Investment company shareholders disagree on why the company collapsed and at least one has reported the matter to gardaí
A liquidator was appointed to liquidate the business and a report was made to An Garda Síochána.
A total of 25 investors had invested €930,000 in the company, one of whom risked losing his entire pension in the collapse.
Managing partner Louis Curran claimed in an email last week to investors that “we were advised by James Kelly that all was lost, we were told the losses were a direct result of ‘leveraged trading’ unauthorized “.”
“I deeply regret the loss of investors’ money”
In response, the Kelly family released a statement to the Sunday Independentsaying the allegation was “completely false”.
“James was the founder and director of Gigabyte Investments Ltd and was therefore fully authorized to transact in cryptocurrency and related derivatives,” said Kelly’s father Simon, Gigabyte’s corporate secretary.
“I deeply regret the loss of investors’ money,” said James Kelly, adding that the company culture had become “toxic” with stress as the crypto market crashed in 2022.
Investors said they received regular updates from the company to show the fund was up 40%. But on Friday March 24, it emerged that there was only €80,000 left in the company’s bank account. Over the weekend, a potential recapitalization was discussed, but talks fell through.
Curran, a forex trader with more than 25 years of experience at major financial institutions including JP Morgan, Citi and Merrill Lynch, emailed investors the following Monday: “I am writing to bring you some very disturbing news. and difficult…with immediate effect, Gigabyte Investment Company ceased all market operations.
“In the past 48 hours, it has come to our attention that a colleague of mine has, for a time, and without our knowledge, engaged in a series of unauthorized transactions which have caused the company significant, even catastrophic losses,” he said. writing.
Curran alleged that there “appeared to have been false reports of client positions and profits” which “continued for several months.”
He and the company’s third-largest shareholder, Sam Molloy, had notified the Garda’s National Economic Crime Bureau and a Garda spokesperson confirmed the case “is currently being assessed”.
In a follow-up email last week, Curran told investors there was “an understanding that James’s role was solely to implement the transactions I was leading.” But the documents he had seen suggested that “your funds were multiplied by 20”, he wrote.
“We’ve always been clear, both in person and on any written communication that we took ‘no leverage, no shorts,'” Curran said.
But the Kellys replied that “as sole director of the company, James was the most senior officer of the company. He is also the largest shareholder” and that his trading power – including on futures contracts – was “clearly established” in company documents.
Gigabyte was founded by Kelly in 2021 with school friend and fellow UCD graduate Sam Molloy. Both were 21 at the time and were crypto enthusiasts. Within a year, they had posted returns of 1,500 pc.
“We were told they were always long on the market, never short”
They opened a dealing room in Sandyford, south Dublin, and partnered with Curran, who became managing partner and took a 25% stake. New investors have also joined us, including former Wealth Options directors Éanna McCloskey and Brian Flynn. Earlier this year, the business was valued at $3.5 million by outside advisers, Kelly said.
He sought to raise seed capital to register as an AIFM (alternative investment fund manager) in the Cayman Islands on a hedge fund platform, he said.
After the capital loss was revealed, there were “exploratory talks” to recapitalize but these fell apart, he said. The family saw no choice but to have a liquidator appointed. Creditors stepped in and had another liquidator named Joseph Walsh of JW Accountants instead.
An investor who lost a large sum told the Sunday Independent which he invested because he “believed in the future of digital assets and was looking for an Irish business in the space”.
He had received regular reports showing that his investment was constantly increasing by at least 30% despite market volatility: “They would share transactions in real time on a WhatsApp group. We were told they were always long in the market, never short, but entering and exiting trades quickly.
“It destroyed the future of my family”
Even after the collapse of FTX and Silicon Valley Bank, Gigabyte continued to report that it was up more than 30%, he said. So when he received the email about “catastrophic” losses, the investor said he was “shocked and devastated”.
“It tore my family’s future apart,” he said. “When you make an investment like this, you trust people and systems. If you lose money because Bitcoin has fallen, you just have to take it on the chin. But if it turns out that our money was multiplied by 20 as alleged, well, that was never part of what I was thinking of investing in.
According to the Kellys, the company’s documents “shared with all investors and advisors clearly authorize the company to trade long and short positions” in crypto. “All investors were required to sign the client contract,” they said. A risk statement highlighted the “incredibly volatile” nature of crypto and said “investment loss is a possibility.”