Another iSignthis customer has assets frozen amid ASIC investigation
Embattled tech group iSignthis has copped another blow, with the corporate regulator launching court action to freeze the assets of yet another of the one-time market darling’s customers and a sponsor of the NRL’s South Sydney Rabbitohs.
The Australian Securities and Investments Commission has successfully obtained interim freezing orders over the assets held by financial derivatives trading group Maxi EFX Global AU Pty Ltd, which operates the EuropeFX platform.
EuropeFX is a second-tier sponsor for the Rabbitohs, with the club naming the platform its “official foreign exchange partner” in July.
iSignthis, which provides “know your customer” technology to online trading and gaming businesses, revealed in September, 2018, that EuropeFX was a “contracted merchant” to its business.
EuropeFX joins a cavalcade of iSignthis customers that have run afoul of regulators both in Australia and internationally amid allegations they are linked to online trading scams.
iSignthis’ shares have been suspended from trading on the ASX since October amid concerns about the group’s disclosures and the calibre of its clients. Many are subject to regulatory warnings for not being licensed or for allegedly being linked to online trading scams, including Australian group AGM Markets, which in turn counted alleged unlicensed binary options trading platforms OziFin and OT Markets as clients. The stock is currently subject to reviews by the ASIC and the ASX.
Earlier this month, iSignthis took the unusual step of suing the ASX in the Federal Court alleging the market operator has unfairly kept its shares suspended and had leaked confidential information that was provided by iSignthis in response to an official request for information by the operator.
In December, the Federal Court made orders against Maxi and another allegedly related entity, BrightAU Capital Pty Ltd (trading as TradeFred).
EuropeFX and TradeFred are not prevented from making payments in the ordinary course of business to customers for creditors, according to the Federal Court orders.
The Federal Court also imposed orders requiring BrightAU director John Carlton Martin and Maxi director Pedro Eduardo Sasso to notify the court before they travelled overseas. Mr Martin and Mr Sasso have been contacted for comment.
There is no allegation that iSignthis is suspected of any alleged breaches by Maxi or BrightAU.
Other iSignthis customers that have also been pinged by regulators include FCorp and Nona.
In mid-December, the German regulator took action to shut down another iSignthis customer, FCorp amid concerns it was not registered to trade financial products in Germany. This followed a warning from ASIC to consumers about FCorp.
ASIC has also warned about another iSignthis customer based in the Marshall Islands, Nona (also known at FTO Capital). Following an ASX query in November, iSignthis revealed that 45 per cent of its revenue in 2018 came from companies which have either been wound up by ASIC or have been the subject of warnings by the corporate regulator.
Moreover, iSignthis subsidiaries used Danish lender KAB as its settlement provider. KAB is now under criminal investigation in Demark for alleged money laundering breaches and has been taken over by the government.
iSignthis declined to comment. In December, its chief executive John Karantzis said in a letter to shareholders the ASX had blocked its recent announcement that showed the number of high-risk customers the group now had was 6 per cent because it was deemed by the exchange as marketing material.
Earlier this month, iSignthis downgraded its underlying earnings to $6.5 million for fiscal 2019, from a November forecast of $10.7 million, blaming, in part, its ASX suspension.
Sarah Danckert is a business reporter.
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