Envestio has Defaulted – Possible Scam

Envestio - Possible Scam

Envestio Website Closed Down in January 2020

When Envestio’s website became unavailable on January 22, the 404 message implied a misconfiguration of their server. Such mistakes, however, are easily resolved and should have been fixed within an hour or so.

It soon became clear that the website, including the mail server, was deliberately suspended.

Envestio 404 Error

Communication Stopped

There has been no communication from Envestio since January 21. Up until that point, Envestio gave the impression that everything was working as normal.

But it wasn’t.

According to some sources, Envestio put all withdrawals on hold as early as January 12.

This was apparently a direct or indirect effect of the collapse of the Kuetzal P2P platform. Too many investors wanted an early exit from their investments, since Envestio had promised to buy back all loans with a small penalty. This buyback was supposed to happen with Envestio’s own money.

So, the question is: did Envestio closed their website due to a hype in early-exit requests because the funds dried out or was it a desperate exit scam triggered by investors questioning the reliability of Envestio?

On January 21, Envestio Said They had Issues with Hacker Attacks

Twitter Tweet January 21

Dear Investors,

We would like to address all our clients, investors, borrowers and other counterparties with the following very important issue. We proudly declare that till present moment Envestio managed to fulfill on time and in good faith all financial obligations to all contractual investors and borrowers, despite the very unfavorable situation in the crowdfunding market, provoked by the uncertainty and potential fail of Kuetzal platform.

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.

Envestio strongly condemns any actions aimed at further destabilizing the current crowdfunding market situation and disrupting the activity of the Envestio platform, as these factors together can lead to an uncontrolled solvency crisis, influencing not only Envestio but also other industry participants

Obviously, a database disruption may call for a postponement of account information and/or investment data. But not for taking down the full website.

A hype in early exit requests or “hostile actions” could also have been handled differently. Leaving customers or investors in the dark is not advisable for any business.

The COO Evgeniy Kukin, who was replaced by new management in late 2019 and who was supposed to return to his post January 15th, has recently deleted his entire social media presence (LinkedIn, Twitter, Facebook) etc.

This is, of course, raises many questions about what really happened in the company during fall and winter 2019.

Possible Scam

While many new actors on the P2P market are less professional and are too eager to attract investors, it is obvious that Envestio’s current behavior suggests that investor’s money are gone.

The last few days, Estonian police have also received several complaints regarding Envestio, but they have not opened an investigation about fraud. Yet*.

We recommend all investors to make formal complaints to Estonian authorities, join different groups to get more information, but NOT to donate money to anyone who says they will work to reclaim the investments.

33M Euro at Stake

13,000 investors have invested roughly 33M Euro on the platform. Those investments are most likely gone, especially since some of the companies listed as borrowers are difficult to track down.

For investor’s with large losses, it may pay off to take legal action. If you are in this situation, contact a law firm directly, not through Facebook groups or twitter accounts. In other words, don’t make the situation worse by losing more money to other scammers.

Should Envestio somehow rise from the ashes, the business and credibility are gone. So, be happy if some of your money can be reclaimed.

The Domino Effect - Image by Christine Schmidt from Pixabay

Will There Be a Domino Effect?

It is very likely that we will see a Domino effect on the P2P market in the weeks to come.

  • Wisefund is already in deep water with poor transparency, many loans hovering around 19% interest rate, and non-transparent borrowers (like the one-man company KRM Services LTD on a virtual London address).

    Investors have put Wisefund under heavy strain with a wave of early-exit requests. Wisefund have answered with making early withdrawals impossible until further notice. Withdrawals of your unused funds (funds not invested) is still honored, though.

    Early withdrawal from Wisefund

    It is not unlikely that Wisefund will follow in Envestio’s footsteps.

  • FastInvest is a shady P2P platform with many similarities to a Ponzi scheme. If they don’t constantly attract new investments, they are less likely to remain in business.

    Read why we stopped investing with Fastinvest.

  • Crowdestor is another Estonian crowdfunding company with many high-risk and spectacular projects. Interest rates are also high and could easily be categorized as “to good to be true”. The company share many similarities with Wisefund and Envestio.

There are possibly more…

Red means stop

*/ January 31: Police and Border Guard Board in Estonia has now started an investigation to find out if Envestio and Kuetzal were indeed created with the purpose of committing fraud.