Managers of Countinghouse, the crypto CFD fund that collapsed last month owing $80-90 million to investors, were not scammed but instead committed fraud, according to a report from a group of investors who have taken legal action against them. The group claim that their work so far has uncovered evidence of fraud and misappropriation of funds, with the firm hired to audit the fund also potentially hoodwinked by the team. The team themselves have offered no evidence to back up their claim that they are themselves victims of “sophisticated offshore crooks”.
A Year-long Scam?
Countinghouse unraveled late last year after purportedly returning a 10x during the crypto bear market. Investors were reassured by the fund’s existing position as a forex hedge fund, their registration with the Australian Securities and Investments Commission (ASIC), and the completion of an audit in January 2019 which confirmed that the fund was performing as reported.
The fund collapsed in early December however following its alleged sale to a group of scammers, following months of speculation that it was no longer solvent. The new report, issued by a member of the group that has taken the first steps towards justice, appears to support the latter theory, stating that things had been rotten for some time in the fund:
The existing case against them has revealed that they have committed criminal acts in that they deceived investors about the fund and misappropriated investors’ money including providing false information to the fund auditors.
This would date the fraud as far back as January 2019, meaning that the entirety of last year’s performance as based on lies. The team still conducted private sales of the tokens during this time while, for a short period at least, offering cash redemption, suggesting the new money was being used to pay off existing investors – the classic definition of a Ponzi scheme.
Investors to Learn of True Fund Value
According to legal filings, the fund managers implicated in the scam, Tim Dawson, Chris Yap, and Mike Pomery, have until January 17 to respond to a court order demanding their financial records, at which point investors will be able to see if anything can be rescued from the ashes of their investment. They are also due to file their defence on February 14, at which point it will be clear if they plan to stick to their story of being having been scammed themselves.