- Crypto investment firm Crypto4Winners is being investigated by the Luxembourg public prosecutor’s office.
- Sources estimate customers deposited at least $100 million worth of crypto before Crypto4Winners stopped processing withdrawals.
- Customers have hired lawyers in an attempt to get their money back.
At the start of March, Crypto4Winners’ customers started to notice something odd.
The platform, which invests Bitcoin, Ethereum, and stablecoins on its customers’ behalf and which boasts monthly returns of up to 20%, stopped processing withdrawals.
“It has been over 96 hours since my withdrawal request and it is still not complete,” said one customer, posting on the Crypto4Winners subreddit — an online forum.
Then on March 9, customers’ worst fears were confirmed.
A post on the official Crypto4Winners channel on Telegram — a messaging app — said the firm’s investigations led it to “suspect an individual of committing fraudulent acts that may have compromised the integrity of assets.”
“It has come to light, through multiple sources close to the organisation’s management, that Crypto4Winners has been identified as a Ponzi scheme,” Florian Ernotte, a lawyer representing a group of Crypto4Winners customers, claimed in an email sent on March 15, which was viewed by DL News.
According to the same email, the problem began in February when “close associates” of Crypto4Winners CEO Adrien Castellani “executed substantial withdrawals” from the platform.
Castellani and Schiltz didn’t respond to DL News’ repeated requests for comments.
DL News contacted Ernotte to confirm the email’s authenticity. He told DL News that he collected the information in the email from several sources close to the matter, but that he himself did not verify it.
DL News cannot view the relevant transactions so cannot verify the claims, in particular regarding Castellani’s and Schiltz’s involvement and whether the transactions involved constitute a Ponzi scheme. Neither they nor Crypto4Winners responded to our requests for comment.
The withdrawals at Crypto4Winners triggered a series of events which appear to implicate Castellani and his business partner, Luc Schiltz, who is a co-owner and serves as a general partner at the company. Schiltz has a history of legal troubles. He was sentenced by a Luxembourg court to six years in prison in 2017 for financial fraud.
Crypto4Winners’ approximately 4,000 customers are now demanding their money back. But Schiltz, who multiple sources say has complete control over customer funds, was involved in a car crash earlier this month. According to Ernotte’s sources and other sources DL News spoke to who are close to the matter, Schiltz said he suffers from amnesia — resulting from the crash — and that he cannot access the funds.
A separate lawyer representing a group of Crypto4Winners customers, who declined to be named because of the sensitive nature of the case, told DL News that the value of deposits might be $100 million or more.
Scorechain, a platform that offers crypto compliance services, estimates that the value of customer deposits to Crypto4Winners sits at $100 million.
DL News could not independently verify the value of deposits.
Who’s in control?
On March 4, Schiltz was involved in a car crash that resulted in his hospitalisation in Luxembourg, sources who spoke to Schiltz and staff at the hospital told DL News.
Over the following days, Crypto4Winners customers started reporting that withdrawals from the platform’s trading pools weren’t being processed.
In Crypto4Winners’ terms and conditions, the platform says Bitcoin and Ether withdrawals can take up to 96 hours, while other withdrawals could take up to a month to process.
By March 8, the number of customers waiting on Bitcoin and Ether withdrawals was piling up. Many took to Reddit to vent their frustration.
A source close to both Schiltz and Castellani, disclosed to DL News that Schiltz has maintained complete control over the assets deposited into Crypto4Winners.
This control includes the critical password-like keys necessary for accessing the firm’s cryptocurrency wallets and exchange accounts since the platform was established in 2019.
On multiple occasions, Castellani had previously told Crypto4Winners customers that Schiltz had limited involvement in the company.
During Schiltz’s recovery in hospital, he was unable to recall the events leading to the crash, or his involvement in Crypto4Winners, the March 15 email cited him as saying.
On March 15, the Luxembourg public prosecutor’s office said it’s investigating Crypto4Winners.
“The Luxembourg prosecutor’s office confirms that an investigation has been opened for fraud and money laundering charges,” the statement said. “Searches have been carried out, and two individuals, after being charged, have been placed under custody by the investigating judge handling the case.”
The March 15 email from Ernotte said that one of those individuals was Schiltz.
Brian Hellinckx, a Luxembourg-based lawyer, confirmed to DL News that Schiltz has hired him as counsel but declined to comment further.
Schiltz, Castellani, and other Crypto4Winners employees are presumed innocent until proven guilty.
Crypto4Winners customers lawyer up
In addition to the investigation brought by the Luxembourg public prosecutor’s office, groups of Crypto4Winners customers have engaged lawyers to attempt to recover their assets.
According to Andreas Komninos, a Luxembourg-based corporate lawyer with experience fighting cryptocurrency cases, the case against Crypto4Winners has both civil and criminal dimensions.
In a Zoom call with Crypto4Winners customers on March 13, also attended by DL News, Komninos said that the fact the platform hadn’t honoured withdrawals within the stipulated 96-hour period likely constitute grounds for a civil case.
But he also noted that the accusations of fraudulent activity and investigation from the public prosecutor may be part of the reason withdrawals from Crypto4Winners were initially halted.
In a follow-up call on March 17, Komninos told Crypto4Winners customers that he intends to go after the firm’s technological “partners” for compensation based on failure to protect assets with know-your-customer and anti-money laundering procedures.
A history of fraud
In January, DL News reported that Schiltz is an owner and general partner at C4Wave Capital, the company that controls the Crypto4Winners platform.
Schiltz, a Luxembourg national, was previously sentenced to six years in prison in 2017 for defrauding nearly 60 victims out of over $1.5 million through fraudulent investment schemes. DL News’ attempts to contact him at the time were unsuccessful. DL News has attempted again to contact him for comment on this story.
After serving just over two years of his sentence for previous financial crimes, Schiltz was released on probation in 2019, and quickly started Crypto4Winners with fellow Luxembourger Castellani.
Nowhere on the Crypto4Winners website did it list Schiltz as an owner or general partner at the company. The website has since gone offline.
Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.