Globix: Cross Border Insolvency

The Insolvency (Cross Border Insolvencies) Regulations 2014 (“the ICBIR”) provides an effective mechanism for dealing with cases of cross-border insolvency. It gives effect to the provisions of the UNICITRAL Model Law and also the EC Insolvency Regulations, which Gibraltar continues to apply in full even post Brexit.

Miracle World Ventures Limited, a company incorporated in the British Virgin Islands ('BVI'), went into liquidation on the 10th March 2023 under section 159(2) of the BVI Insolvency Act 2003. Miracle World was a crypto trader operating as “Globix” or “Globix Cash”, with investors in Gibraltar amongst other places.

Adrian Hyde, Joanne Wild and Brian Simpson of Begbies Traynor were appointed liquidators by the sole shareholder, Mr Damian Carreras, by members resolution.

The court in Gibraltar recognised the appointment of the liquidators in Gibraltar under the UNCITRAL Model Law but also held that that recognition could amount to the opening of the insolvency proceedings for the purposes of the EC Insolvency Regulations. This was important as far as jurisdiction to make certain orders against parties outside Gibraltar was concerned.

This led to the first ever crypto asset injunction issued by the Gibraltar courts, on application by Counsel Daniel Feetham KC & Darren Martinez. The Injunction ordered Binance, the world's largest crypto exchange, to prevent assets being transferred from certain wallets associated with Globix.

Disclosure orders were obtained against various exchanges including Kraken, Bitstamp, Kuna, Coinbase and Crypto.com in an attempt to recover the missing crypto assets. So far there have been six different applications for disclosure and previous orders lead to further trails of enquiry. The court was told that the next part of the process is to attempt to obtain disclosure in Russia and Hong Kong from exchanges in that jurisdiction.

The public examination of Damian Carreras took place via video link on Friday 21st July. Mr Carreras initially refused to answer questions without legal counsel present and assured the court he would be adequately prepared by September. Pusine Judge Liam Yeats rejected his application on the basis that he previously had sufficient time to appoint counsel, given that the matter had been ongoing for months, and had failed to do so.

Daniel Feetham KC, proceeded to question Damian Carreras.

Damian Carreras disclosed that approximately £26m of investor money had been received by him. Firstly, investor money would be transferred into the main Globix funding wallet at Binance which was in his name and then from there to the Globix cash wallet under the name of Ms Babenko. Ms Babenko is the wife of Mr Sidirov, Mr Carreras’ business partner. Mr Carreras claimed he had never spoken to Ms Babenko and only transferred the currency to her because he was asked by Mr Sidirov. Next, Mr Carreras and Mr Sidorov would then communicate via Telegram, where Mr Carreras would instruct Mr Sidorov on who invested what and what amounts together with details of where the investor wanted to invest their money/currency. No record is said to have been kept of these transactions outside the Globix system which Mr Carreras claims was stolen from them by a Ukrainian company called Media Planeta. The Telegram messages between Mr Carreras and Mr Sidirov were also said to have been 'lost', as it is alleged that they were deleted during a kidnapping, where Mr Sidirov was held in an alleged bid to obtain control over the Globix cash wallets. Mr Carreras has gone on to say during his public examination that as a result of the kidnappers deleting the messages on Mr Sidirov's phone, the messages were also removed from his phone. Mr Carreras also sold the android mobile phone via a Spanish online marketplace app called "Wallapop" and therefore no longer has access to the device. All of this is being investigated by the liquidators.

Overall, both Mr Carreras and Mr Sidorov have told the Court that Globix was never a pozi scheme, but a legitimate investment trading platform.

Counsel, Daniel Feetham KC and Darren Martinez, are in close contact with lawyers in Madrid and Moscow in order to open proceedings in Spain and Russia.

The public examination of Pavel Sidorov and Alla Babenko has been adjourned to the 5th October 2023, where the couple are due to be interviewed in court on their involvement in Globix.