Avoiding Lawsuits and Fraud Via Potentially Rigged Assets, Manipulated Stock, Scams and/or Inflated Asset Values

On 09/25/2020


International Liquidity Partners, LLC (Nevis) announces that it is not able to structure deals for all publicly traded assets. ILP avoids a 100% loss on a potentially rigged asset or manipulated stock. How ILP avoids scams and/or inflated asset values. An overview of how the process works for both sides of a transaction.


While ILP strives to provide clients with the liquidity they seek, over a reasonable time period with beneficial terms, it is not always the case that a deal can be structured. A very good example occurred in October 2019 when an independent agent for a large holder of 9AU.GR sought to structure a transaction. The agent was not an employee of 9AU.GR but we believe the agent had a previous business relationship with the potential client seeking to structure the transaction using his 9AU.GR holdings. ILP had no relationship to the agent. As with all ILP structured transactions, ILP signs fee agreements with the agent confirming we would transfer the origination fee from the client proceeds of any transaction to the agent. Agents are compensated by the client and not ILP. This is the same arrangement in any deal we structure. No commission is ever offered or paid.


When structuring a transaction, the most important thing for ILP to understand is the actual value of the asset being offered in the structure. In this case it was shares of 9AU.GR. The most basic step in determining intrinsic value is to look at the former and current share price. You must know where you have come from to at least start to understand where you are going. The share price of 9AU.GR back in October 2019 when ILP was approached about doing a deal was roughly $4.50 USD. The following dates and timeline can be viewed on the chart below.

It should be noted at the end of 2017 the stock price went from $0.30 USD to over $50.00 USD in a period of days and then crashed back down to $10.00 USD during the first half of 2018. By 2019 the shares were trading under $3.00 USD trending toward $1.00 USD in June 2019. From June 2019 to October 2019 the shares immediately jumped back to the $4.50 USD level (in a matter of days) where they traded during June, July, August, September and some of October 2019.

ILP was approached in September/October 2019 and the client wanted a USD valuation on the stock the client was willing to put into the structured product. The client wanted to use $4.50 USD per share as the valuation price. After reviewing the price movement describe above and the highly volatile bitcoin industry Uptech Ag operated in, ILP determined that the true value of the asset was only roughly $1.00 USD per share. This was a significant difference to the current share price at the time. Based on the legal agreements in place and the structuring documents legally executed, ILP had every right to structure a deal based on $1.00 USD per share.

Since ILP values its relationships with clients and strives to make all clients successfully achieve their financial goals, ILP approached the client and informed the client in order to do a deal ILP would not use $4.50 USD per share but rather $1.00 USD share. If the client wished to proceed, we would move forward but if they did not mutually agree, an agreement to terminate the deal minus the customary significant termination fees would be the outcome. There were minor third-party brokerage fees, associated with the client opening a brokerage account in the client’s name, that ILP could not waive but agreed to split such fees if the client did not approve of the valuation. ILP retained all rights as the client reviewed the very fair options presented.

Ultimately the client appreciated our analysis and approach but was not happy with the valuation and decided to not proceed. ILP agreed to not structure using the lower valuation, and the client was able to seek different alternatives for the client’s needs. As can sometimes be the case, the independent agent for the deal was not happy the deal fell apart. These agents, though they work for the clients, have no money at risk in deals, they have no asset at risk in these deals, and they are purely motivated by getting a deal closed. Such motivation sometimes works against both a client and ILP.

The agent’s view was he had spent a lot of time and energy and that ILP should have used the current market price of $4.50 USD per share and just structure the transaction. The agent had no fiduciary duty to the ILP capital at risk. All he wanted was his origination fee from the client which would be paid on a successful deal. The client in this case agreed with the agent and was hoping to use the $4.50 USD per share valuation to structure a deal and potentially leave ILP with large losses. The agent was very upset and did leave ILP threatening voicemails about flooding the internet with fake stories about how we do business. We understand people can get let down when deals don’t happen, but we must be true to our clients and ourselves. We are not sure if this agent is behind some of the recent fake news stories about ILP but ultimately it does not matter, reviewing the 9AU.GR situation is a great example for potential clients.

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What Is Securities-Based Lending?
Securities-based lending, or a stock loan, is the practice of using market investments such as stocks, ETF’s, warrants, bonds, or real estate investment trusts as collateral for a loan.
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