Migom Bank came into the fintech sector with a lot of promise. It introduced a neobanking concept that served the underbanked population. The bank provided remote access to financial services without needing a brick-and-mortar banking infrastructure: it has almost become a norm today but was a rather revolutionary concept during Covid. Migom also offered a decentralized model with low fees, which skyrocketed the bank's valuation to over $750 million in a short time. 

Despite a promising start, the bank's reputation took a deep plunge almost overnight, as customers were blocked from accessing their funds. Soon came the speculations of the bank not having enough funds to support its customers. Ultimately, the speculations turned out to be true when Migom Bank stopped its operations in early 2023. 

This led to one of the most complex sagas in recent fintech history, filled with legal battles, investor despair, and financial mysteries. So, what's Migom Bank's current status? Are investors close to being reimbursed? And what's the legal outcome? To answer these questions, we launched an investigation into this story, reaching out to the bank's clients, stakeholders, accountants, lawyers, and Dominican regulators. 

CEO's Obsession and Legal Troubles

At the heart of Migom Bank's complex journey is a legal battle centered around the bank's governance and future direction. Thomas Schaetti has been the bank's President and CEO since its inception and currently stands in a challenging standoff over leadership control. 

Schaetti seems determined to hold onto control, which is evident in his exhaustive efforts to block the legitimate transfer of shares to incoming investors. There have been instances of Schaetti making unsolicited prank calls and leveling threats against attorneys representing the new investors. These actions raise critical questions about his motivations and the lengths he will go to to maintain his position.

The legal dilemma has found its way to the Austrian courts, placing the future of Migom Bank in the hands of a judicial system known for its unpredictability. Some stakeholders are expecting a swift resolution, but the reality is that Austria's legal system has a massive backlog of pending cases. This means that Migom Bank's legal resolution could take a long time. 

Schaetti's actions outside the courtroom further complicate the situation. He has been accused of fabricating police reports and authoring negative articles online aimed at discrediting the new investors who are poised to take control of the bank. One article made a controversial claim that one of Migom Bank's original founders allegedly transferred EUR 120 million from the bank's assets to an external crypto wallet. However, this allegation lacks any real evidence, and Schaetti's credibility is also questionable. 

Misleading Balance Sheets and Financial Inconsistencies

A deeper dive into Migom Bank's financial health reveals a scenario far from the robust image it once portrayed. Documents filed with the U.S. Securities and Exchange Commission (SEC) indicated that Migom Bank's assets stood at approximately EUR 20 million by the end of 2022. However, financial statements submitted to Dominican regulators, where the bank is licensed, showed its assets to be even less. This raises major concerns about the bank's financial reporting, alleging that it could potentially have been misleading its shareholders and customers. 

Most importantly, if the bank's assets were EUR 20 million or less, where did the EUR 120 million that Schaetti claimed were transferred out of the bank come from? All of these discrepancies point to the fact that a considerable portion of the bank's funds may have been illicitly diverted. Schaetti reportedly had exclusive access to the bank's custody accounts. 

So, could he be the one draining large amounts of customer funds from the bank and then attempting to shift the blame to other founders? According to our investigation, this is highly likely, as we've seen evidence of large inflows to another company in Luxembourg, which is solely owned by Thomas Schaetti. 

What's Happening with the Clients and Shareholders?

Clients and shareholders are understandably frustrated. Customers who once trusted the bank with their savings are now considering the reality that they might never recover their funds. Many have turned to Dominica's legal system, seeking ways to get their money back.

On the other hand, shareholders are coming to terms with the reality that their investments might be worth much less than expected. The bank's stock, which once traded at higher than $100, is now at risk of becoming worthless. In response, more than sixty shareholders are considering legal action. They are talking to lawyers about starting a class action lawsuit in the United States. Their goals are clear: they want transparency, accountability from the bank's management, and compensation for their losses.

What's Next for Migom Bank?

The future of Migom Bank remains unclear, and there are several factors that can affect it. First, the outcome of the legal battles in Austria is very important. Investigation is still ongoing; it will reveal the bank's ability to operate and how much trust it can regain from the public and regulators.

Regulatory decisions in Dominica and the United States will also play a big role. The SEC and FINRA's decisions on whether Migom Bank can keep trading publicly will be very important. 

While we were preparing to publish this article, Dominica's regulators seem to have run out of patience. A regulatory decree ousted Thomas Schaetti from Migom Bank's management, appointing an independent team to lead the bank through its insolvency proceedings.

The new administrators include independent lawyers, and auditors from London, UK. They seem to have a wealth of experience in notable bankruptcy cases. Hopefully, they will be able to provide some much-needed clarity in Migom Bank's current situation. Official announcements are expected shortly, according to our sources.