A better picture has emerged of what happened to the R1.4 billion ploughed by investors into forex trading company Imagina FX, which was placed in liquidation in October 2020 when the company put a freeze on withdrawals.

In May 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 into Imagina FX, only roughly R280 million was used for trading. “From the approximately R280 million, only R8 million was returned to Imagina FX and it would appear there was a trading loss of approximately R272 million,” reads the notice.

As for the rest, R879 million was repaid or transferred back to investors. The balance was used to pay directors, consultants, operational expenses “and other related third parties such as Massyn’s family trusts”.

Complicating the picture is that the same team of “experienced traders” managing Imagina FX was also behind a number of other company funds under the names Praesidium and Octox.

Accountants@Law has been brought in to trace the complicated flow of funds between the companies and to see where the money went.

Many investors were paying funds into the FNB banking account of Octox, believing this was the banking account of Imagina FX. The Octox bank account was controlled by Massyn.

Returns to rejoice in … 

Imagina FX and its sister company Praesidium were extremely successful in roping in investors from around the world with advertised returns ranging between 43.5% and 74.3% for the four years to 2019. Its marketing material pumped up these market-thrashing returns as a come-on for more investment funds.

This was the first loss announced by the company in five years. To calm investors’ rattled nerves, the company said a turnaround strategy had been put in place to recover from these losses, traders would work longer hours, and investors could expect faster communication from the company.

Not long thereafter, the company stopped paying out investors who wanted to withdraw funds. It was at this point they rushed to court to place Imagina FX and Praesidium in liquidation.

Secrecy

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.

“The liquidators have not managed to recover any funds of significant value in Imagina FX,” Bester warned investors in May.

“The bank accounts were depleted, and the known trading accounts in Cyprus which were frozen appeared to record a loss. The fact that there [are] no available funds make[s] any investigation extremely difficult, as most experts or professional service providers are not prepared to render services ‘on spec’,” he added.

The liquidators are now exploring the possibility of recovering funds from ‘impeachable transactions’ which are transactions entered into by an insolvent company prior to liquidation.

Sound familiar?

This begins to take on the complexion of Mirror Trading International (MTI), the liquidated bitcoin (BTC) scheme that raked in close to 30 000 BTC with promises of returns of 10% a month using a computerised trading system.

Investigations by the Financial Sector Conduct Authority (FSCA) found no evidence of any successful trading by MTI, and the liquidators have asked the court to declare it a Ponzi scheme, in which case all payouts received by investors would have to be returned.

Massyn has been sequestrated by the liquidators, an action he opposed.

Massyn brought a court application to avoid testifying before an inquiry set up to investigate the affairs of the company, but was unsuccessful.

An order for the recovery of R1.2 million from his wife was obtained by the liquidators in October 2021. An application has also been initiated for the recovery of funds from Massyn’s sister-in-law.