The UK high court has wound up online investment broker firm Scothop Limited and the official receiver has been appointed as liquidator.
The company, which was more commonly known as Genesis11, claimed to be a regulated digital broker with the ability to trade different commodities.
But the Insolvency Service received complaints about Scothop’s practices and started confidential enquiries into it. This led to the uncovering of significant losses for investors.
Investigators found that customers were encouraged to invest with the firm and would often see their investments increase in value, prompting them to put more money into them.
But when investors tried to withdraw their funds, they were either charged a “substantial fee” or their investments significantly reduced in value, the Insolvency Service said.
Subsequently, if customers kept withdrawing their funds or would not pay the fee, Scothop would cease all contact with them.
Investigators then discovered that the company claimed to keep client funds in segregated third-party accounts, but in reality, these were held in accounts that belonged to individuals not registered as officers at the firm.
‘False and misleading’
The financial regulator had “no knowledge of Scothop Limited and throughout the investigation and court proceedings” nor of the individuals connected to the business or those in charge of it, the Insolvency Service added.
Investigators received information about the company’s practices by seven investors who suffered a combined total loss of £263,000 ($314,125, €310,000), with one who lost just under £100,000.
On 21 June 2022, judge Jones said Scothop traded without commercial propriety, and it had obtained funds on a false and misleading basis. The judge added there was a lack of transparency as there were no records showing that investors’ funds were used for a proper purpose or to see what had happened to any of the money it received.
Edna Okhiria, chief investigator at the Insolvency Service, said: “Our investigations identified that Scothop Limited misled investors, illegitimately securing thousands of pounds whilst falsely claiming to be regulated.
“Thankfully the court recognised the severity of the company’s actions and wound up Scothop Limited before any more investors lost their money. We hope this outcome serves as a warning to other rogue investment firms that we have the necessary powers to put a stop to unscrupulous misconduct.”
