Category: viderium

Viderium administrators report, £62k left of £4.1 million invested

~ Phoenix ~ 2 Comments

The administrators of collapsed cryptocurrency bond scheme Viderium have released their initial report.

According to the report, a potted history of Viderium is as follows:

  • Viderium raised a total of £4.1 million in its bonds starting in February 2018.
  • £940,000 was invested in cryptocurrency mining machines, which were mostly deployed in Riga, Latvia and Rotterdam, Netherlands in summer 2018.
  • What was done with the other £3 million of investors’ money is not elaborated on in the report.
  • Until the cryptocurrency crash in late 2018, the company was apparently making revenue of $10,000 per day. With $1 worth about 75p at the time, that would have translated into about £2.7 million a year – which is pretty much exactly what Viderium were targeting in year 1 according to its investment brochure.
  • However, after the cryptocurrency market crashed, revenue dropped to $1,000 a day. The administrators are presumably referring to the crash of late 2018 when Bitcoin crashed from ~£5,000 in November 2018 to ~£2,700 in December 2018. It can’t be the crash of early 2018 when Bitcoin crashed from ~£12,500 to ~£5,000, because that had already happened when Viderium raised the bulk of its funds and deployed its mining machines.
  • If anyone’s wondering how a halving of the Bitcoin price translates into a literal decimation of Viderium’s revenue, I assume it’s because Viderium was mining cryptos other than Bitcoin. Exactly which cryptos Viderium would mine was not specified in the investment literature.
  • Despite Viderium signing investors up for a three year term, and the cryptocurrency market recovering six months later (Bitcoin was back to £5,000 and higher by May 2019), this didn’t save the company’s business model. Viderium resorted to hiring out director Ross Archer and his “experience in marketing and sales” to other companies. This also failed to bring in enough money to keep the scheme afloat.
  • (Shame they didn’t manage to keep any of that £3 million in reserve for when the crypto markets recovered.)
  • In November 2019 Viderium persuaded most of its investors to agree to defer their interest to the end of the term.
  • In December 2019 / January 2020 Viderium attempted to raise funds on the cryptocurrency markets to resurrect its business model. This failed, in part due to the pandemic and lockdown. In March 2020 Archer threw in the towel and consulted an insolvency practitioner about a voluntary liquidation. This led to Viderium’s Security Trustee appointing Administrators.

The £940,000 used to purchase mining equipment has been written off by Archer, who states its value as “nil” on the Statement of Affairs. Most of Viderium’s mining equipment is apparently in a shipping container in Latvia, having been moved there in 2019, and turned off in 2020 after it became clear that they cost more to run than they brought in. Axia, an independent valuation agent hired by the administrators, notes that the mining machines are obsolete, having been superseded by better models. Worse, Archer “has had difficulties in obtaining contact with the shipping company” who are storing said obsolete miners. Axia are investigating.

As for cryptocurrency, Viderium now owns the sum total of… £25. With Bitcoin having rocketed from £5,000 in March 2020 (when Archer first threw in the towel) to £36,000 at time of writing, Viderium’s chronic bad timing seems to have continued to the very end.

What about the insurance?

Viderium heavily marketed its “A rated insurance”, with the words “WITH “A” RATED BOND INDEMNITY INSURANCE” emblazoned on the front cover of its investment literature.

Whether the insurer, Willis Towers Watson, will pay out is very unclear. The insurance was not a guarantee and only covered the event of “any Actual or Alleged act, Error, Misstatement, Misleading Statement, Omission, Neglect or Breach of Duty or loss” . In itself, Viderium running out of money to pay investors doesn’t qualify. The administrators have contacted the insurer and had not received a response at the time of the report.

Ross Archer estimates that the total value of Viderium’s remaining assets is only £62,000, consisting mostly of £35,000 in cash and a £25,000 to an apparently unrelated company, Mir Marketing and Management Limited. That leaves investors facing total losses unless the insurance pays out – which in terms of unregulated minibonds marketed as “insured” would be a first in my experience.

Viderium Limited collapses, administrators appointed

~ Phoenix ~ 18 Comments

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.

L: Ross Archer, Viderium CEO. R: Alexander Johnson, Viderium chairman and 95% shareholder.

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.

Whisky Cask Company in false “Oxford professor” CEO claim; Viderium investors to lose their money?

~ Phoenix ~ 3 Comments

A puff piece in the London Daily Post for Whisky Cask Company made the eye-catching claim that the CEO is an Oxford professor and that the investment scheme, which promoted itself as a “sure-fire” investment paying 8-12% per year, is endorsed by rugby legend Chris Robshaw.

The article claims WWC CEO Alexander Johnson is “Building Scotch Whisky Into A Competitive & Trending Investment Class”. On its publication it referred to him as a “whisky aficionado and Oxford professor”.

It claims whisky represents a “prudent” investment. The reality is that whisky is a high-risk investment like any commodity, especially when investing via a new start-up company.

The “London Daily Post” has no corporate presence beyond a mobile phone number and an address in a London residential street.

Its article on Whisky Cask Company is allegedly penned by London Daily Post writer Kevin Taylor. Taylor claims in his bio underneath the article to “cater an uncompromising form of journalistic standard for the audiences”. Despite his commitment to a form of journalistic standard, Taylor failed to spot that Alexander Johnson is not in reality an Oxford professor.

While Alexander Johnson is a visiting lecturer at Oxford’s Conted department – which caters to part-time and mature students – this is a long way short of being an Oxford professor, one of the highest positions in academia.

I contacted Oxford’s Conted department for clarification. They have not responded, but subsequent to the article’s publication – and my contacting Oxford’s Conted for comment – the London Daily Post article was corrected to say “Oxford lecturer”. Although in one spot it still refers to the company as “Whisy Cask company”.

Chris Robshaw was contacted but declined to comment on whether he endorsed the use of his name to promote Whisky Cask Company.

Viderium in minibond collapse?

Johnson is also the owner and chairman of cryptocurrency minibond scheme Viderium. Viderium raised £3.9 million from investors in its cryptocurrency bonds. Judging by a rather bizarre fragment on its website, it isn’t going well.

Reviews

This screenshot is from https://viderium.com/bond/reviews/. It is an “orphan” page, meaning it is not accessible by following links from Viderium’s home page, but can be accessed via Google or the URL. Viderium’s page on feefo.com itself has been closed, with all reviews deleted. It is a safe bet that the embedded fragment on Viderium’s own website is not supposed to be visible.

My best guess for the contradiction between the review’s title and content is that the reviewer edited his review after leaving it.

Viderium’s closure of its Feefo page and scrubbing of all reviews is quite an about turn from when it used to promote its Feefo ratings via press releases.

Investors have given their opinions of the bond on Feefo, a trusted independent review platform and Google partner. Impressively, Viderium’s bond has been rated 4.9/5 by existing investors, demonstrating the company’s commitment to those who’ve helped to make everything happen.

October 2018 Viderium press release

Viderium’s next accounts are due by September 2020.

Viderium files first accounts, fails to meet profit target

~ Phoenix ~ 1 Comment

Cryptocurrency miner Viderium has filed its first accounts for the year ending December 2018.

The company aimed to raise £5 million from bonds paying 9.8% for a 3 year term, reviewed here in June 2018 (its accounts say their loans carry interest between 9.8% and 12%). Its accounts show that as at December 2018, it missed its target by about £1 million, with total creditors of £3.9 million.

Viderium’s information memorandum stated that in its first year, it would target revenue of £2.7 million and a net loss of £224k, before hitting profitability in year 2.

Viderium has not published its profit and loss account, and its accounts were unaudited, so the amount that can be gleaned from its published accounts is limited. And an allowance has to be made for it raising 20% less than it hoped.

Nonetheless, it is clear from the net liabilities figure of £2.15 million that year 1 losses were considerably greater than hoped. Exactly how the losses broke down is not stated in the published accounts.

With the first bonds not repayable until 2021, there is naturally time for Viderium to turn things around.

Three of Viderium’s leading staff members, Alexander Johnson, Ross Archer and Russell Spratley, divide their time between Viderium and their new venture, Whisky Cask Company, reviewed here a few weeks ago.

Viderium – unregulated cryptocurrency mining bonds offering 9.8%pa

~ Phoenix ~ 2 Comments

Viderium Limited is offering a 3 year bond paying 9.8% interest per year, paid out quarterly.

The bond is promoted as offering “A Rated Indemnity Insurance”.

Who is Viderium?

viderium ceo & chairman
L: Ross Archer, Viderium CEO. R: Alexander Johnson, Viderium chairman and 95% shareholder.

Viderium was incorporated in December 2017 and is controlled by Ross Archer (Chief Executive Officer) and Alexander Johnson (non-Executive Chairman).

Interestingly, when it originally incorporated in December 2017, Archer held 95 of Viderium’s 100 shares and Johnson 5. However, a few days later, 1800 new shares were allocated to Johnson, so the ownership ratio swapped around to give Johnson the 95% shareholding.

Due to the company’s young age, it is yet to file accounts with Companies House.

How safe is the investment?

These investments are unregulated corporate loans and if Viderium defaults you risk losing up to 100% of your money.

The purpose of the bonds is to allow Viderium to expand its data centre operations in order to mine cryptocurrency.

If Viderium fails to make sufficient returns from its cryptocurrency mining, or for any other reason Viderium runs out of money to service these bonds, there is a risk that they may default on payments of interest and capital to investors.

Viderium’s literature is very clear in this regard, with the front page stating “reliance on this promotion for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all the property or other assets invested.”

Asset-backed security

Investors have a first legal charge over the company’s assets, with Bluewater Capital Limited appointed to act as Security Trustee.

Investors should not assume that because their loans are secured on these assets, they are guaranteed to get at least some of their money back through sale of the collateral if the issuer defaults. Investors in asset-backed bonds have been known to lose 100% of their money (e.g. Providence Bonds and Secured Energy Bonds) when it turned out that the company’s assets were insufficient to pay investors after paying the insolvency administrator (who always stands first in the queue).

We are not in any sense implying that the same will happen to investors in Viderium, only illustrating the risk that is inherent in any corporate loan note even when it is asset-backed.

If investors plan to rely on this security, it is essential that they undertake professional due diligence to ensure that in the event of a default, Viderium would have enough valuable and liquid assets to raise sufficient money to compensate all investors, as well as any other creditors that Viderium has borrowed money from.

“Insured” bonds

Viderium has an insurance policy with Assicurazioni Generali S.p.A. which covers it against “any Actual or Alleged act, Error, Misstatement, Misleading Statement, Omission, Neglect or Breach of Duty or loss.”

This policy is promoted heavily as an attraction of the investment; the cover page of Viderium’s Information Memorandum includes the sub-title “With A Rated Bond Indemnity Insurance”.

Investors should note that, as Viderium says in its literature, “this policy is not a Performance or Financial guarantee”. In other words, the insurance policy has nothing to do with the risk that Viderium fails to make enough from its cryptocurrency mining operations and cannot pay investors their interest and capital. If Viderium defaults in this event, the insurance policy does not cover investors.

Should I invest with Viderium?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

As with any unregulated corporate bond, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

Any investment offering up to 9.8% per annum yields should be considered very high risk. As an individual security with a risk of total and permanent loss, Viderium’s bonds are higher risk than a mainstream diversified stockmarket fund.

This particular bond is described as asset-backed. Before relying on the security backing the bond, investors should undertake professional due diligence to ensure that in the event of default, the security could be easily sold and would raise enough money to compensate all the investors, after the adminstrator deducts their fees.

Before investing investors should ask themselves:

  • How would I feel if the investment defaulted, the sale of the security failed to raise enough money to compensate all investors, and I lost 100% of my money?
  • Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
  • Have I conducted due diligence to ensure the asset-backed security can be relied on?

If you are looking for an investment that is fully insured against the risk of capital loss, you should be looking at deposit accounts protected by the Financial Services Compensation Scheme, rather than unregulated bonds with a risk of total and permanent loss.