Gigabyte Investments crypto currency faces liquidation amid major shareholder row

A liquidator has been appointed to wind up the firm and a report has been made to An Garda Síochána.

A total of 25 investors had put €930,000 into the firm, with one understood to be in danger of losing their entire pension in the collapse.

Managing partner Louis Curran claimed in an email last week to investors that “we were informed by James Kelly that everything was lost, we were told the losses were the direct result of ‘unauthorised leveraged trades’.”

‘I deeply regret the loss of investors’ money’

In response, the Kelly family issued a statement to the Sunday Independentsaying the allegation was “completely false”.

“James was the founder and director of Gigabyte Investments Ltd and was therefore fully authorised to carry out crypto currency and associated derivative trades,” said Kelly’s father Simon, Gigabyte’s company secretary.

“I deeply regret the loss of investors’ money,” said James Kelly, adding that the culture in the company had become “toxic” with stress as the crypto market collapsed in 2022.

Investors said they had received regular updates from the firm to show the fund was up as much as 40pc. But on Friday, March 24, it came to light that just €80,000 was left in the firm’s bank account. Over that weekend a potential recapitalisation was discussed but talks broke down.

Curran, a foreign exchange trader with more than 25 years’ experience at major financial Institutions, including JP Morgan, Citi and Merrill Lynch, emailed the investors the following Monday: “I am writing to bring you some very troubling and difficult news…with immediate effect, Gigabyte Investment Company has ceased all market operations.

“Within the last 48 hours, it has come to our attention that one of my colleagues has, for some time, and entirely unknown to ourselves, engaged in a series of unauthorised transactions which has caused the company significant if not catastrophic losses,” he wrote.

Curran alleged that there “appears to have been false reporting of client positions and profits” that had been “ongoing over a number of months”.

He and the firm’s third shareholder, Sam Molloy, had informed the Garda National Economic Crime Bureau and a Garda spokesperson confirmed the matter “is currently under assessment”.

In a follow-up email last week, Curran told investors there was “an agreement that James’s role was only to implement trades that I directed”. But documents he had seen suggested “your funds were leveraged as much as 20x”, he wrote.

“We were always clear, both in person and on any written communication that we took ‘no leverage, no shorts’,” said Curran.

But the Kellys responded that “as sole director of the company, James was the highest officer in the company. He is also the largest shareholder” and that his authority to trade – including in futures contracts – was “clearly established” in company documents.

Gigabyte was founded by Kelly in 2021 with school friend and fellow UCD graduate Sam Molloy. Both were 21 at the time and crypto enthusiasts. Within a year they had posted returns of 1,500pc.

‘We were told they were always long on the market, never short’

They opened a trading floor in Sandyford, south Dublin, and teamed up with Curran, who became managing partner and took a 25pc stake. New investors also came on board, including former Wealth Options directors Éanna McCloskey and Brian Flynn. Earlier this year, the firm was valued at €3.5m by external advisers, claimed Kelly.

It sought to raise seed capital to register as an AIFM (Alternative Investment Fund Manager) in the Cayman Islands on a hedge fund platform, he said.

After the loss of capital was revealed, there were “exploratory discussions” to recapitalise but these collapsed, he said. The family saw no option but to have a liquidator appointed. Creditors intervened and had another liquidator, Joseph Walsh of JW Accountants, appointed instead.

One investor who has lost a substantial sum told the Sunday Independent that he had invested because he “believed in the future of digital assets and had been looking for an Irish company in the space”.

He had been sent regular reports showing his investment consistently up at least 30pc despite volatility in the market: “They would share trades in real time on a WhatsApp group. We were told they were always long on the market, never short, but that they got in and out of trades quickly.”

‘This has ripped apart my family’s future’

Even after the collapse of both FTX and Silicon Valley Bank, Gigabyte continued to report it was up over 30pc, he said. So when he received the email about “catastrophic” losses, the investor said he was “shocked and devastated”.

“This has ripped apart my family’s future,” he said. “When you make an investment like this you put your faith in the people and the systems. If you lose money because Bitcoin fell, you just have to take it on the chin. But if it comes to light our money was leveraged 20x, as has been alleged, well that was never part of what I believed I was investing in.”

According to the Kellys, company documents “shared with all investors and advisers clearly authorises the company to trade long and short positions” in crypto. “All investors were required to sign the client contract,” they said. A risk statement highlighted the “incredibly volatile” nature of crypto and said “loss of investment is a possibility”.