This is post I hoped I would not have to write. I really feel badly for having made the right decision for once. I wish I was wrong. I hate having to write another negative post about peer to peer investing.
Panic on the peer to peer markets as investors are scrambling to organize and find out what is happening to Envestio. In one of my previous blogs I explained I did not trust the situation and named several reasons why I decided to leave Envestio. The change in COO, the large amounts of withdrawals I saw, and of course being extra on my guard by the Kuetzal disaster I felt no longer comfortable being in Envestio and moved out. I never claimed Envestio was a scam, and neither will I now, but the amount of red flags was stacking up fast.
What happened mid January?
My blog with my decision to move out was published on January 10. I am aware I run one of the smaller blogs, but I do care about my readers. That’s why I avoided advertising my post to outside sources. I wanted to give my readers a head start to decide if they should stay in our not.
I did had some readers that told me they were or had already moved out. I hope they made it out on time, because I heard that not long after Envestio stopped processing withdrawals.
I generally avoided advertising my post, and I also did my best to show two sides of the story, as I did not want Envestio to fail. A failure of Envestio could possibly spread to other platforms. There was some other high risk platforms apart from Envestio such as Wisefund and Monethera.
I am not in Wisefund fortunately but I am in Monethera. I investigated some projects and could not find any flaws but I do consider to move out of Monethera as well. I do not like the 3rd party investors from Hong Kong and the fact that we know nothing about their Financial Statements.
Have a look at this Youtube channel where P2P Investing is explain his reasoning of leaving Envestio, Monethera and Wisefund. I decided to follow his advice and move out of Monethera as well (I don’t want to discuss this here as this is not related to Envestio).
The author explained that he would sell Envestio, and slowly pull the principal out of Monethera and Wisefund. This was posted the 15th of January, but at the time of posting Envestio had already stopped processing repayments, so I am not confident he got his money out.
P2P Investing also mentioned one reason I had overlooked so far: the size of the projects. Where Envestio started with 40k projects, they now had borrowers looking for funding of 5M. At the same time these companies were extremely hard to find online. The only project that was being identified everywhere was the Hostel renovation. But even that was actually not a hostel but a Dorm for University students.
Meanwhile what did Envestio do?
Envestio did start a countercampain to try to polish up their image. They hired back the old COO and started reacting on both twitter and facebook. Fighting with PeerDuck twitter account and anyone who talked against them.
Actually their first statement that was very worrying came on January 15th. Envestio has about 33 M funds invested. They posted 500k-800k of funds actually left Envestio recently. Envestio gets 5% on those funds and the investments got re-invested at the time still quite fast. In the short term, assuming Envestio was using real money and anything that Investors had on their Investor’s account was on a bank account, this should not prove an issue.
This should have brought Envestio extra funding. Afterall Envestio’s income came mainly from projects where they got a few % every time a project got listed. There were more projects and projects with higher funding then ever. So there should not have been a problem in the short run as long as all the money was real and so were the projects.
Better news was that the former COO would be returning to Envestio. Mr Evgeniy Kukin. The current COO would move to Sales. It was a slight improvement and good to see some light at the tunnel.
At the time there was still some people defending Envestio. Also on my blog post there was people saying how wrong I was. The thing is, its your money. You decide what to do with it. We are not a social institution that is keeping their money in for the greater good. We are capitalists and when the return is no longer worth the Risk then its time to pull our money out.
Whats happening today?
One week later, January 21st Envestio issued a statement it was under attack from Hackers. The website did went down a few times. The news did not sound very positive. Envestio was blaming others for its troubles and did not seem to have any plan for fixing the issues.
Fast forward to 22nd of January: the website was down in the morning and has not come back up! There has been no statement of Envestio of what is happening.
Some users have speculated that Envestio is moving their provider to a safer host such as Azure. However…let’s review some worrying facts
Worry #1 Envestio has gone cold turkey
If Envestio was moving their Website, it would be extremely bad PR to take down your website in the midst of a storm and make no announcement whatsoever. You would almost guarantee that every investor would request a buy-back as soon as the Website is back online.
Worry #2 the old COO has vanished
The old COO Mr Evgeniy Kukin has removed both his Facebook and Linkdin account.
As you can see above this was his former profile. However you will no longer be able to find him.
Worry #3 where are there offices?
Allegedly one person actually went to the Riga offices of Envestio, at least to the adres they mentioned and could find no trace of Envestio’s offices.
I can’t help to wonder if the attacks on Envestio really took place or if they were part of a larger plan to give Envestio time to disapear.
Worry #4 Envestio is removed from ECN
The ECN should give some credibility to a peer to peer platform, but now we know that Kuetzal was a member and all they had to do was pay a memebership fee. In other words its not very easy to get removed. If you are removed something needs to be seriously wrong.
Not only are they removed but ECN also decided to report them to the National conduct authority.
What should you do if you are an investor who’s money is at risk?
If you still trust them after this you can give it another few days and see if Envestio’s website goes back online. But also consider the worst case scenario: Envestio was a scam from the very beginning (again worst case scenario!), and the hacking was not done by Hackers but by Envestio itself as a smoke screen. Taking down the Website was part of their plan to make it harder to gather evidence for investors and buy time to get away.
Time is of the essence!
The more time you lose the harder it will be to get back your funds! If you decided you no longer have faith in Envestio its time to take action.
Action #1 Connect with other investors
With over 30M of investments in Envestio you can be sure there is a lot of other investors who are eager to get some money back. First thing you need to do is get connected. There is an Envestio Telegram group “EnvestioDiscussion” that you should join.
Action #2 File a police report
This is something you could do. If you want to do this it has to be with the local police: https://www.politsei.ee/en International police will not help you.
Keep in mind police is mainly after criminals. They don’t care about your money and will not help you get it back. For that you need to go to a civil court.
Action #3 Get a lawyer
There is over 400 investors in the telegram group. Acting together will make you a lot more powerfull. A lawyer can cost around 5-10k. A lot for one investor, peanuts for the 12k investors together that Envestio has.
The lawyer should focus on two things: #1 file for Bankruptcy. There have been no repayments since mid January. Its clear Envestio has cash flow problems. #2 if it turns out the accounts are empty, then initiate criminal proceedings. If somehow you can prove this it will be much easier to get the money back. That is if there is money left. Its likely that in the worst case scenario, that this was a planned scam from Envestio, they already have left with your money the day the repayments stopped.
Remember act fast. Within the next 1-2 days you should gather and close the list of investors. By that time you will have 100s of investors gathered I am sure. Search contact with Kuetzal investors as they will have a law office to recommend to you and will have at least some experience with peer to peer cases.
Again time is of the essence, the faster you act the more chances you have to recover your money. I actually consider to contribute to support the investors if Envestio does not come above water again.
To be continued!
I really hope that its not the worst case scenario. There is other scenarios possible, namely that its all real projects and they just could not keep up with the amount of buy-outs.
Not only Envestio’s investors have taken a serious blow, but also the peer to peer world as a whole. Steady and profitable platforms will now also need to prove themselves extra hard going forward. They can expect that every single project or added Loan Originator will be closely examined. Not showing complete transparency will no longer be accepted.
Let’s hope that the blow that Envestio is giving will stay limited to Envestio and will bring increased transparency to other platforms. Envestio failed to do so and attempts to recover came much to late.
I wish the very best of luck to all investors, I will be following the proceedings very closely!