts people will have. I will feel much more comfortable once the EU regulations are in place

    Like

      1. I managed to get it back yes. I’m glad I did but I feel so bad for other investors. As I lost out in Kuetzal I know how they feel. I also moved out of Monethera and feel more comfortable with my current portfolio.

        Like

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