It probably is (too good to be true)…
In case you missed the latest development in the Baltic crowdlending industry, let me give you a quick recap;
Two of my (previously) best performing platforms have turned out to be fraudulent (nothing is proven yet, but I think the writing on the wall is pretty clear).
In December it became apparent that Kuetzal was more than a little dodgy around the edges – and last week another bombshell dropped, when it became apparent that Envestio was also in fact a highly dubious operation. I am reluctant to use words like “scam” and “ponzi scheme” (oops, I just did) about Kuetzal and Envestio, as nothing has been proven yet. Although, in the case of Kuetzal it seems that the majority of their projects simply did not exist, and thus it would not be in-appropriate to use the word “SCAM” to describe Kuetzal…
In the case of Envestio, the judgement is still out here, and apparently the Estonian police has now launched a criminal investigation against the Company/the people behind the platform.
In any case, I’m fairly certain we can wave goodbye to the money we “had” on either platform, since both websites have now completely vanished.
As I predicted in my previous update the downfall of Kuetzal did in fact spread (very quickly) to other platforms, and unfortunately I don’t believe that we’ve seen the last of the ripple effect just yet. People have lost faith in (that part of) the industry, and are running towards the exit. This has caused a lot of the similar platforms to issue statements in regards to buybacks, transparency and their general ways of conducting business. I believe that something good is going to come out of this eventually (more transparency from the platforms, among other things), but unfortunately I don’t believe the storm to be over just yet.
Crowdestor, Monethera and Wisefund, which are all similar platforms to Kuetzal and Envestio, have attempted to re-assure their investors that they are nothing like their fraudulent counterparts.
I’m not entirely sure that I believe them, but at least I believe that they are acting rationally, in that both Monethera and Wisefund has suspended the usage of the buyback/early-exit feature of projects until the storm clears (the panic fades). Had Envestio done the same, they might have still been in business (at least for a while longer…).
Crowdestor does not have the buyback feature (where you can sell your loan parts back to the platform at any given time, for a small fee of 5-10%). This puts Crowdestor at the top of my list of “least likely to be fraudulent” platforms…
I am of course disappointed in this recent development, but I can honestly say that I am really not surprised (which is why my crowdlending strategy accounted for this exact scenario). The level of information that these platforms disclose about their projects are very limited (sometimes downright ridiculous – in hindsight 😉 ). Apparently we are easily fooled, and we’re quick to follow each other into the pit of doom, like ducks on a row…
What puzzles me though, is the amount of work that the people behind these platforms put into the (apparent) ruse. I have to believe that these people did not set out to run a fraudulent business from the get-go (or maybe they did?). Of course, if they end up getting away with it (which I believe is likely), I can’t completely rule out that it was their plan all along…
Anyway, since I’ve played a part in forming the row of ducks, I have to offer an apology to any of my readers, who decided to join any of these platforms, based on my recommendation. I hope it’s very clear by now that these are high risk investments, and you should only invest money that you are prepared to lose (I don’t hope I’ve ever given you any other impression).
However, unlike some of my fellow “P2P bloggers” out there, I’m far from done with this venture. And I hope most of you out there still believe in the industry as a whole. We’re not gonna let a few rotten eggs (so far) deter us from funding some funky projects out there – and making a buck while we do it 😉 I might be down, but I am far from out!
If you wan’t to learn more about what happened, exploreP2P has a good summary that I recommend you check out.
I will of course cover more on this subject in my next monthly update, so if you want to learn wtf the crazy Total Balance guy is up to, I suggest you stick around for some (always) funky updates in the months to come 😉
Until then, stay vigilant and keep diversifying 😉
Nick, get thr $%^k out of p2p! If they are cracking during economy boom, they are 80-90% failure at recession 🙂 +10% return is not for nothing. Risk/reward is a thing. And if you get 1,something% from US bonds and 2-3% something from dividends you have to understand that this is 5-10x greater risk then difference between no risk US bonds and dividend shares so you can calculate how risky is those p2p.
You’re right. I should just quit. But I’m not a quitter, am I?! 😛 m000hahahah
This is not about quiting, its about realocating money to more secured assets. 10kEUR in your case is not a big deal, but I would decrease the p2p to at least 5kEUR if I were you. Or at least stop investing in p2p. Gold and RE is a good investments. Dividend stocs of ETF of that if your not into analysing 30-50 companies, this is what I miss in your portfolio. You should have 30-50kEUR alocated there. But this is just my toughts. Im 76% dividend stocks 4% bonds, 20% cash myself for the moment with my small 23kEUR portfolio 😉
I understand what you mean 😉 But I dont think you’re seeing the big picture here. My net worth is well over €400K and about 10% of that is already invested in stocks via an ETF-like asset type. In that context my crowdlending is less than 2% of my net worth. Yes, you can argue that “why even bother then?”. But I like the “exoticness” and I believe that P2P has a bright future (maybe not in its current form). Also, I will eventually have a growth portfolio too, no doubt. But for now the stocks allocation of my portfolio remain tied to my pension alone 😉 Maybe I will reconsider, if that bear market that everyone has been talking about for 5 years now should suddenly arrive 😉
It’s not about getting rich (obviously a €10K allotment in crowdlending is not going to make a big difference in the broader perspective) – it’s about having something to play with, so I don’t get bored! 😛
Well agree, p2p is a bit more rational and to some extend economicaly logical form of investment compared to cryptocurrencies that some has their exotic 10% invested in 🙂 And agree 10k€ is something you can lose. Lets see how thing will go. Im in cash accumulation phase now 🙂 +30%/y growth is not normal and stuf like that happen before the crash (euphoria, high growth ect). Lets wait and see.