Globix liquidators grapple with web of crypto wallets in search of $42m
The Gibraltarian director of a collapsed cryptocurrency trading platform “fears for his personal safety” if he returns to Gibraltar, a cross-border insolvency hearing in the Supreme Court was told on Friday, as liquidators grapple to trace $42m in digital assets.
The court was considering submissions relating to Miracle World Ventures, a company registered in the British Virgin Islands which was placed into liquidation on March 10 by Damian Carreras, its sole shareholder and director.
Miracle World Ventures traded under the name Globix, taking investments including from people in Gibraltar and the UK.
Now, liquidators are trying to trace and secure around $42m they believe was held in the Globix system through various crypto wallets.
They are working to establish whether part of that money “has been lost” and whether all or any of it can be recovered, said Daniel Feetham, KC, the lawyer representing the liquidators.
Last month liquidators secured a court order freezing a number of wallets associated with Globix and requiring other crypto exchanges to provide information to investigators following the digital money trail.
On Friday, lawyers for the joint liquidators - Adrian Hyde, Joanne Wild and Brian Simpson of corporate recovery specialist firm Begbies Traynor – appeared before the court again to expand the scope of the injunction and amend earlier references to some wallets to reflect new information.
The court had previously heard that investors used crypto wallets within the Globix system to invest money either into a Globix funding wallet or the personal wallets of Mr Carreras or his Russian business associate Pavel Sidorov, the company’s chief technical officer.
The funds were to be invested in Globix “bots” which would in turn trade in different crypto currencies based on algorithmic strategies.
The interaction between Globix wallets and investor wallets is the subject of a “foundations upwards” probe by the liquidators, who have retained a specialist London-based team of crypto investigators from Grant Thornton led by Carmel King and Dan Sutch.
The court was told Globix took 50% of all profits made by investors on the system and that investors were guaranteed 1% profit per trading day, with a minimum three-month period – later rising to nine months – before any profits could be withdrawn.
There are also indications that some investors may have been offered a commission for introducing new investors into the system.
But the liquidators have told the court there is “compelling” evidence of a fraud.
The company was incorporated in early 2021 but the liquidators believe it was experiencing problems paying investors as early as February 2022.
Investors, a large number in Gibraltar including “high profile” individuals, have been shut out of the Globix trading system since June 2022, with liquidators estimating there could be hundreds of investor wallets affected.
In April, the court issued an order requiring disclosure from Mr Carreras and Mr Sidorov but lawyers for the liquidators said on Friday the orders had not been complied with.
Mr Feetham said the liquidators would make an application for contempt of court unless the disclosure orders were met.
And he said too that unless Mr Carreras explained to the court what had happened, he would “very likely” face “a very substantial claim for fraud”.
But the court heard that Mr Carreras was currently in Barcelona.
“He fears for his personal safety should he come to Gibraltar,” Mr Feetham said, noting that last year, Mr Sidorov and his wife had been kidnapped in Spain before being freed by Spanish police.
The hearing left no doubt as to the difficulties faced by the liquidators in tracing the funds that Globix was managing, highlighting too the possibility that they had been “sent on a wild goose chase” early on in their investigation.
The investigation is piecing together the interactions between hundreds of crypto wallets associated with other exchanges in multiple jurisdictions, some of which were being “very cooperative”, others less so, the court was told.
Mr Carreras had offered to meet the liquidators to answer their questions, though he did not want lawyers present, the court heard.
Mr Feetham said this was being considered and may be possible in line with Gibraltar's insolvency laws, while another possibility is for Mr Carreras to provide evidence to the court via remote link.
The insolvency case, which is being heard by Puisne Judge Liam Yeats, is back before the Supreme Court on June 13.
Darren Martinez appeared alongside Mr Feetham for the liquidators.