John Dalli tied to Ponzi scheme MFSA warns is ‘of dubious nature’

The Malta Financial Services Authority’s recent warning about an illegal cryptocurrency operation QuickX is related to a Ponzi scheme in which former EU commissioner John Dalli is involved in no small way.

The MFSA informed the public to steer well clear as “the entity is likely to be a scheme of dubious nature with a high risk of loss of money”. It made no mention of Dalli.

Yet The Shift has been working on the story for months. Questions were sent to the MFSA in January 2021, but the only reply received was that the Authority was looking into the case.

More than a year later, the MFSA has issued a warning when things had gone too far, and a number of people had suffered due to the regulator’s lack of action.

Research undertaken by The Shift shows that not only is this “a scheme of dubious nature”, but it also has all the hallmarks of an illegal Ponzi scheme, a form of fraud that involves paying ‘profits’ to earlier investors with funds from more recent investors until the scheme implodes.

John Dalli has been embroiled in a Ponzi scheme before and is presently facing bribery charges.

How it started – a bizarre press conference in India

In May 2018, an Indian regional news outlet’s breaking news item about some cryptocurrency project raised eyebrows over 5,000 kilometres away – in Malta.

The subject was a press conference in New Delhi organised by the Adhlakha brothers (Vaibhav and Kshitij) from India, the founders of QuickX.

The quirky moustache-sporting Adhlakha brothers gleefully announced to the world that John Dalli was their newest recruit for their crypto project’s “advisory board”.

Whether it was the disgraced ex-EU Commissioner’s speech about how cryptocurrencies will allow people to shift money around without being “spied upon” by law enforcement or the feeling that he must have omitted chunks of his chequered CV, the press conference left Maltese viewers (and the press) with what can only be described as a distinct sense of foreboding.

It turns out that this feeling was rather accurate, even though no media outlet in Malta connected the dots between QuickX and John Dalli, despite reporting conferences on the subject that he addressed.

The MFSA, in a warning published last month on 25 October that did not mention Dalli by name, advised, “The public should refrain from undertaking any business or transactions with the above-mentioned entity.”

The Shift’s research shows that not only is Dalli an ‘advisory board member’, but the Maltese company behind QuickX and its related undertaking CNexchange is also hosted at Dalli’s business address at Portomaso in St Julian’s.

It is fully owned by Indian brothers Vaibhav Adhlakha and Kshitij Adhlakha, while Dalli, apart from the use of the address, does not appear on the paperwork.

No accounts or annual returns have ever been filed by the company, or any other documents for that matter, since its incorporation on 5 July 2018.

Back then, in 2018, just before the Indian start-up cryptocurrency company’s Initial Coin Offering (ICO), the Indian promoters bragged profusely about having secured Dalli’s “backing” and about how the Maltese former finance minister and European Commissioner was a member of its board of advisors.

‘Unequalled access to government regulators’

Dalli’s presence on the QuickX advisory board, according to the company, “…cannot be understated as it could allow the start-up to obtain unequalled access to government regulators – minimising regulatory uncertainty for the company”.

The company said, “At this time you’ll be hard-pressed to find token sales that have been green-lighted by an establishment player. This is what makes QuickX’s token sale [ICO] so unique, as it has the backing of Malta’s former finance minister John Dalli.”

‘Sir John Dalli’, as he was labelled by his Indian partners at the time, said at a QuickX event: “Blockchain is a technology that transcends technical issues. Its core rationale is the delivery of information directly between the people involved, bypassing any centralised data, and capturing and storing servers that are controlled by governments and big businesses. The outcome is the restoration of users.”

Dalli also appears to have brokered meetings in Malta, including between the Adhlakha brothers and Mario Borg, then a member of the OPM’s “blockchain advisory team” and an MFSA Board of Governors member, to explain the QuickX project and understand Malta’s new “Blockchain Island” laws.

It is not clear what was discussed during these meetings, but the promoters of QuickX must have liked what they heard. A couple of weeks later, the “QuickX project” became a project owned by a Maltese company, QuickX Ltd.

Six months later, the Maltese company would be in flagrant breach of these laws (listing on a crypto exchange without MFSA approval) and repeat that breach, including running an unlicensed crypto-exchange (CNexchange) from Malta.

QuickX Ltd. has also never filed any accounts or annual returns since its incorporation in 2018, a status which should have led to it being declared ‘inactive’ by the Malta Business Registry (MBR) and struck off.

But breaches of Maltese regulatory and company laws are, potentially, just the cherry on the cake.

Research conducted by The Shift into QuickX and related undertakings such as CryptoAdvice and CNexchange and, more recently Eazme and Riseoo, shows the markings of a Ponzi scheme, where investors are invited to lend their tokens to related entities in exchange for impossible returns which never materialise.

In addition, investors were rewarded for enticing other investors to buy QuickX and lend the tokens to CryptoAdvice. Any income paid out to investors would either be paid out in a worthless token (QuickX) or using other investors’ money.

CryptoAdvice has since imploded, leaving investors dry, but the same “token lending” arrangement would later be re-launched and re-branded as CNexchange and “virtual minting” contracts, again offering unsustainable ‘risk-free’ returns of up to 6% monthly or 25% annually, so long as you locked up your investment and recruited others.

The Shift’s research shows that the promoters behind QuickX, CryptoAdvice and CNexchange have, most recently, again re-launched and re-branded the scam as Eazme and Riseoo.

Investors in QuickX and related ventures have, according to cautious estimates by The Shift, lost millions of US dollars.

Several aggrieved investors in QuickX-linked schemes consulted by The Shift claim to be seeking legal action against the parties involved in this scam.

An earlier attempt – GenArb

QuickX and CryptoAdvice were not John Dalli’s first venture in India.

A year before these were launched, in March 2017, a company called “Genius Capital Markets Ltd” (GenArb) was registered in the unlikeliest of places, Vanuatu.

It is unclear who set up this venture, but an online video of an event in Singapore shows John Dalli promoting the venture as the brainchild of a contact of his.

Mainly targeting the Indian subcontinent, GenArb promised unwitting investors in its so-called ‘Investment Pools’ guaranteed stratospheric returns starting from 5% income every ten days, provided investors let their money be locked in the pool for 390 days.

As though the sustainability of GenArb’s returns was not enough of a red flag, GenArb promised a “boost” to returns from 5% to 7% every ten days if an investor, in turn, enticed another three investors.

Marketing events were organised in Delhi, Singapore and Indonesia in the summer of 2017, including appearances by John Dalli and awards of certificates for the most gifted salespeople signed by John Dalli and Maqsood Alam, a person whom Dalli describes as his longstanding contact.

Inevitably, the events attracted persons heavily involved in the Indian Multi-level Marketing space such as Dr. Mansingh Nayak (pictured below in pink).

Then it all fell silent.

The website went offline leaving little more than sporadic complaints by defrauded investors on consumer websites about how after investing in August 2017, the company stopped responding to calls.

It is not clear what led GenArb’s founders to disappear in August 2017, but many involved in the scam, including the entire text of the website, would later resurface with QuickX and CryptoAdvice.

As would John Dalli.