This December is the anniversary of Migom Bank
losing its network of correspondent banks, its ill-fated investment in Baltic
International Bank following a raid by Latvian authorities, and since the
management of the bank effectively stopped communicating with their
clients.
A lot has been written about the neobank’s fall
from grace, so why is there still interest in the saga of this once promising
new financial institution? Despite the relatively high level of attention this story received, the conclusion has yet to
arrive. In fact, Migom appears to be resurrecting itself.
A couple of months ago, reports surfaced that a
group of investors, including the founders of the bank, had made an earnest bid
to retake control of the bank’s holding company, recapitalize the bank, and
resume its operations. Representatives of these investors have shared what they
know about the current state of that transaction.
De jure, it appears that bank president Thomas
Schaetti has already been ousted as the controlling shareholder of the Austrian
holding company, which dictates the management, policies, and procedures
downstream to the American holding company, which ultimately controls the bank.
Schaetti’s ejection happened sometime in November and should have started the
contemplated reforms of the bank, including resumed operations. The incoming
investors have been prepared to deploy their own assets in Migom Bank, ensure
seamless customer service, and resume the bank’s licensed crypto
operations.
De facto, Schaetti still seems to be in control of
the holding companies and the bank itself, and has been obstructing the
completion of the share transfers to the bank’s new owners.
Reports indicate he
is delaying the requisite recordings in the Austrian Commercial Register,
withholding transfer of the information required to access the bank’s accounts,
and effectively ceasing communication with the bank’s regulators in Dominica.
Furthermore, it appears that Schaetti had even made an attempt to disband the
staff of the bank in Dominica and close its offices there.
His reasons for these reported blockages remain a
mystery. Is it because of the impending audit by the new investors and
resumption of reporting to the US SEC, which Shaetti had stopped since the
fourth quarter of 2022? Is that because December is around the time when the
bank’s license is supposed to expire and be renewed by the Dominica’s financial
regulators? It is unclear who ultimately benefits from the bank failing to
report its financials. Whomever it may be, it is likely the same people who
would benefit from the bank finally losing its license and fading into a sea of
lawsuits and investigations.
Luckily for the new investors and clients of the
bank, Austrian law appears to have provisions giving the incoming shareholders
the necessary tools to complete the transfer of shares regardless.
Even though
it will likely result in Austrian courts’ involvement, there is a fair chance
for the procedure to move forward without extensive litigation. Despite the
persistent obstruction by Schaetti, the new investors are determined to
complete the takeover and reform the bank. The Dominica financial regulators have
expressed their full support of the proposed reforms and
recapitalization.
Many are rooting for the resumed success of Migom
Bank, especially clients who have yet to access their accounts. Time will tell
if the bank can manage their ‘phoenix moment,’ but with the reported impending
end of the crypto winter, clients needing a neobank will be many. Migom may
once again become the success story it had been.
This December is the anniversary of Migom Bank
losing its network of correspondent banks, its ill-fated investment in Baltic
International Bank following a raid by Latvian authorities, and since the
management of the bank effectively stopped communicating with their
clients.
A lot has been written about the neobank’s fall
from grace, so why is there still interest in the saga of this once promising
new financial institution? Despite the relatively high level of attention this story received, the conclusion has yet to
arrive. In fact, Migom appears to be resurrecting itself.
A couple of months ago, reports surfaced that a
group of investors, including the founders of the bank, had made an earnest bid
to retake control of the bank’s holding company, recapitalize the bank, and
resume its operations. Representatives of these investors have shared what they
know about the current state of that transaction.
De jure, it appears that bank president Thomas
Schaetti has already been ousted as the controlling shareholder of the Austrian
holding company, which dictates the management, policies, and procedures
downstream to the American holding company, which ultimately controls the bank.
Schaetti’s ejection happened sometime in November and should have started the
contemplated reforms of the bank, including resumed operations. The incoming
investors have been prepared to deploy their own assets in Migom Bank, ensure
seamless customer service, and resume the bank’s licensed crypto
operations.
De facto, Schaetti still seems to be in control of
the holding companies and the bank itself, and has been obstructing the
completion of the share transfers to the bank’s new owners.
Reports indicate he
is delaying the requisite recordings in the Austrian Commercial Register,
withholding transfer of the information required to access the bank’s accounts,
and effectively ceasing communication with the bank’s regulators in Dominica.
Furthermore, it appears that Schaetti had even made an attempt to disband the
staff of the bank in Dominica and close its offices there.
His reasons for these reported blockages remain a
mystery. Is it because of the impending audit by the new investors and
resumption of reporting to the US SEC, which Shaetti had stopped since the
fourth quarter of 2022? Is that because December is around the time when the
bank’s license is supposed to expire and be renewed by the Dominica’s financial
regulators? It is unclear who ultimately benefits from the bank failing to
report its financials. Whomever it may be, it is likely the same people who
would benefit from the bank finally losing its license and fading into a sea of
lawsuits and investigations.
Luckily for the new investors and clients of the
bank, Austrian law appears to have provisions giving the incoming shareholders
the necessary tools to complete the transfer of shares regardless.
Even though
it will likely result in Austrian courts’ involvement, there is a fair chance
for the procedure to move forward without extensive litigation. Despite the
persistent obstruction by Schaetti, the new investors are determined to
complete the takeover and reform the bank. The Dominica financial regulators have
expressed their full support of the proposed reforms and
recapitalization.
Many are rooting for the resumed success of Migom
Bank, especially clients who have yet to access their accounts. Time will tell
if the bank can manage their ‘phoenix moment,’ but with the reported impending
end of the crypto winter, clients needing a neobank will be many. Migom may
once again become the success story it had been.