A few days after the news about the company’s financial troubles surfaced, CoAssets, which operates its crowdfunding platform under the name CA Funding Pte Ltd (CAFPL), announced that it is officially shutting down CAFPL. “We regret to inform you that CA Funding Pte Ltd (CAFPL) is in the process of gradually winding down,” a note on CAFPL’s website states.
The note also indicates that CAFPL is a wholly owned subsidiary of CoAssets Limited and that only CAFPL is being regulated by the Monetary Authority of Singapore (MAS). There is nothing mentioned about CoAssets also ceasing operations. CoAssets’ official website, however, states that it is currently under maintenance.
Following the announcement, CA Funding said it will terminate the accounts of members who do not have outstanding investments with the company. Those with outstanding investments are instructed to contact the company through the telephone number 8182 2216 or via email at [email protected].
CoAssets investors, on the other hand, are advised to send an email to [email protected] or [email protected] to inquire about their investments in the form of promissory notes.
The root of the problem
CoAssets, a crowdfunding platform turned debt financing company in Singapore, was reportedly in deep trouble after it was revealed that it transferred $30 million of its debt financing to an obscure debt recovery firm Sunfits. A company without an official website or social media presence, Sunfits apparently deemed the transferred receivables unrecoverable.
In a note to investors, Sunfits said that it could no longer collect the debt ($30 million) because of the lack of visibility on any of the collectible assets. Sunfits communicated with Business Times via email, after which the latter reported that Sunfits already considers CA Funding “currently non-operational and insolvent.” Sunfits also reportedly wrote that recovering the loans was already “extremely challenging.”
The debt transfer by CoAssets to Sunfits is viewed as a violation of MAS regulations. The Monetary Authority of Singapore said that it will review the transaction and will take appropriate actions in due time. Singapore’s financial regulator is unable to divulge more details as it is bound to not disclose its dealings with the institutions under its regulatory authority.
After learning about these developments, several of CoAssets’ investors filed police reports against the company’s Co-Founders Getty Goh and Seh Huan Kiat. Singapore’s police refused to verify if their Commercial Affairs Department will be handling the matter, but they confirmed that police reports were indeed filed.
What happens to CoAssets?
It is unclear if CoAssets will continue existing in its current setup and nature. CoAssets Chief Executive Officer Getty Goh wrote in a now deleted Facebook post that he already stepped down as group CEO at the start of 2021. However, he said that he continued to be the CEO of CA Funding before it was officially announced that the CoAssets subsidiary was winding down.
Denka Wee, Director of real estate brokerage company DWG, reportedly took over the chairmanship and Chief Executive Officer posts of CoAssets.
As reported by Business Times, there was a previous plan for DWG to take over CoAssets and provide investors with exit options. Unfortunately, the proposed deal failed to materialize.
CoAssets was founded as a crowdfunding site for real estate projects more than seven years ago. It eventually ventured into different business models, which led it to establish subsidiaries and issue loans referred to as “promissory notes to investors.”
These promissory notes are technically debt instruments that enabled CoAssets to secure financing from nontraditional sources. These debt instruments entailed higher risks and were typically offered to corporate investors.
Many of the promissory notes were set to mature in 2020, when COVID-19 disastrously disrupted Singapore’s economy. However, Getty Goh managed to convince investors to stay on board after revealing CoAssets’ potential merger with DWG.
However, DWG said that it was backing out of the planned merger (with DWG as the surviving entity). The company said it found suspicious transactions, irregularities, and misinformation after scrutinizing CoAssets’ financial records and other documents.
Former CoAssets Chief Operating Officer Lawrence Lim also said that there were transparency issues with the promissory notes issued by the company. He said the funds secured through these debt instruments were mostly diverted to one company that invested in tech startups and film projects, but failed to provide adequate details on what happened to the investments.
CoAssets is now facing a flurry of lawsuits. Aside from the disgruntled investors, Sunfits and DWG are said to be considering legal action against the company.
CoAssets has already applied to delist from the Australian Securities Exchange, pointing out its low trading volume of low number of shareholders as reasons. The company’s revenue dropped by 250 percent for the fiscal year ending June 30, 2020. It has also reported asset impairments worth $13.3 million.
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