Background

Katerina Papanicolaou’s Maxigrid Scam (2024)

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Katerina Papanicolaou's scam

Investment firm (CIV) iTrade Global (CY) Ltd., regulated by the CySEC, is the operator of the CFD, FX, and cryptocurrency broker InvestFW. Based on the most recent data, the broker is especially effective in Portugal, where over 90% of website visitors originate from. It is thought that the Israeli owners of Capitalix, an offshore broker, also operate InvestFW. The entities in question share the same Cypriot directors. Here’s our first assessment.

Brief Story of Katerina Papanicolaou’s Scam

In Q32022, the CySEC-regulated InvestFW saw just about 166,000 visits to its website; but, its offshore subsidiary, Capitalix, attracted about 500,000 visitors. But this is not out of the ordinary for Capitalix, which covers a far bigger market (without the necessary authorization) and draws customers from South America, Asia, and the MENA region. Capitalix operates under a securities dealer licence from the FSA Seychelles.

Overall though, the data shown by the two linked brokers—Capitalix and the CySEC-regulated InvestFW—is rather good.

CySEC

Cyprus’s financial regulator is the Cyprus Securities and Exchange Commission, or CySEC for short. The European MiFID financial harmonisation law is complied with by CySEC’s financial regulations and operations as a member state of the EU.

A sizable portion of foreign retail forex brokers are registered with CySEC. Many binary options brokers had previously chosen CySEC as their regulator of choice before 2018.

The following are the duties of CySEC:

  • to oversee and manage the trading activities of the Cyprus Stock Exchange, as well as the Stock Exchange’s listed companies, brokers, and brokerage firms.
  • to oversee and administer mutual fund management firms, collective investment funds, licensed investment services organisations, and investment advisors.
  • to authorise investment firms, including brokerage houses, brokers, and consultants, to operate.
  • against applying disciplinary actions and administrative consequences against investment consultants, brokerage houses, brokers, and any other natural or legal person covered by the Stock Market Laws.

Recent changes to the law governing CySEC’s duties have given it considerable authority over the organisations it oversees. This includes the ability to conduct investigations, search properties, and share any results with authorities in other countries.

CySEC takes action against Maxigrid Ltd and initiates compensation for clients!

Bans and administrative fines for Maxigrid Ltd.

Ultimately, Maxigrid Ltd. was the target of action taken by the Cyprus Securities and Exchange Commission (CySEC) on June 17, 2022. The announcement included four directors who were barred from performing management duties for Cyprus Investment Firms (C.I.F.s.) and administrative fines totaling € 210,000.

CySEC enforced the following administrative punishments in particular.

  • Israeli shareholder and former non-executive president of the board Roy Almagor is fined €200,000 administratively and is prohibited from managing C.I.F.s. for a period of five years.
  • Jekaterina Pedosa, the company’s executive director, is fined €10,000 administratively and is prohibited from managing C.I.F.s. for a period of five years.
  • Katerina Papanicolaou, the company’s executive director, is prohibited from performing managerial duties in C.I.F.s. for a period of two years.
  • Ex Executive Director of the Company Nikolai Monogarov receives a two-year ban from exercising management functions in C.I.F.s.

With the trade names Dualix and A.G.M. Markets, Maxigrid Ltd. has been conducting business as a Cyprus Investment Firm (C.I.F.). The licence number 145/11 was revoked on February 14, 2022. Following an enforcement action by German authorities that led to the arrests and impending indictments of multiple defendants in Germany, Maxigrid fell apart. As of right now, the inquiry is still on.

The actions of Maxigrid Ltd. caused harm to thousands of victims throughout Europe.

Under CySEC licence number 145/11, Israeli Roy Almagor’s Maxigrid Ltd. and its Chief Executive Officer, Jekaterina Pedosa, have been processing payments as an unlicensed payment processor for numerous broker scams, including RoyalsFX, LincolnFX, 10CryptoMarket, RoyalCBank, and others. Maxigrid employed BitandBuy, its cryptocurrency platform, and its bank account with Lithuania’s GlobalNetint for this purpose.

Katerina Papanicolaou’s Company Claims It can’t Pay the Victims

Additionally, Maxigrid doesn’t seem to be able to fulfil its commitments resulting from investor claims, and CySEC doesn’t think it will be able to do so very soon.

The Cyprus Securities and Exchange Commission, or CySec, declared on June 7th that the Maxigrid victims’ compensation process had begun.

“CySEC has determined that the Company (member of the I.C.F.) for the time being, for reasons directly related to its financial circumstances, is unable to meet its obligations arising out of investors’ claims and has no early prospect of being able to do so,” the circular reads, citing paragraph 18(1)(a) of Directive DI87-07 of 2019 for the Operation of the Investors Compensation Fund (R.A.D. 76/2019).

The I.C.F. will then invite covered clients to submit their claims against the corporation, if any, and will specify the process for submitting applications for compensation as well as the deadline for doing so. The fund then publishes the information, including the address where investors can get updates on the status of their applications, in at least two local newspapers.

According to the provisions of the contracts governing each client’s connection with the failing broker, the amount of compensation payable to each client is determined. However, the maximum sum typically stays under €20,000.

The maximum payment for legitimate claims was modified by the CySEC earlier in 2019 and is now equal to 90% of the total amount of covered claims or €20,000, whichever is less. 

Coverage is therefore equal to Min (90 percent X the claimed amount, or €20,000). Accordingly, an investor holding €50,000 with a C.I.F. that experiences difficulties and is unable to make payments will get €20,000 from the I.C.F. But, if the claim is for €10,000, the coverage will only be 90%, or €9,000, instead of 100%, as was previously determined.

The specific claim process for the Maxigrid clients (victims) has not yet been announced by the I.C.F. We’ll keep you informed.

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