High Court winds up firm as investor (81) believes he was victim of ‘elaborate sting’

The High Court has appointed liquidators to an Irish-registered firm following a petition from an 81-year-old man who claims he invested $325,000 (€299,000) in what he thought was a cryptocurrency.

Retiree Gerald Stitt, who lives in Langley, Canada, said there had been no response to his letters of demand for the return of his investment, transferred through bitcoin, in Redline Arrow Limited, trading as Crystalead, and he now believes he was the victim of an “elaborate sting”.

In a sworn statement to the court, he alleged he pursued a winding up of Redline in the Irish High Court as he came under mounting financial pressure and came across “hundreds” of the firm’s alleged clients who claimed they had suffered losses.

By pursuing the liquidation, Mr Stitt said, he was “fully aware” he might not personally recover any money due to him. However, he claimed, the firm’s sole director and shareholder, Cyprus-based Eleftheria Pericleous, is not prepared to engage with him or to take steps to regulate Redline’s affairs.

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Mr Stitt’s counsel, Stephen Walsh, submitted to the court this week that Redline, which was incorporated in 2020, is unable to pay its debts as they fall due and it is just and equitable to wind it up.

The petition was served on the company at its registered offices at Penrose 1, Penrose Dock, Cork, although it does not appear it is functioning from there.

There was no appearance in court by representatives of the firm.

Mr Justice Conor Dignam was satisfied, principally due to the demand letter, that the company is unable to pay its debts. It was appropriate to make an order for its winding up, he said.

He appointed joint liquidators to the firm.

Mr Stitt alleged he was influenced to invest in digital currency after watching videos of prominent Canadians, allegedly including prime minister Justin Trudeau.

He claimed he submitted an application in November 2020 to BitcoinUp and within a day received a phone call from London. There was no mention that he was now dealing with Crystalead, which accepted payment only in bitcoin, he alleged.

He said an account representative for the firm showed him how to circumvent the banks’ efforts to discourage cryptocurrency investment.

Mr Stitt claimed he received calls daily, with some conversations lasting more than half an hour. One call, in which a representative referred to paperwork regarding sending Mr Trudeau $100,000, had a “huge impact” on him, “as I took it as verification that Justin Trudeau was involved”.

Mr Stitt said he negotiated an agreement that he could withdraw money monthly and made an initial investment of $325,000 in January 2021.

Under the agreement, he said, he was to be paid a return by reference to the number of leads and clicks generated by an advertising campaign that customers were required to post to the Crystalead website. By his calculations, he should have earned $224,000 in bonuses and $597,000 in commission for clicks and for his work on selecting elements of the ads.

Mr Stitt claimed there were various factors putting his mind at ease, but he was later encouraged to use his credit card for a further investment he was assured “could not lose”. By that stage he had reached his credit card limit and lost access to a large portion of his monthly living expenses, he said.

Mr Stitt alleged the company failed to honour seven separate withdrawal requests he made between February and July 2021.

He claimed he issued a formal demand for payment of the entire sum due in August 2021 and engaged Irish lawyers Mason Hayes & Curran to pursue the matter and issue a second formal letter of demand for payment of $1.14 million.

He later discovered the company’s website no longer operated and there was a message indicating it was ceasing operations in November 2021 due to the impact of the pandemic, he claimed.

Mr Stitt alleged representatives of the company sought to pressure him into settling his claim for $28,000 but he refused.

“It was becoming abundantly clear that I had very likely been a victim of an elaborate sting,” he said.

Mounting financial pressure caused him “considerable personal upset and distress” and caused him to put a mortgage on his family home, he said. In those circumstances, he believed he should pursue the company’s winding up so the individuals behind it can be thoroughly investigated and pursued if possible.