Exiled fintech iSign this linked to the collapse of European cannabis investment platform Juicy Fields

In July, the company abruptly froze cash withdrawals, its alleged executives disappeared and deleted their social media profiles and shut down its online infrastructure, leaving tens of thousands out of pocket. This collapse came shortly after warnings about Juicy Fields issued by Spanish and German authorities.

Now, class action lawyers are circling the wreckage, examining the merits of potential lawsuits to recover funds from financial institutions that processed payments on behalf of JuicyFields.

Among them is reportedly ISX Pay, run by ISX Financial EU Plc, a spin-off of controversial Australian fintech iSignthis which was suspended from the Australian Securities Exchange in October 2019. Its Australian unit, since renamed Southern Cross Payments, remains the subject of a ongoing legal action launched by the Australian Securities and Investment Commission, while the company itself is suing the ASX over the suspension, which came over concerns about iSignthis’ alleged accounting irregularities.

The new European-based company, headed by John Karantzis, is the product of a demerger of most of iSignthis’ businesses last year, with the new organization re-domiciled in Cyprus where most of the business is.

Karantzis also moved to Cyprus late last year, after a travel ban was lifted on the executive following a lawsuit by the Australian Taxation Office alleging an unpaid tax bill of $10 million.

Investors in JuicyFields appear to have been directed to deposit funds into accounts at two banks. One was ISX Pay. The other was a Lithuanian institution Via Payments UAB.

The potential involvement of ISX Pay became apparent on July 15 when the company’s Twitter account, ISX Financial, sent out a fraud alert asking customers not to trust details published on a website that alleged ISX Pay transfer accounts were linked to the Juicy Fields scam. “ISX is mentioned at this URL but is not involved,” the tweet said.

Karantzis has since clarified this related to warning consumers about an “additional scam and fake website” that included an account at a separate institution.

Instead, Karantzis told Australian Financial Review: “ISX has been instrumental in alerting authorities to JuicyFields activities.”

“ISX was the first institution to freeze JuicyFields accounts and alert law enforcement. ISX freezing accounts may have led to the exposure of the scheme, as funds were restricted,” Karantzis said.

Documents of unknown origin, circulated on online forums in recent weeks, also describe a meeting on July 13 between two directors of a company called Juicy Fields AG and Mr Karantzis’ in Cyprus. The documents claim to represent part of an investigation into a previously unknown bank account held in the name of the Juicy Holdings NV entity.

“We also note that the JuicyFields attendees ended the meeting immediately following our proposal to involve law enforcement to assist with issues ISX had already identified,” Karantzis said in response to questions.

The documents claimed that Karantzis told them that payments of 500 million euros had occurred since the account was created. Karantzis said the 500 million euro proposal passed through their systems is “wildly exaggerated”.

Furthermore, documents allegedly presented by lawyers at that meeting showed that a bank account was established by ISX on behalf of the Dutch-domiciled entity called Juicy Holdings on January 14, 2022. On July 15, Karantzis notified the entity that the account had been closed.

Although he confirmed the meeting took place, Karantzis said: “We have good reasons and evidence to doubt that some of the documents published online are genuine and they appear to be part of a smokescreen to confuse the public, and apparently some media thus far.”

Juicy Fields AG, which claims no involvement in the scam, was originally called Luxor, and was a customer of Probanx, a company acquired by iSignthis.

Karantzis said: “Any such agreement predates the ownership of Probanx by the ISX Group, which agreement was terminated as part of the acquisition of Probanx in September 2018. ISX notes that Probanx now provides bank account ledger software to banks and financial institutions. transaction is being processed.”

Swedish lawyer and businessman Lars Olofsson said he plans to file a claim against financial institutions that allegedly facilitated investments in JuicyFields.

Because of its sophistication, Olofsson believes the Juicy Fields operation is linked to Russian organized crime and has resulted in losses of more than a billion dollars.

He argues that banks and other financial institutions should have been better at preventing the fraud by completing due diligence on customers.

Karantzis said there was no fraudulent use of ISX’s systems. “ISX complied with EU regulatory requirements for customer due diligence at all times. ISX met the directors in person and verified all corporate documents and licenses via official registers, sanctions screening, negative news checks and third-party certifications,” he said.

He said ISX has been engaged with law enforcement agencies “for some time, at our own behest.”

Olofsson said ISX was “absolutely an important part of JuicyFields” and said investors in the scheme deposited money into the ISX Pay account.

He says he has a list of more than 60 institutions that he claims have flagged transactions as suspicious and prevented them.

“It’s the sending bank, the transferring bank and the receiving banks, and all three need to have this compliance system to monitor and detect suspicious activities.”

So far, 350 alleged victims have approached Olofsson, including 13 Australians and five New Zealanders who have signed up to his proposed class action to recover funds from financial institutions that processed payments on behalf of JuicyFields.

“I have never come across a scam of this magnitude,” Olofsson said Australian Financial Review from his home in Malmö, Sweden.

Olofsson says his biggest client has lost €600,000, although most investors were smaller, out of pocket to the tune of around €25,000. In all, around 120,000 victims are believed to have been caught up in the scam, which covers players from India, Vietnam, Mexico and Argentina.

Several law firms in Spain are also organizing class actions, and a lawyer, Emilia Zaballos, told a Spanish newspaper. El País she had been contacted by “almost 6,000 people”.