What a crazy month of January 2020. This time it wasn’t just loan originators in trouble, this time it was actual platforms!
It was a result of the P2P community applying pressure to several platforms as part of an increased focus on due diligence. Platforms were faced with questions to their businesses and many answers or missing answers were not to the community’s liking. So 2 high-risk platforms collapsed, Kuetzal and Envestio.
And now we are waiting to see what the aftermath will bring. Both platforms are facing law suits but whether that will bring anything back to investors, remains to be seen. In the Envestio case, the platform was according to the platform itself, attacked by hackers during the collapse, which meant that their site crashed. How most unfortunate for Envestio that their site crashes just when investors are panicking and looking to withdraw funds. This is indeed a rather peculiar coincidence.
Their site is still not accessible but at least investors are not waiting patiently for access but have started the judicial process with the lawsuit already funded. As an investor myself, and participant in the lawsuit, I will be following the process eagerly. Luckily it is only about 2% of P2P portfolio that is at stake.
Nevertheless, my personal take is that the money is gone and the persons behind have disappeared. At least it is clear, that key personnel have done a lot to erase all connections to Envestio on various social media, thereby attempting to erase their online link to the company. They are probably hiding somewhere in the Caribbean with the 33 million Euros invested in the platform. But you never know, the lawsuit might actually bring something. I will together with many other investors cross our fingers.
In relation to both cases investors have obviously been frustrated. This has lead to a lot of discussions and also attacks on bloggers who were endorsing these platforms. Even to an extent that the atmosphere got so hostile that some bloggers decided to close down their sites due to threats and personal attacks.
What have we learned?
Clearly even though I perfectly understand the frustration, threats are never okay. We are all personal responsible for our own investments and should not blame others for our actions. If we have relied on advice from bloggers etc. on investments and the investments goes bad, we have clearly not carried out an adequate due diligence process and we should learn from that.
At least I have learned a lot from this process and will in the future do more research before investing in a new platform. Also this have given me an opportunity to reflect on current investments and whether they actually reflect the risk level that I thought. Currently I have no plans for further adjustments but this can soon change, just like the weather or the next P2P shitstorm.