Market Update: Validus Scams

Market Update: Validus Scam

As a number of fraud warnings have now been issued in relation to Validus being a scam including in Australia, New Zealand, Dubai and Belgium, we take a look into Validus and what has prompted the growing number of warnings and claims of fraud, whilst we try to determine whether Validus is a scam.

What is Validus?

Validus appears to be a Ponzi scheme run by former OneCoin scammers, Parwiz Daud and Mansour Tawafi, who are originally from the UK. Having fled to Dubai after the collapse of OneCoin – a known cryptocurrency scam that was registered in Dubai but based in Bulgaria. Validus looks to have followed a similar process to OneCoin, with the organisational set up being such that rewards initial investors at the detriment of those who follow. In the typical fashion of Ponzi schemes, Validus investors were encouraged to recruit others into investing and parting with their funds in return for additional rewards. 

In 2021, Validus popped up on the radar of those who monitor cryptocurrency scams due to its purchase of AuLives. The transaction was questionable for a number of reasons, not least because AuLives was a known Ponzi scheme that had collapsed quite some time before the purchase (around November 2019). All that was left for Validus to actually acquire of AuLives was the database of investors. Following the acquisition of AuLives, in just its second year, Validus claimed to have achieved “unprecedented growth”, going from $ 10 million to $ 200 million of investment within the 12 months leading up to January 2023.

Validus uses a forex training platform as a front for what is essentially the same Ponzi scheme as OneCoin and AuLives. Targeting primarily younger members via social media channels and encrypted messaging platforms such as Telegram groups, Validus solicits up to $10,000 (£7,886) in initial investments from members in various cryptocurrencies. Members are encouraged to invest based on materially false claims that they will get an eventual ‘guaranteed’ return of 300% on their initial investment.

In April 2023, Validus informed investors via a Telegram group post that withdrawals from the platform had been disabled, with the reasoning being given as “back office upgrades”. At this time, the 16th of May was provided as a date when withdrawals would resume. Unfortunately, this date came and went without the withdrawals being re-enabled, and investors understandably grew concerned. 

Validus Fraud Warnings

There have been formal warnings issued about Validus and its related entities by various international financial authorities going back to the end of 2022. Despite this, the company continued to accept money from unsuspecting investors on an ongoing basis via their pyramid scheme structure.

The first warning issued appears to have been from Belgium’s Financial Services and Markets Authority, dated the 14th of December 2022. In this initial warning against Validus, which claimed to be offering members training in what was termed by the FSMA as “complex financial instruments such as Forex”, Belgian authorities raised concerns about both the content of the training videos being offered by Validus, in addition to issuing warnings about it being an ‘MLM (or Multi Level Marketing) network’. It detailed that such networks incentivise existing members to bring in new members, and that in similar Ponzi schemes, members eventually discover that no transactions ever took place and they have lost their investment. 

In September 2022, the New Zealand Financial Markets Authority issued an initial warning about Validus. Then on the 16th of February 2023, they ordered Validus to cease business operations in their country. This was followed by yet another warning on the 20th of March 2023 stating that they were aware Validus had been operating in breach of the New Zealand financial markets legislation, highlighting the fact that they were not authorised or licensed to trade there. In the same warning, they “strongly recommended that investors do not trade or invest with” entities like Validus.

In December 2023, the Dubai Financial Services Authority (DFSA) also issued a clarification via their website regarding the regulatory status of Validus-FZCO, VMarketing Ltd and Validus. This stated that the DFSA had become aware of misinformation circulating in relation to Validus and related entities being registered in Dubai’s financial district, DIFC. The clarification stated that, whilst offices were registered there under VMarketing Ltd, the company is not licensed to carry out any financial activities in the region. Whilst this warning stopped just short of calling Validus an outright scam, the public message distancing themselves from Validus and related entities prompted concern. 

What To Do If You’ve Invested In Validus

If you think that you may have fallen victim to the Validus scam then there may be routes you can take to try and claim your money back with the correct expert advice. As a regulated law firm, we are particularly skilled at getting money back from cryptocurrency scams, such as the Validus scam. 

We currently have a number of cases in process involving Validus and are familiar with their scam operation. Get in touch for a confidential, no obligation call with one of our lawyers who can help advise on next steps you could take.

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