Dutch student’s crypto bank accused of being Ponzi scheme behind millions in losses

A group of at least 100 private cryptocurrency investors have lost millions of euros to a 23-year-old law student’s cryptobank. The Hengelo man promised high returns and gained more and more customers by delivering for a while. This week, he emailed his customers to tell them that all their money had been lost, RTV Oost reports.

Over 100 victims have so far reported to the law firm Damste Advocaten en Notarissen, but lawyer Arjon Tieman, who is representing the victims, expects that number to increase. The email went to over 300 people, he told the broadcaster.

The Hengelo student has been running his crypto bank for about a year or two, according to the broadcaster. Each of his customers invested at least 5,000 euros, but several invested tens of thousands. He then allegedly reinvested the money in cryptocurrencies, promising returns of up to 50 percent. For a while, he delivered, building a reputation and attracting more customers - often through word of mouth from his existing ones.

In the email sent to customers on Wednesday, the Hengelo man said that, to his great regret, the entire invested capital, including his own money, had been lost. His spokesperson told RTV Oost that the loss caused the crypto banker to have a breakdown, and he is currently under treatment.

“I tried it myself first,” one victim, who considers themself financially well-versed, told the broadcaster. “After I made a nice profit with my deposit of 30,000 euros, I informed the rest of my family. In our case alone, about 20 people pushed in seven to eight hundred thousand euros. Just think, if you are talking about 300 victims, it is probably millions. Apart from my own loss, it is, of course, an unpleasant idea that I got my family involved in this.”

Lawyer Tieman suspects that the crypto banker paid out the first investors with money from his new customers and that this unsustainable system eventually collapsed. “We still have to find out whether this is really the case because the information we have is very fresh, but this has all the hallmarks of a pyramid scheme,” Tiemen said.

The law firm organized an information evening for early next week and called on other victims to come forward. So far, about 100 victims have contacted the lawyer. Some cases involved the minimum deposit amount of 5,000 euros. “I have seen amounts of 35,000 to 50,000 pass by,” Tiemen said.

He is currently investigating the victims’ legal options. The student himself seems to have disappeared off the face of the earth. According to the broadcaster, his home seems deserted, and his profiles disappeared from social media. Last week, he was supposed to go to a training camp in Turkey with his football club, HSC’21, but he pulled out at the last minute.

“Another option is that we focus on professional parties like the banks and crypto platforms involved,” Tiemen said. The man worked through his own account. “The question now is, among other things, to what extent a bank has a duty of care if such amounts are credited to the account of such a young person.”

Tieman is working with the victims on a police report. “We look at what is sensible,” Tieman said. “Whether the victims should do this individually or whether we might do it together and, for example, set up an interest group for this purpose. It has often been done this way in the past.”