Cryptocurrency trader comes out swinging
East London businessman questions roles of key individuals around beleaguered trust
After months of silence Richard Rawlins, who faces legal attacks on his professional integrity over cryptocurrency dealings through his family trust, has come out fighting, calling into question the roles of key individuals in seeking the trust s liquidation.
He also stated that the trust had been solvent as at August 27 2020, based on an audit report he had commissioned.
In an affidavit submitted to the East London high court to oppose the liquidation of the trust, Rawlins places the spotlight on the actions of independent trustee Gary Klinkradt, liquidation applicant Russel Linde and East London attorney Angus Pringle.
In his affidavit, Rawlins: Holds Klinkradt responsible for reckless trades that led to losses totalling about R18m after the independent trustee demanded control of the cryptocurrency account codes from Rawlins;
● Formally exposes Linde as the trust s attorney who drafted documents and provided advice until days before the liquidation proceedings;
● Says Pringle sat in on an August 28 2020 meeting at the offices of Drake Flemmer and Orsmond where the Rawlins couple was allegedly bullied into signing a letter stating the trust was insolvent.
Rawlins lists various disclaimers in the trust s agreement with investors, including reference to the risks associated with cryptocurrency investments and a clause indemnifying the trust against any losses.
He said Linde s claim was not covered by the Insolvency Act, as he was not a creditor.
Financial statements drafted by JS Jacobs & Associates Accountants show that the trust was solvent as at August 27 2020, with assets of R137.61m and liabilities of R138.62m.
The asset value then did not include a sum of R4.92m in the (Naspers-backed cryptocurrency exchange) Luno account which could not be verified and had also been compiled after the alleged losses which occurred after Klinkradt took control of the cryptocurrency codes.
The accountants confirm in the statements attached to Rawlins s affidavit that a group of investors had agreed to subordinate their claims totalling R29.87m in favour of other investors or creditors, until the trust s assets exceeded its liabilities.
Rawlins states in his affidavit that there were 991 trust investors in total. The Dispatch understands from a source that at least 100 investor agreements underpin the subordination commitment aimed at ensuring the trust s investment business can continue.
Other sources indicated that of about 386 investors surveyed by a few key Gauteng-based investors, 96% support the move to oppose the liquidation process.
Some investors have consistently said they feared receiving only a fraction of their investment if the liquidation goes ahead.
One investor reiterated on Monday that for the trust to continue doing business, investors needed guarantees that their investments would be “traded in a responsible and secure way ”.
Rawlins said Klinkradt lost his independence when he made an investment into the Rawlins Trust through the Klinkradt family trust.
He said Klinkradt and Linde orchestrated events preceding the liquidation application, including an audit of the crypto exchange, and the withdrawal of most of the funds invested by them and their families, except R500,000 invested by Linde.
It was clear they were not “acting in the best interests of socalled investors, but that they were acting in their own best interests.
On August 27, Klinkradt took control of the Binance Exchange, Luno Wallet and bank accounts.
Rawlins said he was effectively prevented from accessing the funds but recorded the balances in the respective accounts as R115.54m in the Binance Exchange, R5.11m in the Luno Exchange wallet, and a combined R5m in two Standard Bank accounts.
Within 15 minutes, a loss of R13.5m was incurred, allegedly through trade activity by people acting on Klinkradt s instructions.
After the balance of R115,542,000 was handed over to [Klinkradt], there was a balance of R102m within 15 minutes.”
An independent auditor had subsequently established the trust had crypto assets valued at R97.63m, indicating a further loss of R4.36m while Klinkradt controlled the investment, Rawlins said.
Rawlins said the auditor had been unable to verify the information provided by the provisional liquidators against the cryptocurrency exchange.
Simultaneously with Klinkradt laying claim to the trading codes, his associates Wade Young and Kevin Warkus illegally seized various electronic “” devices and trading computers belonging to the trust from Rawlins s home.
Rawlins makes wide-ranging claims against Linde, whom he says was closely involved in providing legal counsel to the trustees before he brought the liquidation application, ostensibly as a businessman and investor.
Linde describes himself as a businessman, whereas in reality he is a practising attorney who gave advice to the Rawlins
"Trust and to me in my personal capacity ”.
This advice was inter alia in regard to the memorandum of agreement which was signed by investors except, ironically, by Linde in respect of his own investments in the trust.
There is a clear conflict of interest in Linde bringing the liquidation application, Rawlins said.
After the balance of R115.542m was handed over to [Klinkradt], there was a balance of R102m within 15 minutes
It was clear they were not acting in the best interests of so-called investors