Editor’s observe: This story is a collaboration between the Investigative Journalism Foundation (IJF) and CTV News.
A Canadian company is at the centre of an alleged pyramid scheme that international officers say stole greater than US$2 billion from a whole lot of hundreds of individuals in Sri Lanka and Bangladesh, in line with authorities in these nations.
Metaverse Foreign Exchange Group Inc., often known as MTFE, pitched itself as a good on-line buying and selling platform. The company is federally included in Markham, Ont., has a Canadian director and is even registered with Canada’s cash laundering watchdog.
But in August 2023 the platform stopped working and traders’ cash disappeared, in line with court docket paperwork filed in Sri Lanka. Sri Lanka’s central financial institution has since described MTFE as a pyramid scheme.
Bangladeshi police have mentioned as many as half one million residents misplaced cash on MTFE, in line with native media reviews.
Now, an investigation from the Investigative Journalism Foundation and CTV News shines new gentle on how Canadian shell corporations and registries had been used to drag off the scheme.
The investigation — based mostly on dozens of company filings, interviews with specialists and each home and international court docket data — discovered MTFE was half of a community of dozens of Canadian shell corporations peddling related cryptocurrency funding schemes.
Most of these corporations had international administrators, and specialists interviewed for this story suspect some used pretend identities.
Efforts to find MTFE’s sole Canadian director, Randy Mathieu Lane, who had a listed handle in Richmond, B.C., had been unsuccessful.
Corporate data present Lane is a listed director of six Canadian corporations together with MTFE, all providing cryptocurrency or different monetary providers. In 5 of these registrations, together with the one for MTFE, the different listed director had an handle in China .
Four of Lane’s corporations had been dissolved by Canadian officers for non-compliance in May, shortly after the IJF and CTV News contacted the federal division that runs the company registry looking for remark for this story.
Agencies together with the RCMP, the Ministry of Finance and the Ontario Securities Commission wouldn’t reply direct questions on MTFE or whether or not Canadian officers are investigating MTFE.
But specialists interviewed for this story, together with former legislation enforcement and intelligence officers, say the investigation highlights gaps in Canada’s enforcement which have made the nation a waystation for monetary crime.
“We’ve become such a weak link in the financial crime arena that we’re attracting all the business,” mentioned Garry Clement, a former RCMP officer who investigated monetary crime. “Because they know that virtually nothing is going to happen to them.”
Behind MTFE
Arif, a 22-year-old in Dhaka, Bangladesh, made his first funding on Metaverse Foreign Exchange in January 2023.
MTFE’s web site claimed to make use of synthetic intelligence to commerce foreign exchange on behalf of customers, providing regular, gradual positive aspects with little effort and low danger.
Arif was skeptical, however trusted MTFE as a result of it was a Canadian company.
“I thought that Canada should have strict regulations and that it should have good regulations around setting up a company and doing trading,” mentioned Arif, who requested his full identify not be used.
By August 2023, Arif had invested the equal of about US$3,400. Most of that was cash he borrowed from his dad and mom.
“I assured them that there was no risk, so we can get them the money back,” mentioned Arif. “And it didn’t work out.”
That month, MTFE’s web site went down. Investors may not withdraw their cash. And then, it was gone.
Bangladesh’s Criminal Investigation Department — which didn’t reply to repeated requests for remark — informed native media as many as 500,000 individuals in the nation could have misplaced cash.
Bangladeshi police have estimated traders misplaced the equal of US$1.7 billion, in line with the Dhaka Tribune. In Sri Lanka, the Sunday Times quoted mentioned the equal of US$1 billion was stolen from traders there, citing the nation’s central financial institution. The financial institution declined to remark for this story, citing the ongoing investigation.
To enroll, customers needed to buy and ship cryptocurrency to 1 of varied digital wallets utilized by MTFE.
A modern app would then present customers the state of their “investments,” together with each day returns and losses. Initially, customers may even withdraw cash, which made them extra inclined to belief it.
Many, like Arif, heard about the company by a pal. That was no coincidence. MTFE provided monetary incentives to customers who recruited extra traders, one thing Arif now acknowledges as a trademark of a pyramid scheme.
Court data in Sri Lanka recommend MTFE additionally benefited from native companions who promoted the platform in trade for a share of the income.
In August 2023 — shortly earlier than the scheme collapsed — Sri Lanka’s central financial institution started an investigation into native corporations set as much as promote MTFE.
Sri Lankan authorities arrested three people in 2024 on expenses of cash laundering associated to their function in the alleged pyramid scheme. Proceedings are set to renew this September.
The financial institution – which declined to touch upon the investigation – has additionally banned 10 different people it suspects of being concerned with the scheme from leaving the nation since August 2023. It has additionally obtained orders freezing the motion of funds from 29 cryptocurrency wallets, which the financial institution mentioned contained the equal of about US$900,000.
In court docket filings, investigators declare the native promoter teams acquired between 60 and 70 per cent of investments made by MTFE customers.
The relaxation, investigators mentioned, was kicked as much as the “parent company” in Canada in the type of a “service fee.”
Investigators didn’t know who was behind that “parent company,” or how native promoters contacted them. The data say there “is no information available about any organization running this computer software service or the individuals responsible for creating or hosting the service.”
But court docket data say the arrested suspects testified they might obtain the equal of US$4,000 in cryptocurrency and a US$500 month-to-month allowance in the event that they personally recruited 100 individuals onto the service.
Those teams finally turned very giant. Investigators claimed one of them had 42 sub-branches all through the island. One turned giant sufficient that it sponsored a neighborhood cricket workforce, the Jaffna Kings. Another promotional group even hosted a live performance, the court docket paperwork mentioned.
Investigators mentioned MTFE software program that traders like Arif had used didn’t appear to work and had been “inactive since the beginning of this inquiry.”
Many transactions with MTFE occurred by way of Binance, a Canadian cryptocurrency trade.
In a press release, Binance spokesperson Carolina Matos mentioned the company “was made aware of the MTFE scam by one of our trusted law enforcement partners” in August 2023. She mentioned Binance was “unable to provide details of the case due to ongoing investigations.”
Matos mentioned MTFE was additionally lively in Pakistan and Nigeria. She famous the company had curated a powerful on-line presence and even efficiently registered for the Apple cellular app retailer.
“This showcases how well-crafted schemes can appear legitimate on the surface while deceiving both seasoned and novice investors alike,” Matos mentioned.
Nauriin Ahmed, a Dhaka-based lawyer specializing in know-how, says Bangladeshi residents have been repeatedly focused by such schemes.
The nation’s restrictive securities buying and selling regime means Bangladeshis have comparatively few professional methods to speculate.
A display screen seize of what MTFE’s web site seemed like in March 2022
‘I … thought I would not fall for a rip-off like this’
While shopping for cryptocurrency in Bangladesh is definitely completed, it can be thought-about against the law — one of the explanation why Arif requested to not be named for this story.
“These victims, at least within Bangladesh — they don’t have any sort of recourse,” Ahmed mentioned.
Canadian officers knew about MTFE. The Ontario Securities Commission issued a short assertion in July 2023 warning that MTFE was not registered in the enterprise of buying and selling securities .
Andy McNair-West, a spokesman for the OSC, mentioned they issued that assertion after receiving calls about the company’s registration standing. He didn’t reply questions on whether or not the fee contacted officers in Bangladesh or different affected nations, or if the OSC was investigating MTFE.
Canada’s federal company registry says MTFE remains to be lively, although it has since been discovered non-compliant and is in the course of of being dissolved.
Ahmed needs the OSC’s warning had reached extra traders.
“I think if OSC had reached out to the Bangladesh central bank to put out a circular saying this is not a legitimate organization … that would have helped,” Ahmed mentioned.
If the scale of the alleged fraud was large, so was its human impression.
Arif blamed himself for shedding his household’s life financial savings. He fearful his dad and mom would kick him out of their home. At his darkest moments, he says he known as suicide prevention hotlines for assist.
Arif begged his dad and mom to forgive him, they usually did. But he nonetheless blames himself.
“I consider myself an educated individual and thought I wouldn’t fall for a scam like this,” Arif mentioned.
The Canadian shell corporations
Ahmed mentioned the key to MTFE’s success was its Canadian credentials.
But on nearer inspection, these credentials increase extra questions on MTFE — and the way it was capable of function in Canada in the first place.
MTFE’s company handle was 500-7030 Woodbine Avenue in Markham, Ont., on the fifth ground of an workplace tower.
At one time, this one workplace unit in Markham was house to 97 totally different cash providers corporations, together with 95 registered international foreign money exchanges .
But there’s little proof any of them ever did enterprise there — or that they had been even precise tenants.
A screengrab from hidden digital camera footage exhibits Adrian Ghobrial at MTFE’s company handle in Markham, Ont., talking with a supervisor at the shared workplace area who mentioned ‘it is onerous to maintain monitor of all the corporations utilizing our handle’ (CTV News)
A supervisor at the shared workplace area, whose identify we’re preserving confidential, informed CTV News, “it’s hard to keep track of all the companies using our address.”
The shared workplace area has about 650 shoppers registered at its Markham location. The supervisor informed CTV News that “90% of (our clients) are good legitimate businesses, there’s 10% of that group that are not, and once we find out we shut them down, we stop accepting mail on their behalf and we close out their account.”
Joseph Iuso, the government director of the Canadian Money Services Businesses Association, says such “clusters” of cash providers companies are sometimes an indication of fraud.
Money providers companies (MSBs) are a sort of enterprise that gives monetary providers like wire transfers, cryptocurrency trade or international foreign money trade. Most are professional, however they’re thought-about high-risk for cash laundering, which is why they need to register with the Financial Transactions and Reports Analysis Centre of Canada, or Fintrac, Canada’s monetary intelligence unit .
Joseph Iuso, government director of the Canadian Money Service Business Association, speaks with Adrian Ghobrial in Toronto on Wednesday, July 17, 2024 (CTV News)
But Iuso says Fintrac has neither the mandate nor the assets to audit the 3,000-odd registered MSBs in the nation .
He says scammers have capitalized on that by incorporating corporations after which registering them with Fintrac to make them appear extra like professional companies.
“A lot of them are Ponzi schemes related to crypto and foreign exchange and other high-yield investments or high-yield investment products,” Iuso mentioned.
They congregate in the identical areas, Iuso mentioned, usually selecting addresses utilized by tons of different corporations, like legal professionals’ workplaces or company service suppliers.
Fintrac’s web site states registration doesn’t imply Fintrac endorses the enterprise or can assure its compliance. But Iuso says that’s a nuance misplaced on most traders.
“Registration with Fintrac as an MSB can lead to a veneer of legitimacy,” mentioned Denis Meunier, a former Fintrac deputy director. “And that can be abused.”
The unit at 500-7030 Woodbine Avenue is operated by IWG Plc., a British holding company that gives workplace providers underneath the identify of Regus . They personal and function 4,000 areas throughout the globe.
IWG Plc. wouldn’t present an interview for this story. When offered with the IJF and CTV’s findings, public relations agent Linda North wrote an e-mail saying they “take their regulatory responsibilities seriously.”
The supervisor at Regus’s Markham location shared that “fraudulent people know that business centres are easy prey because they can use the address as a legitimate business address but (the criminals) aren’t paying to use our address (for their companies) and we can’t keep track of the people who’re using it.”
Fintrac could have recognized one thing was amiss at the Woodbine handle.
As of February 2024, it had revoked the registration of 86 of the 97 MSBs based mostly there.
Fintrac wouldn’t say why it did that.
The exterior of what was MTFE’s company handle at 500-7030 Woodbine Avenue in Markham, Ont. (IJF reporter Carly Penrose)
But a confidential 2022 Fintrac report back to the Minister of Finance says the company “detected an unusual trend” that yr involving 95 MSBs registered to the identical handle, nearly none of which responded to “repeated attempts” to contact them .
In the report, which the IJF and CTV obtained by way of entry to data laws, Fintrac requested the Ministry of Finance to offer it new instruments to revoke registrations from “unscrupulous operators” and to deal with “exploited weaknesses.”
In June 2023, the federal Ministry of Finance launched a brand new requirement for MSB registrants to supply prison report checks for his or her administrators. A ministry spokesperson declined repeatedly to say why the authorities did that.
Fintrac would find yourself revoking registrations for many of these MSBS in January 2022 — however not MTFE, which saved its registration till September 2023, a month after the scheme had folded.
A cluster of MSBs
It’s not clear who the masterminds behind MTFE had been.
One of the company’s registered administrators, Hongbing Wang, listed an handle in China. The second, Randy Mathieu Lane, had a listed handle in Richmond, B.C.
The IJF and CTV tried to seek out and interview these individuals with out success.
The paper path led to a different enterprise on the different aspect of the nation.
The IJF and CTV examined company filings for all 97 of MSBs included at 500-7030 Woodbine Ave.
We discovered 75 of these corporations had a director who used the handle 150-10451 Shellbridge Way – the identical handle utilized by Lane.
The 150-10451 Shellbridge Way handle was additionally listed by MTFE on its web site, in line with an archived webpage from the Wayback Machine. The handle was modified someday earlier than August 2022.
That is the handle of Raydwell Consulting, a Richmond “business service provider” whose web site markets “virtual addresses” and devoted telephone traces for registered corporations.
The company’s director, De Wang, wrote in an e-mail to the IJF that his company had by no means labored for MTFE or any of the different corporations whose administrators used Raydwell’s handle.
Listed telephone numbers for these MSBs — which all used British Columbia space codes — didn’t reply to calls.
Iuso suspects some of the administrators could not exist — or that they’re utilizing false identities.
“They’re all fake. Fake, fake, fake,” Iuso mentioned.
Bad actors
Experts interviewed for this story say its findings increase severe questions on Canada’s regulation of MSBs.
Peter German, a former RCMP deputy commissioner and the creator of two reviews on cash laundering in British Columbia, says the incident exhibits the limits of Fintrac’s mandate and authority.
“By creating this registration process, you do recreate a certain air of legitimacy to those who register that maybe they don’t deserve. And that can be misleading,” German mentioned .
Some mentioned it additionally speaks to a larger pattern of criminals exploiting Canada’s fame and company infrastructure with out apparent penalties.
“I guarantee this group (MTFE) that you’ve discovered, they’re still operating” Iuso mentioned.
Fintrac declined to reply particular questions on MTFE.
Finance Minister Chrystia Freeland initially declined to be interviewed for this story.
When requested about some of the investigation’s findings at an unrelated press occasion in Markham, she highlighted current regulatory modifications cracking down on exercise like cash laundering. But she acknowledged the established order was not excellent.
Finance Minister and Deputy Prime Minister Chrystia Freeland solutions a query from CTV News throughout a press convention in Markham, Ont. on Tuesday, July 16, 2024 (CTV News)
“We do have more work to do here in Canada, both in terms of ensuring we have the tools we need to crack down on fraud and money laundering and also that enforcement agencies across the country are doing their jobs,” Freeland mentioned.
But any modifications come too late for victims like Arif, who remains to be getting his life again on monitor.
As of April, Arif mentioned he had lastly completed paying again his dad and mom for the cash he misplaced on MTFE. It didn’t come simply: he needed to in the reduction of on nearly all his bills, he mentioned, and miss out on time he would usually spend with mates.
And he’s cautious about ever investing once more.
“People are vulnerable when they’re trying to escape their poor life and get a better life for themselves and their family,” Arif mentioned.
“Everyday, now, people are falling for a new scam.”
