Cryptocurrency minibond scheme Viderium has collapsed and gone into administration. MHA MacIntyre Hudson LLP have been appointed as administrators.
Viderium raised £3.9 million (as at December 2018) from bonds paying 9.8% per year for a three year term, claiming “A Rated Indemnity Insurance” on the front page of its brochure.
Whether anything has happened to trigger that insurance is unknown, but I wouldn’t bet on it, given that the insurance covered “any Actual or Alleged act, Error, Misstatement, Misleading Statement, Omission, Neglect or Breach of Duty or loss” and running out of money to pay bondholder returns doesn’t fall under any of those things.
At some point before April 2020 Viderium wrote to investors to tell them that they were going to lose some or all of their money, according to an investor review posted on Feefo. Viderium subsequently scrubbed all its Feefo reviews but left a fragment of that review visible on its website.
The company continued posting regurgitated content to its Facebook page until August 2020. Its Twitter page has, like its Feefo page, been scrubbed.
In August 2018 Viderium wasted investors’ money attempting to legally intimidate WordPress into removing my review. Viderium made no attempt to complain to me directly, effectively an admission that it knew its complaint was groundless.
Viderium complained that my review “made a number of false statements, unauthorised financial advisory statements, inflammatory and defamatory statements and remarks”. It failed to point out anything in my review that was inaccurate, which simply noted the inherently high risk nature of Viderium’s bonds. It also inaccurately complained that I had republished “confidential and sensitive documents”, when in fact my review was based on Viderium’s own investment material which it freely supplied to the public on request.
Astonishingly, Viderium’s complaint also claimed that their investors could not lose their money.
[Quoting my review] These investments are unregulated corporate loans and if Viderium defaults you risk losing up to 100% of your money.
[Viderium’s complaint] This is false and misleading information not based upon fact. The publisher has provided incorrect information as advice to the general public.
[Quoting my review] If Viderium fails to make sufficient returns from its cryptocurrency mining… there is a risk that they may default on payments of capital and interest to investors.
[Viderium’s complaint] This is false and incorrect information provided deliberately out of context in order to purposefully provide a negative view of the company and the prospect of investment into the company.
Viderium’s collapse illustrates that I was right and that unregulated corporate loan notes are in fact high risk.
In another complaint to Google, Viderium claimed that its “investment bond is regulated by the Financial Conduct Authority”. This was also false. While Viderium’s literature was approved by Bluewater Capital, the investment itself was unregulated.
Three of Viderium’s leading staff members, Alexander Johnson, Ross Archer and Russell Spratley, divided their time between Viderium and a new venture launched in 2019, Whiskey Cask Company, which claims endorsement from rugby legend Chris Robshaw.
Perhaps trying to run two unregulated investment schemes simultaneously caused Johnson, Archer and co to take their eye off the ball at Viderium. As and when more details are published by the administrators, it’ll be covered here.
[Hat tip to readers Tony and Terry who separately flagged up the administration.]
How do I get my money back from Viderium?
Anyone who cold-calls you claiming they can get your money back from Viderium or want to buy your bonds is a scammer.
If you were advised to invest in Viderium by an FCA-regulated company, you may have recourse to the Financial Ombudsman and Financial Services Compensation Scheme. Unfortunately for investors, as yet I’m not aware that any FCA-regulated companies did promote Viderium.
The standard procedure when an unregulated investment goes into administration is to write off the investment and treat any return as a bonus.
Considering they certainly made misleading statements to investors and Bond Review would the insurance cover investors? I rather suspect the insurance covers the company not investors but if I was an investor I would look into it. Eg Maybe sue the company for false statements then the insurance can cover the payout if you win
What’s to say the same won’t happen to Whiskey Cask Company? Its the same leading staff members such as CEO Alexander Johnson, and offers similar returns. I’m assuming it’s unregulated and the bond may also collapse.
“If you were advised to invest in Westway by an FCA-regulated company, you may have recourse to the Financial Ombudsman and Financial Services Compensation Scheme. Unfortunately for investors, as yet I’m not aware that any FCA-regulated companies did promote Viderium.”
Copy-andpaste error? Shoudl that say Viderium in the first line?
Indeed it was, thanks Adam.
After reading this I did some research. It seems that their CEO Alexander Johnson has been involved in a Crypto scam through his company; ‘Johnson Research Ltd’ (Company number 10934144), which WAS called ‘Lex Capital’ lexcapitals.com – At the bottom of the web page there is a Companies House link that takes you back to Johnson Research and names him as director.
Chat on this Crypto forum explains that investors were promised high returns but lost out;
https://bitcointalk.org/index.php?topic=5183904.0
Statement of administrator’s proposal has been published on Companies House.
So easy these days for these individuals to keep rebranding, I think we could try get our money back from the insurance but how’s that done to achieve best outcome?
The insurance belonged to Viderium, not the bondholders, so it’s in the hands of the administrators.
All the administrators have said in their report is that they’ve contacted the insurers, had no response as yet, and have hired solicitors to look into it.
As yet there is no indication in the administrators’ report that there has been “any Actual or Alleged act, Error, Misstatement, Misleading Statement, Omission, Neglect or Breach of Duty or loss” that would be covered by the insurance. Viderium’s cryptocurrency business failing and running out of money to pay bondholders doesn’t in itself qualify.
I’ll publish an update on the administrators’ report when I have time, but in the interim, it is clear that Viderium investors should write off their investment and treat any return as a bonus. The statement of assets says that out of the £4 million odd raised by the company, only £62,000 is left.
I too saw the ‘Lex Capitals’ scam but from the post on Johnson’s website it looks like this may be a genuine case of impersonation. All too common these days!
https://alexanderjohnson.com/
Is this the same Alexander Johnson featured in your precious article;
….False “Oxford professor” CEO claim; Viderium investors to lose their money?”
Very little information is available for us investors at this stage. Finding the updates useful. Not much more than their website and 5 Star Google page to go by in the public domain.
They’re the same person, yes. Viderium share several common senior figures as mentioned in the article.
The Statement of affairs has been filed on Companies House, 5 Feb. Surprisingly their plant and equipment based in Riga as shown in the doc, has a value of £940k, but has been written off at Zero Value. Which means there is just over £64k remaining of funds. Maybe Bond Review can shed light on which this may be.
The administrator’s report states that the mining equipment costs more to run than it makes back from cryptocurrency. It is also obsolete. And it’s potentially been lost in the post. Put all that together and you’re certainly looking at closer to nil than £940k.
£940,000 is probably what was paid for it. Any computer equipment depreciates pretty rapidly as it becomes obsolete, and that goes at least double for cryptocurrency mining machines.
For years cryptocurrency mining has generally only been profitable if somebody else is paying the electricity bill, e.g. your mum or the Chinese state. Cryptocurrency trading is a zero sum game and if people are willing to buy crypto tokens with zero expectation of return, it follows that people will also be willing to mine crypto tokens with zero expectation of return, so any profit margin on mining drops rapidly to zero. This is exactly what has duly happened with Bitcoin and any other crypto of note.
The same people who are willing to hand over £X cash for crypto tokens purely in the hope that they can sell them to a Greater Fool later will also be willing to spend £X on electricity and computer equipment to mine them for the same reason. The expected return will be identical in both cases, nil. If it becomes more profitable to spend £X on mining crypto than simply spending £X on existing tokens, all the speculators will pile into mining, the price of equipment will rise and the supply of tokens will increase, reducing the price per token, until equilibrium is restored.
Thanks Brev,
You have summed the Crypto market up well. The power of webpages like yours is very strong, and I have no doubt that it closed the net of people who would simply “rebrand” as one person has commented above. I would look forward to another article you may base on this case, if you decide to do so.
Statement of Administrator’s Proposal has just been posted on Companies House. Amazing how the Administrator’s fees etc come in at such a close amount to the remaining cash in the bank (58k fees, 64k in bank).
Investors, like myself, would love a follow up article to this so we can hear it as it is. There would be no love lost as it seems Viderium & Bond Review have a past. I will keep my eyes open for the next read.
Interesting ‘review’ on Whiskey Cask Company here. Same characters as Viderium;
[Edited: Link to website promoting forex scams removed. -Brev]
Result of meeting of creditors is indicated on Companies House;
“This document is being processed and will be available in 10 days”.
Let’s look out for it….