A better picture has emerged of what happened to the 1.4 billion rand invested by investors in forex trading firm Imagina FX, which went into liquidation in October 2020 when the company froze withdrawals.
In May of this year, court-appointed liquidator Christian Bester of JJS Administrators sent out a notice to investors, and it’s not good news.
Of the R1.42 billion deposited in Imagina FX, only around R280 million was used for trading. “Of the approximately R280 million, only R8 million was returned to Imagina FX and it would appear that there was a trading loss of approximately R272 million,” the notice reads.
Of the remainder, R879 million was refunded or transferred back to investors. The balance was used to pay directors, consultants, operating expenses “and other related third parties such as Massyn’s family trusts”.
Imagina FX was controlled by Cape Town-based Craig Massyn, who was also the lead forex trader.
To complicate the picture, the same team of “experienced traders” managing Imagina FX was also behind a number of other corporate funds under the names Praesidium and Octox.
Read: Imagina FX Founder Craig Massyn Defends Sequestration Attempt
Accountants@Law was brought in to trace the complicated flow of funds between businesses and see where the money went.
Many investors were depositing funds into Octox’s ETF bank account, thinking it was Imagina FX’s bank account. The Octox bank account was controlled by Massyn.
Return to rejoice in…
Imagina FX and its sister company Praesidium have been extremely successful in attracting investors from around the world with advertised returns of between 43.5% and 74.3% for the four years to 2019. Its marketing materials have inflated these returns devastating in the market. for more investment funds.
If it all sounded too good to be true, it was. In June 2020, investors were made aware of a “black swan” event in the form of Covid which had caused funds to fall by 40%.
This is the first loss announced by the company in five years. To calm the agitated nerves of investors, the company said a turnaround strategy has been put in place to recover from these losses, traders will work longer and investors can expect faster communication from the part of society.
Soon after, the company stopped paying investors who wanted to withdraw funds. That’s when they rushed to court to place Imagina FX and Praesidium into liquidation.
A former employee of the company, who asked not to be named, told Moneyweb that the forex trading team operated in virtual secrecy, so it was impossible to see if they were actually trading and making profits as claimed. .
Read: Two forex trading firms go bankrupt, owed investors over R1 billion
“Liquidators have failed to recover funds of any meaningful value in Imagina FX,” Bester warned in May.
“Bank accounts were depleted and known business accounts in Cyprus that were frozen appeared to be at a loss. The fact that there [are] no funds available do[s] any investigation is extremely difficult, as most experts or professional service providers are not prepared to render ‘tailor-made’ services,” he added.
The legal costs incurred by the liquidators so far appear to exceed R10 million, meaning that unless the funds are recovered somewhere, there is no prospect of the funds being returned to investors or creditors. .
The liquidators are now looking into the possibility of recovering funds from “defendable transactions”, which are transactions entered into by an insolvent company before liquidation.
It’s starting to take on the complexion of Mirror Trading International (MTI), the liquidated bitcoin (BTC) system that has raked in almost 30,000 BTC with promises of returns of 10% per month using a computerized trading system.
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Investigations by the Financial Sector Conduct Authority (FSCA) found no evidence of a successful transaction by MTI, and the liquidators asked the court to declare it a Ponzi scheme, in which case all payments received by investors should be returned.
It is uncertain whether the same fate awaits Imagina FX investors, although funds paid to Massyn family trusts and other beneficiaries could certainly be targeted.
Massyn was sequestered by the liquidators, an action he opposed.
Massyn filed a request with the court to avoid testifying before an inquiry set up to investigate the company’s affairs, but was unsuccessful.
A R1.2 million recovery order from his wife was obtained by the liquidators in October 2021. A request was also initiated for the recovery of funds from Massyn’s sister-in-law.