Migom Bank: The Final Chapter of a Disastrous Fintech Story

Migom Bank’s journey in fintech started as a success story. The Dominica-based neobank was once worth over $700 million, touting itself as a crypto-friendly financial institution empowering the underbanked and the unbanked.

Yet, Migom’s story quickly went south, especially considering its latest activities and track record. Combined with a failure to communicate with customers and the ongoing regulatory scrutiny, the neobank’s disastrous journey involves suspicious backroom deals and a catastrophic investment in Baltic International Bank, which was later raided by Latvian authorities.

More recently, a feud has developed between a group of investors trying to save the neobank and its CEO, Thomas Schaetti. For the last 1.5 years, Schaetti has maintained sole control over the neobank and its holding company, Migom Global Corp.

However, Migom Bank’s story is yet to be concluded. For this reason, we have continued our investigation into the neobank’s disastrous journey to uncover the latest details in this follow-up report. To bring you the next chapter of this perplexing saga, we have contacted Dominican regulators and Migom Bank’s clients, shareholders, accountants, lawyers, and other important stakeholders.

The Fight to Retake Control Over the Neobank

Despite reports of Thomas Schaetti’s ejection from the Austrian holding company, the fight between Schaetti and Migom Bank’s investors has yet to cease. In fact, the battle has recently reached a stalemate, with involved parties awaiting judges in Austria to render a verdict.

In theory, a court decision in the neobank’s case is expected any minute. But, in practice, judges must deal with numerous pending cases in Austria’s unpredictable court system. According to lawyers involved in the process, this could delay the verdict by multiple weeks, if not months.

In the meantime, Thomas Schaetti has kept himself busy trying to obstruct the legitimate transfer of shares to Migom’s new investors. Reportedly, Schaetti has been involved in prank calls and threats against attorneys representing the group of investors. Moreover, there are also rumors claiming his involvement in falsifying police reports and publishing smear articles online.

Since his primary duty is to lead Migom Bank out of its current crisis, such allegations make Schaetti’s role in the neobank somewhat questionable. Also, as the neobank’s President and CEO, his efforts to block new funding from investors seem rather counterproductive, as it hinders the financial institution’s chances for survival.

Interestingly, a smear article allegedly published with Thomas Schaetti’s assistance claimed the transfer of €120 million of Migom Bank’s assets into a digital asset cold wallet by one of the neobank’s original founders. However, the story was too quick to frame this person as the perpetrator and ultimate villain in Migom’s case.

This caught our attention, so we proceeded with the next steps in our investigation. These include reviewing Migom Bank’s financial statements that are officially published on the US Securities and Exchange Commission (SEC) website. We also requested financial statements from financial authorities in Dominica, where the neobank is licensed.

Did €100 Million Vanish From Migom’s Balance Sheets?

Our analysis of the financial statements filed with the SEC by Migom Bank’s holding company showed that the neobank’s assets were valued at only around €20 million at the time of the filing. The certification was performed by Thomas Schaetti. This valuation was confirmed by the Dominican filings, which cited an even smaller amount.

Interestingly, the smear article we discussed earlier referred to €120 million. As a reminder, the piece was reportedly authored by Schaetti, the same person who valued Migom Bank’s assets at approximately €20 million. So, what happened to the missing €100 million?

We have two theories to explain this mystery. First, the €120 million in the smear article is a fictitious amount made up to divert the public’s attention from the real issue, which is the funds of clients that are still missing.

In the second scenario, Thomas Schaetti tried to vilify someone else (one of Migom’s founders), but with some unexpected results. Despite his efforts, he revealed a small piece of truth by accident: the missing €100 million of client funds that were moved off the neobank’s balance sheet.

We believe the second theory is more realistic, especially if we consider the initial results of our Migom investigation. Regarding that, we have already identified a potential destination for this “off-balance sheet money train,” a company based in Luxembourg and owned solely by Thomas Schaetti.

To find out the truth, we have contacted regulators and tax authorities who will soon share their insights with us.

A Legal Case Is Imminent in the US

In the meantime, Migom Bank’s dissatisfied clients are sparing no effort to regain access to their assets. So, with the assistance of Dominican regulators, they are filing a legal case to reclaim their lost funds and settle their scores with the neobank.

In addition to the bad relations with its customers, the US-based shareholders of Migom Bank’s holding company are also unhappy with the current situation with the neobank. Due to the negative price movements, Migom Global Corp’s stock (MGOM) has dived from approximately $100 per share to $10 between April 2021 and December 2022. During this period, MGOM lost around 90% of its value.

On top of the above, it is likely that the SEC and the Financial Industry Regulatory Authority (FINRA) will terminate Migom Global Corp’s publicly traded status. When that happens, it will render MGOM stock worthless, causing massive investor losses. It is realistic to expect such a decision to take place in the coming months due to three reasons:

1. Migom hasn’t filed any mandatory disclosures or financial statements with the SEC for over a year.
2. The lack of communication with the holding company’s shareholders.
3. No solid efforts or plans from the neobank’s management to save the institution from an imminent collapse.

Our Migom investigation’s results indicated that over 60 of the neobank’s holding company’s shareholders are actively negotiating with their lawyers. They will likely file a class action lawsuit in US federal court in an attempt to recover the potentially significant damages inflicted on Migom Global Corp and disclose details that could be relevant to the case.

As we were finalizing this article, reports surfaced that Dominica’s regulators are making a significant change to the bank’s leadership. Regulators have dismissed Thomas Schaetti from Migom Bank’s management, appointing an independent team to guide the bank forward.

The team includes London-based lawyers and auditors with extensive experience handling major insolvency cases. Hopefully, they will be able to provide some much-needed clarity to the bank’s clients and creditors. According to our sources, official updates will be made public very soon.