The court action related to ASIC’s successful attempt to wind up the company – along with another iSignthis customer OT Markets. The regulator accused the two companies, and AGM Markets, of engaging in conduct that was “misleading or deceptive, and/or unconscionable”.
Queries by the ASX revealed that Ozifin and OT Markets accounted for more than one-quarter of the revenue iSignthis generated during the June 2018 half year which triggered the release of hundreds of millions of dollars worth of shares to iSignthis insiders.
The controversial billion-dollar tech stock remains suspended from trading while the market operator’s enquiries continue.
iSignthis markets itself as a provider of automated payment verification services to clients such as contracts for difference providers and forex dealers so they can meet “know your client” requirements under anti-money laundering regulations.
iSignthis has not been implicated in ASIC’s attempt to wind up its two former clients.
In its submission to the court, Ozifin’s liquidators – lead by Richard Albarran – conceded to “many of the allegations” of misleading or deceptive and unconscionable conduct by ASIC.
The liquidators also stated they believe Ozifin, which traded under the name Trader Q, is insolvent.
The document reveals the tight links between Ozifin, OT Markets and AGM Markets with ASIC alleging that “Ozifin dealt in derivatives and provided financial product advice to retail customers in Australia on behalf of AGM”.
It was necessary for the client’s position to move adversely to the client in order for Ozifin to generate revenue.
It also reports that money paid to Ozifin was then “paid to accounts maintained by AGM” which provided Ozifin’s training and compliance.
ASIC claimed the account managers, who used “stage names” in their dealings with clients, “were in direct conflict with clients,” and said Ozifin clients lost more than $11 million from October 2017 onwards.
ASIC commenced legal action to wind up Ozifin, AGM Markets and OT Markets in February 2018.
In April that year, AGM Markets – which owned the Australian Financial Services Licence (AFSL) under which Ozifin and OT Markets traded – terminated its agreement with the two companies. It effectively put them out of business.
Two Israelis who were found to be the “controlling minds” behind AGM Markets, Yakov Cohen, 27 and Yosef Herzog, 54 have each been charged with one count of conspiracy to commit fraud and three counts of wire fraud by the US Justice Department in relation to online trading scams allegedly run by Israeli-based company Yukom.
According to ASIC submissions to the court to shut down AGM, OziFin and OT Markets, the three companies “transferred large sums of money from bank accounts in Australia to companies and people overseas.”
This included companies associated with Mr Cohen and Mr Herzog.
Colin Kruger is a business reporter. He joined the Sydney Morning Herald in 1999 as its technology editor. Other roles have included the Herald’s deputy business editor and online business editor.