This December is the anniversary of Migom Bank losing its network of correspondent banks, its ill-fated investment in Baltic International Bank following a raid by Latvian authorities, and since the management of the bank effectively stopped communicating with their clients.
A lot has been written about the neobank’s fall from grace, so why is there still interest in the saga of this once promising new financial institution? Despite the relatively high level of attention this story received, the conclusion has yet to arrive. In fact, Migom appears to be resurrecting itself.
A couple of months ago, reports surfaced that a group of investors, including the founders of the bank, had made an earnest bid to retake control of the bank’s holding company, recapitalize the bank, and resume its operations. Representatives of these investors have shared what they know about the current state of that transaction.
De jure, it appears that bank president Thomas Schaetti has already been ousted as the controlling shareholder of the Austrian holding company, which dictates the management, policies, and procedures downstream to the American holding company, which ultimately controls the bank.
Schaetti’s ejection happened sometime in November and should have started the contemplated reforms of the bank, including resumed operations. The incoming investors have been prepared to deploy their own assets in Migom Bank, ensure seamless customer service, and resume the bank’s licensed crypto operations.
De facto, Schaetti still seems to be in control of the holding companies and the bank itself, and has been obstructing the completion of the share transfers to the bank’s new owners.
Reports indicate he is delaying the requisite recordings in the Austrian Commercial Register, withholding transfer of the information required to access the bank’s accounts, and effectively ceasing communication with the bank’s regulators in Dominica. Furthermore, it appears that Schaetti had even made an attempt to disband the staff of the bank in Dominica and close its offices there.
His reasons for these reported blockages remain a mystery. Is it because of the impending audit by the new investors and resumption of reporting to the US SEC, which Shaetti had stopped since the fourth quarter of 2022? Is that because December is around the time when the bank’s license is supposed to expire and be renewed by the Dominica’s financial regulators? It is unclear who ultimately benefits from the bank failing to report its financials. Whomever it may be, it is likely the same people who would benefit from the bank finally losing its license and fading into a sea of lawsuits and investigations.
Luckily for the new investors and clients of the bank, Austrian law appears to have provisions giving the incoming shareholders the necessary tools to complete the transfer of shares regardless.
Even though it will likely result in Austrian courts’ involvement, there is a fair chance for the procedure to move forward without extensive litigation. Despite the persistent obstruction by Schaetti, the new investors are determined to complete the takeover and reform the bank. The Dominica financial regulators have expressed their full support of the proposed reforms and recapitalization.
Many are rooting for the resumed success of Migom Bank, especially clients who have yet to access their accounts. Time will tell if the bank can manage their ‘phoenix moment,’ but with the reported impending end of the crypto winter, clients needing a neobank will be many. Migom may once again become the success story it had been.
