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Members of Gibraltar’s political and legal elite are among investors to have lost money in crypto trading group Globix, whose collapse has triggered an international hunt for a missing $43mn.
Former chief minister Sir Peter Caruana and leader of the opposition Keith Azopardi are among high-profile figures in the British Overseas Territory to have invested using the platform, which let investors use automated trading strategies to pick tokens, according to people familiar with the matter.
The names were then used by Globix sole shareholder and director Damian Carreras — a Gibraltarian — to promote the platform to other clients, two of the people said.
While Gibraltar has sought to distance itself from the scandal, Globix’s collapse during a rout in cryptocurrency markets last year has dealt a blow to the territory’s hopes of diversifying its economy by becoming a major centre for digital asset finance. The peninsula, which faces the prospect of a hard post-Brexit border with Spain, is chiefly reliant on insurance, online gambling and the importation of alcohol and tobacco.
The collapse also underscores the risks that a number of jurisdictions have taken in the rush to establish themselves as global hubs for digital asset activity. The Bahamas and Singapore are among the countries that have seen their ambitions undermined as scandals unfold in their territories.
“Gibraltar’s reputation will be badly damaged as a result of big names being involved directly as investors, but also the fact they have failed in their duty to a wider constituency,” said John Christensen, an economist and offshore finance specialist.
“People look to financial centres like Gibraltar to provide the necessary regulation to protect consumers,” added Christensen.
Among other investors to have used Globix were Anthony Provasoli, Aaron Payas and Justine Picardo, who are all partners at Hassans, a high-profile Gibraltar law firm that has long had close links with the jurisdiction’s political establishment.
Picardo recently separated from the current chief minister, Fabian Picardo. Provasoli advised Gibraltar’s regulators during their efforts to create rules governing crypto-related activity, which were introduced in 2018.
Payas and Provasoli said in a joint statement that they considered themselves to be “victims”, and their only involvement with Globix was as “late investors” using “only a relatively small portion of our personal crypto holdings”. They had “never promoted Globix or advised others to invest”, they said.
They added: “We have never been made aware that our names were being used to attract investors and would never have agreed to that.”
Picardo, Caruana and Azopardi did not respond to a request for comment.
Globix’s collapse has caught out many wealthy Gibraltarians. One investor who lost money said: “Damian would use this VIP list as a sales pitch, openly discussing extremely influential individuals in Gibraltar who were investors, this was how he sold [Globix] so successfully.”
“What due diligence could I have done that would have been better than the due diligence done by the politicians, bankers and lawyers that bought in?” said another investor who lost money.
Carreras told the Financial Times: “I never promoted this, other than talk about it initially with a small group of family and close friends.”
He added he has received death threats and feared for his safety following the fallout from Globix.
“It is crucial to acknowledge the significant losses I have incurred due to the apparent theft of the system,” said Carreras, who has previously claimed that Globix was the victim of cyber crime. “However, amidst these challenges, my primary objective remains unwavering — to recover the system and honour the trust that investors have placed in me by returning their capital.”
Liquidators for the failed company secured a court order in April that demanded crypto exchanges freeze relevant assets and hand over customer information in the search for $43mn of missing funds.
Carreras has been asked to agree to a date for his virtual appearance in the insolvency case after previously failing to appear in person.
If Carreras does not comply, Globix’s liquidators will apply to the court for his committal for contempt of court, and will ask the court also to issue a warrant for his arrest. Carreras told the FT he is “fully committed to participating in the video link proceedings with the courts”.
Since Globix’s collapse, Gibraltar has sought to distance itself from the fallout, pointing out that the company was registered in the British Virgin Islands and not licensed by the Gibraltar Financial Services Commission, the peninsula’s chief financial markets watchdog.
“We need to understand that Globix has nothing to do with Gibraltar, other than the man that was leading the drive to persuade people to put money in, was Gibraltarian,” said Gibraltar’s minister for digital, financial services and public utilities Albert Isola on local television last month, adding that he had no knowledge of Globix’s activity in Gibraltar.
Additional reporting by Andrew Edgecliffe-Johnson in New York