I still can’t believe what happened over the past few weeks with the crowdlending platform Kuetzal. No matter whether or not you’re an investor on this P2P platform, I think you should know about it.
I never invested on the platform myself, but I know from comments and e-mails that some of you did.
Please forgive me if this information reaches you a couple of weeks after it was first discovered, I took some time off during the holidays.
Alright, let’s take a look at everything we know so far.
Why I Never Invested on Kuetzal
Personally, I never added the platform to my portfolio, as I had a bad gut feeling from the beginning. Mostly because of the young, inexperienced CEO. That’s also why I didn’t take a closer look to begin with.
Looking back, I’m sorry I didn’t share my initial thoughts with you. I really hope it’s all going to end well.
Nothing personal against him. But let’s be real here, last year when bloggers started writing about the platform, the CEO was only 24 years old and had very limited experience according to his Linkedin profile:
- 4 months working for the Spanish consumer loan company Twinero
- 4 months as a part-time intern at Viventor
- 6 months of employment with a Spanish lending company T-Presta, which seems to have gone out of business
None of these companies had anything to do with business loan financing as far as I can tell.
He does have a Bachelor’s degree in Business Administration, however.
I also have a university degree in International Business Administration, but I think you’ll agree that wouldn’t make me qualified on making the right decisions on how to properly manage and invest millions of Euros into high-risk business loans, especially if I was only 24 years old.
Nonetheless, starting in Mid 2019, the platform started being promoted by some influential bloggers in the peer to peer lending space, who quickly started investing tens of thousands of Euros on the platform, likely motivating many readers to do the same.
Other Bloggers Found Major Red Flags
Georg from Crowdlendingrocks.eu, who met up with the company back in June and decided not to invest there, sadly didn’t share concerns about Kuetzal’s experience, due diligence, cybersecurity and buyback guarantee until recently.
I especially found the part about Kuetzal’s buyback guarantee very surprising. The CEO basically admitted that the funds for the buyback come out of their own pockets, not the company account.
That’s not all, here is my personal highlight from the interview:
So what is stopping Kuetzal from just declaring bankruptcy if you get into a situation where the money in the company cannot cover the buyback? How can investors be sure that your own personal funds will cover?
Well, it is a question of trust. So nothing basically is stopping us from doing that, except that I am not that kind of a person who would do something like that. So it is a matter of trust in the company.
Wow, I didn’t expect that. I wish Georg would have shared this interview sooner (you can read it in full here), I’m sure it could have prevented a lot of people from investing on Kuetzal.
But I also kind of understand the way he felt. He thought he may not have seen the full picture yet and that there was still a small possibility that they were in fact good at their job and had good advisors.
Anyway, here’s where things get interesting.
The Alborg Petrol Project
In early December, ExploreP2P reported that apparently, investors on Kuetzal lent 850.000€ to a fake petrol company called Alborg Petrol.
Here are some of the things they discovered:
- Most of the text on the Alborg Petrol website was copied from another company’s website
- Even though Kuetzal supposedly met with Alborg Petrol at the company’s address in Riga, ExploreP2P couldn’t find it
- The office photos on the Alborg website were taken from the internet
- The image used for the development manager Erik Feldman of Alborg Petrol as listed on the Kuetzal website, actually belongs to a university professor in New Zealand
- Government filings show that Alborg Petrol is a tiny company with only one employee and 1738€ revenue in 2018
- There is no record of Alborg Petrol operating anywhere on the internet
- The company was purchased just before the funds were borrowed via Kuetzal
- The credit approval was based on some mysterious contracts
You can find the full article here.
Wait for it, the icing in the cake has yet to come.
Kuetzal Performs No Due Diligence?
According to its new terms and conditions, Kuetzal apparently performs no due diligence on its loans.
If you thought that was everything, you’re sadly mistaken.
Almost The Entire Kuetzal Team Left In November
In November, the previous CEO Alberts Cevers as well as seemingly almost the entire team left Kuetzal, supposedly because they got a great offer somewhere else, but we don’t really know anything more about that.
A new, equally young CEO (Maksims Reutovs) replaced the previous one. It seems like they might even have been classmates and colleagues, as they went to the same university and previously worked at two companies together.
Strangely, it seems as though he has no official employment contract with Kuetzal, according to him because he needed to apply for Estonian identification. It’s not clear if Kuetzal has any official employees at the moment.
The Meeting With The New Kuetzal CEO Was a Disaster
In December, Jorgen Wolf from financiallyfree, one of the first bloggers to promote the platform, as well as a representative from ExploreP2P, met the new Kuetzal CEO in Riga.
They wanted to discuss all the concerns that had been uncovered about the company and the Alborg Petrol project.
Sadly, the new CEO was unable to adequately address any of their concerns. Here is what they found out:
- He confirmed that one of Kuetzal’s bank accounts had been blocked by their bank due to anti-money-laundering issues.
- As I mentioned before, the previous Kuetzal team left. In addition, Kuetzal’s Riga office is closed as they’re apparently moving to Tallinn.
- Mr. Reutovs declined to provide evidence of bank wires between Kuetzal and Alborg Petrol. He also couldn’t provide any information at all about projects by AA development (who had borrowed over 3 million Euros) and Alpa Buve, a borrower in insolvency.
- It isn’t clear who really owns Kuetzal. A woman named Viktoria Gortsak is officially registered as Kuetzal’s owner, but the CEO failed to show any proof of communication with her. According to him, he mainly communicated with her husband Andrei, who seems to have some criminal history.
- And lastly, the CEO offered another meeting in Tallinn the next day with Ms. Gortsak, but that never took place.
You can read the full story here on ExploreP2P.
I don’t know how you feel, but I was really shocked after reading all of this.
Conclusion – What Now?
After these two articles were published, understandably a lot of people sent a buyback request for all of their investments on Kuetzal. If I was an investor, I would definitely do the same after finding out about all of this.
Some people already reported getting some money back before the holidays, others said that the Kuetzal support told them it would take between 2-3 weeks.
To anyone that invested on Kuetzal, I’m keeping my fingers crossed for you. I really hope the situation will end well and that you get your money back.
We Need To Learn From This
Even though I was lucky enough not to be affected as they weren’t part of my portfolio, this whole debacle definitely made me more cautious. Ever since then, I’ve been taking a closer look at the loans I’m investing in on other less transparent business loan platforms as well.
The entire P2P community (this includes bloggers as well) needs to learn from this, do more due diligence and make sure something like this doesn’t happen again.
To end things on a positive note, I get the feeling that this incident has brought the community closer. More and more people are now working together to do background checks on new projects that are being added to platforms, which isn’t always easy.
It’s also making investors more cautious to not just blindly trust and invest large amounts of money into any young platform promising 21% returns and a buyback guarantee.
I know this was a lot to take in if you’re hearing about it for the first time. Hopefully this article manages to reach some Kuetzal investors, who may not have heard about this at all on social media or blogs over the past few weeks.
Before you take off, I would love to know what you think of the whole situation.
- Are you affected as well, have you sent them a buyback request and received your money back?
You might find this useful as well:
- Current P2P Lending Bonus and Cashback Offers (January 2020)
- My Entire Investment Portfolio
- How To Track Your Investments In P2P Lending
- 230.000€ In P2P Lending: Bernhard Hummel’s Portfolio