"Finfluencers" and investment that are too good to be true - my experience with such 2 exotic products

Influencers are all over social media and Youtube peddling products recklessly in the garb of "Free Financial advice". I give you my personal experience with 2 such exotic high return products.

This is a slightly longer version of the post that I had put on LinkedIn a coupleof weeks ago.

Crypto platform Vauld recently suspended its withdrawals, trading and deposits. As the screenshots suggest, it was marketed as a ultra high return FD by some (in) famous influencers as seen below.

What's happening with the crypto exchange platform Vauld reminds me of these 2 experiences -

EXPERIENCE 1: In 2017, I met an owner of a watch spare parts factory near Begur for pitching investments. He asked me "Have you heard of Mansoor Khan and IMA Jewels in Shivaji nagar. He is offering 5-10% returns every month ( I first thought I heard 5-10% every year) on investments and a lot of people I know have put their money in his scheme"

I couldn't believe this and even in that stage of my career I asked him that how is he managing it? (apparently something around infra, bullion, gold etc etc) I politely told him to stay away from the same without being too judgemental.

A year later, IMA Jewels was in the news when it was discovered that the Ponzi scheme has collapsed and angry investors, many of whom were just small time investors, all crowded outside the IMA Jewels showroom asking for their money to be returned.

That obviously didn't happen. I dont think much has happened since then.

Mansoor Khan used Influencers such as local maulvis and Muslim netas and also projected himself and his employees as devout Muslims.

You can read more about the same in this link - https://lnkd.in/d69vcnGJ

We've heard of many "chit funds" also blowing up and the Sahara group was the biggest ponzi sceme of them all (they used patriotism as the magnet to attract people)
https://lnkd.in/dJ8th5sv

EXPERIENCE 2:

In early 2019, Minance was a hot new “invest-tech” startup offering innovative instruments for investment in certain exotic products. Now for someone like me who was used to selling Mutual funds, PMS, direct equity and FDs, I was curious to know what really are these exotic products.

I got to hear about them a lot through word of mouth mainly.

I walked into the Minance office in JP Nagar Bangalore and met with one of the folks in sales (who by the way, was a better salesman than I was). I did not get to meet Anurag Bhatia, the mercurial founder and CIO but this guy gave me an idea of the offerings nonetheless.

One product that caught my attention was something called “Assets Pay Cash” - where you offer your mutual funds as a collateral for investment into “low risk” derivatives (far out of money options) that offer upto 12% returns OVER AND ABOVE your mutual fund returns. Minance claims it generated this successfully for nearly 2 years.

Wow! This sounded amazing, who wouldnt want this?

There is a catch though, when things go wrong, it really goes wrong. This product went wrong and in order to keep the train moving, the company apparently paid existing investors from the money collected from new investors -a classic ponzi scheme which always inevitably collapses.

Anurag Bhatia was banned by SEBI from the financial markets and even jailed later on.

What is even more bizarre and batshit crazy is that once he was out of jail, Anurag Bhatia was back in the game this time through a fake persona and a random new investment entity called “Hedonova”.

If you have time for some entertainment I strongly encourage you to read this or this for more on this.

These two experiences leads me to give you a friendly reminder that

1."Influencers" and stock market tipsters/gurus have zero accountability for their recommendations
2. If something seems to good too be true, especially around investments, it just might be