Start News Financial supervision Bafin stops dubious gold-covered cryptocurrency

Financial supervision Bafin stops dubious gold-covered cryptocurrency

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The entrepreneur Harald Seiz wanted to revolutionize the financial system with an allegedly gold-covered digital currency. Now the authorities intervene.

Stuttgart Rhythmic clapping, loud whistles, excited jokes. The audience is seething like a rock concert when Harald Seiz takes the stage. The 56-year-old stretches out his boxer chin, under his suit bulge muscles. Under the cheers of the crowd he announces the revolution of the financial world. He wanted to „make life better for all people“ with his gold-based payment system.

It is mid-September 2019. Seiz has invited the partners of his gold trading group Karatbars to the Beurs van Berlage, the former building of the Amsterdam Stock Exchange. Hundreds have arrived. They spent the past few years finding buyers for Seiz’s cryptocurrencies Karatgold Coin (KBC) and Karatbank Coin (KCB).

On stage, Idol distributes Rolex watches to the most diligent sales people. Seiz forms his arms as if he were holding a steering wheel. On the screen the price for the best of the best appears. Seiz shouts to the audience: „Here’s a Lamborghini!“

Just two months later, the mood in the Karatbars Group is cooling off considerably. Financial supervisor Bafin has ordered on Monday to „adjust and settle“ the issue of the KBC. Reason: The e-money business is operated in Germany „without permission“. According to company information, Seiz’s sales force had collected 100 million euros. Now all the money has to go back to the investors – and not just what’s left.

Seiz goes on a confrontation course. He will not follow the Bafin, he announces. „Nobody can reverse a KBC here.“ KBC has not sold German investors to investors, Seiz explains. The coins would have been added as a bonus to other karatbars products. The foreign countries do not concern the Bafin: „They can not decide on the whole world.“On Seiz, however, there are other problems waiting. According to information of the Handelsblatt, the public prosecutor investigates Stuttgart. She suspects Seiz among other things of fraud. The authority does not want to comment. Seiz says he knows nothing about the investigation: „I have a white waistcoat.“

It has happened again: Investors, in times of negative interest rates looking for high-yielding investment options, have invested their money in an area that is weakly regulated, but rich in scandals. In November 2018, a court ordered the dissolution of Envion AG. The backers of the company, which also issued a cryptocurrency, face claims for damages. A few weeks ago PIM Gold went bankrupt after a raid. The firm had lured investors into gold investments with interest.

Seiz has managed to combine gold and cryptocurrencies with his karatbars group. His KBC was supposed to be digital and universal, promising the security of gold at the same time. Now threatens an international financial scandal, the extent of which can not be foreseen. Official business figures have not existed since 2015. The Karatbars Group has 750,000 customers and intermediaries, their monthly sales should be 20 million euros, says Seiz.

His story begins in Calw, a county seat west of Stuttgart. Harald Seiz was born there in April 1963 in simple circumstances. The boy grows up with his mother and grandmother, both of whom are struggling with alcohol problems, as Seiz himself says. He suggests himself as a vacuum cleaner representative. Again and again he also comes into conflict with the law.

Then Seiz has a golden idea. In 2011, he founds the gold trader Karatbars and starts to sell gold bars in small denominations. Seiz builds a multi-level, commission-based distribution system. He invents fantasy bills called „cash gold“. In it, small gold platelets of 0.1 grams are woven.

The shops are running, but there are better ones. In 2017, Seiz can read in the newspaper every day how another idea of money conquers the world. The cryptocurrency Bitcoin, quoted at $ 800 in early 2017, is up to $ 20,000. It begins a mass imitation wave of new cryptocurrencies. In the spring of 2018 Seiz will be present with his karat gold coin (KBC).

He founds a foundation in the Caribbean state of Belize, she issues the coin. Seiz can claim to collect more than 40 million euros in two months. Because everything works so well on his first virtual try, Karatbars relinquishes in September 2018. KCB is the second art coin.

Seiz is about to create sales packages. They contain a few grams of gold in the form of greeting cards or „cash gold“ notes, brochures, stickers and discount cards, which can be used to recruit new sellers. The packages are called „Bronze“, „Silver“, „Gold“ and „VIP“. Anyone who participates receives the cryptocurrency as well.

According to sales documents, the 3,000-euro „VIP package“ KCBs are worth 4800 euros. That sounds like a good deal, but only if the KCB is really valuable. This can not be checked, because the new token is still not traded.

Luxury Life on Instagram

Seiz claims to have bought a „fully licensed bank“ in the US to make investors savory to the KCB. The financial house in Miami will be in the center of the Karatbars universe in the future. A white paper states: „The bank was purposely placed in one of the most regulated jurisdictions.“ Seiz himself says, „With this bank, we are the world’s first crypto bank.“ Gold is enough to defeat its digital currency available.

The bank in Miami bought a mine in Madagascar. An auditor’s report puts the value of the existing mineral resources at more than 900 million euros. Once funded, the gold is stored in a „security house“. It meets the same security standards as Fort Knox, the legendary gold store in the United States.

Seiz too, of course, is planning something legendary. His cryptocurrencies are to become a globally accepted means of payment. But until the time comes, the manager gets his salary in the usual currency. He earns 150,000 euros, says Seiz – a month.

On the photo platform Instagram, he presents what he makes of it. A picture shows him on the hood of a Lamborghini. Next to it, in the garage entrance of his villa, stands a Bentley. The property in Sindelfingen was already an issue in the local local newspaper. Recently it was for sale for ten million euros, now Seiz celebrates his birthday here.

The social media also uses karatbars for advertising. In April 2019 Seiz travels to Hong Kong with two of his business partners. In a Youtube video Seiz stands with Josip Heit and Alex Borga (name changed) in a vault with a thick reinforced door, behind which allegedly 1.4 tons of gold store.

The Croat Heit appears as „Chairman of the Board“ at Karatbars events. He is head of the Gold Standard Banking Corporation (GSB), headquartered in the Königsallee in Düsseldorf and likes to wear a 700,000 Euro watch. According to the commercial register, the GSB goes back to the company GCC Gazella Corporate AG, whose main asset seems to be a quarry in Croatia. Heit did not answer questions about his role in karatbars.

Number two at the GSB is Borga, a muscled Romanian. There are shots of the two in the private jet and half naked in the rooftop pool in Singapore, caption: „Brothers for Live“. In Romanian gossip Borga is because of a relationship with a TV star an ongoing theme. There you can also find photos showing Romanian milieus.

In May 2019, Seiz has suffered a first setback: The National Bank of Namibia prohibits karatbars as a „pyramid play“. The system is designed so that participants recruit new members and thus earn money, says a spokesman. Seiz claims that karatbars is not a „game of pyramids“, and renowned accountants have even confirmed this in a report. He promises to send the paper to the Handelsblatt, but remains guilty until Monday afternoon

Despite the setback, events will take place almost every month in 2019 in exotic locations. In March, the company will introduce a smartphone in Dubai, and in June, Seiz will promote its coins to over 4,000 sales staff in Cape Town. For the 4th of July the company boss announces an „Independence Day“. The owners of his virtual coins should be able to receive one gram of pure gold for 100 KBC. The value of the KBC rises to an all-time high of twelve US cents.

But the Independence Day fails. On July 4, only a few KBCs can be exchanged for tiny amounts of gold. The value of the KBC collapses by more than 80 percent. It is the turning point. From now on, nasty comments pile up on the internet. The crypto industry portal „Coindesk“ reports contradictions for the first time. It is known that the financial supervision in Florida against Karatbars determine because the alleged crypto bank in Miami have no license – which confirms the US authority and the Bafin the Handelsblatt.

If Seiz ‚Bank has no license, it is questionable whether his gold mine has any gold at all. In the whitepaper she is called „Fort Dauphin“. According to the specialist portal, there is a mine on the island of Fort Dauphin in Madagascar. There, however, the Rio Tinto Group is mining titanium and zircon. The report, which estimates the gold reserves at 900 million euros, raises questions.

The paper is similar to the word of the expertise of a Swiss author on the copper mine group Antofagasta. Apparently the mine names were exchanged. The author of the original says that she reported Harald Seiz and Karatbars because of the „unbelievable plagiarism“.

Seiz does not shy away from critical demands and invites the Handelsblatt to talk. He receives in a spacious office, whose decor could describe a design critic as Gelsenkirchen Baroque: Marble-effect floor, in a corner is the replica of a Greek statue, hanging on the wall portraits of Harald Seiz. For his defense speech, he takes a seat on a massive red leather chair.

„I do not do anything crooked or anything,“ he says. The many allegations, the crash of KBC – all this was the devil’s work of a former business partner, who is said to have organized the Karatbars ICOs technically, but then retired in the dispute. „He has his focus on destroying us.“ Seiz accuses the former partner to have embezzled up to ten million euros. He displayed it. The prosecutor investigates the ex-partner.

However, karatbars has so far been unsuccessful by civil law. A lawsuit for the release of allegedly deceived cryptocoins was legally rejected by the Mainz district court and the Higher Regional Court of Koblenz. The lawyer of ex-partner, criminal lawyer Michael Heuchemer, says, „These are all unsustainable claims.“

Fake report

The judges would have had no idea about coins, says Seiz. At the beginning of the two-hour conversation, he is energetic. Then he gets on the defensive. He has to admit that the Karatbars subsidiary in Florida, unlike claims, still has no banking license. He was in the communication probably a little hasty. „That it did not work out in this timeframe is just that, so I misjudged it.“

The report, which is to prove the value of the mine on Madagascar, is fake – Seiz now sees this for himself. But responsible for this is the ex-partner. The man rejects that.

Even without a report Seiz insists that his gold reserves are worth more than 900 million euros. He seems almost helpless when he is to prove the involvement in the mine in Madagascar. On a large flat screen he opens documents in French. It is an opinion on a claim.

There are 2.3 tonnes of gold in the ground suspected. Then he shows a „mining permit“ from the customs authorities of Madagascar, which includes ruby, sapphire and copper – but no gold. A proof of the existence of an active mine is neither.

Seiz stares at the monitor. He scrolls down, he scrolls up. Somewhere it must be said that there is a mine that belongs to him. Finally he says that he does not speak French at all. And yes, he never visited the mine in person. „I can not understand everything to the last.“ The purchase has been regulated by his partner Heit.

Trouble with the authorities, useless evidence, fake reports: Seiz keeps talking quietly. Nothing reminds of the whip from Amsterdam. When he drove his salespeople to peak performance, the authorities were long on his heels. His sales people knew nothing about it – and probably not the star guests of the event. Former Dutch wonder-winger Patrick Kluivert said: „Karatbars and Kryptocoin are the future!“

And the German record national player Lothar Matthäus brought the secret of a great success on the punkt.„The important thing is that you believe in it.“