Canadian company at the centre of alleged international pyramid scheme: authorities

Editor’s note: This story is a collaboration between the Investigative Journalism Foundation (IJF) and CTV News.

A Canadian company is at the centre of an alleged pyramid scheme that foreign officials say stole more than US$2 billion from hundreds of thousands of people in Sri Lanka and Bangladesh, according to authorities in those countries.

Metaverse Foreign Exchange Group Inc., also known as MTFE, pitched itself as a reputable online trading platform. The company is federally incorporated in Markham, Ont., has a Canadian director and is even registered with Canada’s money laundering watchdog.

But in August 2023 the platform stopped working and investors’ money disappeared, according to court documents filed in Sri Lanka. Sri Lanka’s central bank has since described MTFE as a pyramid scheme.

Bangladeshi police have said as many as half a million residents lost money on MTFE, according to local media reports.

Now, an investigation from the Investigative Journalism Foundation and CTV News shines new light on how Canadian shell companies and registries were used to pull off the scheme.

The investigation — based on dozens of corporate filings, interviews with experts and both domestic and international court records — found MTFE was part of a network of dozens of Canadian shell companies peddling similar cryptocurrency investment schemes.

Most of those companies had foreign directors, and experts interviewed for this story suspect some used fake identities.

Efforts to locate MTFE’s sole Canadian director, Randy Mathieu Lane, who had a listed address in Richmond, B.C., were unsuccessful.

Corporate records show Lane is a listed director of six Canadian companies including MTFE, all offering cryptocurrency or other financial services. In five of those registrations, including the one for MTFE, the other listed director had an address in China .

Four of Lane’s companies were dissolved by Canadian officials for non-compliance in May, shortly after the IJF and CTV News contacted the federal department that runs the corporate registry seeking comment for this story.

Agencies including the RCMP, the Ministry of Finance and the Ontario Securities Commission would not answer direct questions about MTFE or whether Canadian officials are investigating MTFE.

But experts interviewed for this story, including former law enforcement and intelligence officials, say the investigation highlights gaps in Canada’s enforcement that have made the country a waystation for financial crime.

“We’ve become such a weak link in the financial crime arena that we’re attracting all the business,” said Garry Clement, a former RCMP officer who investigated financial crime. “Because they know that virtually nothing is going to happen to them.”

Behind MTFE

Arif, a 22-year-old in Dhaka, Bangladesh, made his first investment on Metaverse Foreign Exchange in January 2023.

MTFE’s website claimed to use artificial intelligence to trade foreign currencies on behalf of users, offering steady, gradual gains with little effort and low risk.

Arif was skeptical, but trusted MTFE because it was a Canadian company.

“I thought that Canada should have strict regulations and that it should have good regulations around setting up a company and doing trading,” said Arif, who asked his full name not be used.

By August 2023, Arif had invested the equivalent of about US$3,400. Most of that was money he borrowed from his parents.

“I assured them that there was no risk, so we can get them the money back,” said Arif. “And it didn’t work out.”

That month, MTFE’s website went down. Investors could no longer withdraw their money. And then, it was gone.

Bangladesh’s Criminal Investigation Department — which didn’t respond to repeated requests for comment — told local media as many as 500,000 people in the country may have lost money.

Bangladeshi police have estimated investors lost the equivalent of US$1.7 billion, according to the Dhaka Tribune. In Sri Lanka, the Sunday Times quoted said the equivalent of US$1 billion was stolen from investors there, citing the country’s central bank. The bank declined to comment for this story, citing the ongoing investigation.

To sign up, users had to purchase and send cryptocurrency to one of various digital wallets used by MTFE.

A sleek app would then show users the state of their “investments,” including daily returns and losses. Initially, users could even withdraw money, which made them more inclined to trust it.

Many, like Arif, heard about the company through a friend. That was no coincidence. MTFE offered financial incentives to users who recruited more investors, something Arif now recognizes as a hallmark of a pyramid scheme.

Court records in Sri Lanka suggest MTFE also benefited from local partners who promoted the platform in exchange for a share of the profits.

In August 2023 — shortly before the scheme collapsed — Sri Lanka’s central bank began an investigation into local companies set up to promote MTFE.

Sri Lankan authorities arrested three individuals in 2024 on charges of money laundering related to their role in the alleged pyramid scheme. Proceedings are set to resume this September.

The bank – which declined to comment on the investigation – has also banned 10 other individuals it suspects of being involved with the scheme from leaving the country since August 2023. It has also obtained orders freezing the movement of funds from 29 cryptocurrency wallets, which the bank said contained the equivalent of about US$900,000.

In court filings, investigators claim the local promoter groups received between 60 and 70 per cent of investments made by MTFE users.

The rest, investigators said, was kicked up to the “parent company” in Canada in the form of a “service fee.”

Investigators did not know who was behind that “parent company,” or how local promoters contacted them. The records say there “is no information available about any organization running this computer software service or the individuals responsible for creating or hosting the service.”

But court records say the arrested suspects testified they would receive the equivalent of US$4,000 in cryptocurrency and a US$500 monthly allowance if they personally recruited 100 people onto the service.

Those groups eventually became very large. Investigators claimed one of them had 42 sub-branches throughout the island. One became large enough that it sponsored a local cricket team, the Jaffna Kings. Another promotional group even hosted a concert, the court documents said.

Investigators said MTFE software that investors like Arif had used did not seem to work and had been “inactive since the beginning of this inquiry.”

Many transactions with MTFE happened via Binance, a Canadian cryptocurrency exchange.

In a statement, Binance spokesperson Carolina Matos said the company “was made aware of the MTFE scam by one of our trusted law enforcement partners” in August 2023. She said Binance was “unable to provide details of the case due to ongoing investigations.”

Matos said MTFE was also active in Pakistan and Nigeria. She noted the company had curated a strong online presence and even successfully registered for the Apple mobile app store.

“This showcases how well-crafted schemes can appear legitimate on the surface while deceiving both seasoned and novice investors alike,” Matos said.

Nauriin Ahmed, a Dhaka-based lawyer specializing in technology, says Bangladeshi residents have been repeatedly targeted by such schemes.

The country’s restrictive securities trading regime means Bangladeshis have relatively few legitimate ways to invest.

A screen capture of what MTFE’s website looked like in March 2022

‘I … thought I wouldn’t fall for a scam like this’

While buying cryptocurrency in Bangladesh is easily done, it can also be considered a crime — one of the reasons why Arif asked not to be named for this story.

“These victims, at least within Bangladesh — they don’t have any sort of recourse,” Ahmed said.

Canadian officials knew about MTFE. The Ontario Securities Commission issued a brief statement in July 2023 warning that MTFE was not registered in the business of trading securities .

Andy McNair-West, a spokesman for the OSC, said they issued that statement after receiving calls about the company’s registration status. He did not answer questions about whether the commission contacted officials in Bangladesh or other affected countries, or if the OSC was investigating MTFE.

Canada’s federal corporate registry says MTFE is still active, though it has since been found non-compliant and is in the process of being dissolved.

Ahmed wishes the OSC’s warning had reached more investors.

“I think if OSC had reached out to the Bangladesh central bank to put out a circular saying this is not a legitimate organization … that would have helped,” Ahmed said.

If the scale of the alleged fraud was massive, so was its human impact.

Arif blamed himself for losing his family’s life savings. He worried his parents would kick him out of their house. At his darkest moments, he says he called suicide prevention hotlines for help.

Arif begged his parents to forgive him, and they did. But he still blames himself.

“I consider myself an educated individual and thought I wouldn’t fall for a scam like this,” Arif said.

The Canadian shell companies

Ahmed said the key to MTFE’s success was its Canadian credentials.

But on closer inspection, those credentials raise more questions about MTFE — and how it was able to operate in Canada in the first place.

MTFE’s corporate address was 500-7030 Woodbine Avenue in Markham, Ont., on the fifth floor of an office tower.

At one time, this one office unit in Markham was home to 97 different money services companies, including 95 registered foreign currency exchanges .

But there’s little evidence any of them ever did business there — or that they were even actual tenants.

A screengrab from hidden camera footage shows Adrian Ghobrial at MTFE’s corporate address in Markham, Ont., speaking with a manager at the shared office space who said ‘it’s hard to keep track of all the companies using our address’ (CTV News)

A manager at the shared office space, whose name we’re keeping confidential, told CTV News, “it’s hard to keep track of all the companies using our address.”

The shared office space has about 650 clients registered at its Markham location. The manager told CTV News that “90% of (our clients) are good legitimate businesses, there’s 10% of that group that are not, and once we find out we shut them down, we stop accepting mail on their behalf and we close out their account.”

Joseph Iuso, the executive director of the Canadian Money Services Businesses Association, says such “clusters” of money services businesses are often a sign of fraud.

Money services businesses (MSBs) are a type of business that offers financial services like wire transfers, cryptocurrency exchange or foreign currency exchange. Most are legitimate, but they are considered high-risk for money laundering, which is why they must register with the Financial Transactions and Reports Analysis Centre of Canada, or Fintrac, Canada’s financial intelligence unit .

Joseph Iuso, executive director of the Canadian Money Service Business Association, speaks with Adrian Ghobrial in Toronto on Wednesday, July 17, 2024 (CTV News)

But Iuso says Fintrac has neither the mandate nor the resources to audit the 3,000-odd registered MSBs in the country .

He says scammers have capitalized on that by incorporating companies and then registering them with Fintrac to make them seem more like legitimate businesses.

“A lot of them are Ponzi schemes related to crypto and foreign exchange and other high-yield investments or high-yield investment products,” Iuso said.

They congregate in the same locations, Iuso said, often picking addresses used by lots of other companies, like lawyers’ offices or corporate service providers.

Fintrac’s website states registration does not mean Fintrac endorses the business or can guarantee its compliance. But Iuso says that’s a nuance lost on most investors.

“Registration with Fintrac as an MSB can lead to a veneer of legitimacy,” said Denis Meunier, a former Fintrac deputy director. “And that can be abused.”

The unit at 500-7030 Woodbine Avenue is operated by IWG Plc., a British holding company that provides office services under the name of Regus . They own and operate 4,000 locations across the globe.

IWG Plc. would not provide an interview for this story. When presented with the IJF and CTV’s findings, public relations agent Linda North wrote an email saying they “take their regulatory responsibilities seriously.”

The manager at Regus’s Markham location shared that “fraudulent people know that business centres are easy prey because they can use the address as a legitimate business address but (the criminals) aren’t paying to use our address (for their companies) and we can’t keep track of the people who’re using it.”

Fintrac may have known something was amiss at the Woodbine address.

As of February 2024, it had revoked the registration of 86 of the 97 MSBs based there.

Fintrac would not say why it did that.

The exterior of what was MTFE’s corporate address at 500-7030 Woodbine Avenue in Markham, Ont. (IJF reporter Carly Penrose)

But a confidential 2022 Fintrac report to the Minister of Finance says the agency “detected an unusual trend” that year involving 95 MSBs registered to the same address, almost none of which responded to “repeated attempts” to contact them .

In the report, which the IJF and CTV obtained via access to information legislation, Fintrac asked the Ministry of Finance to give it new tools to revoke registrations from “unscrupulous operators” and to address “exploited weaknesses.”

In June 2023, the federal Ministry of Finance introduced a new requirement for MSB registrants to provide criminal record checks for their directors. A ministry spokesperson declined repeatedly to say why the government did that.

Fintrac would end up revoking registrations for most of those MSBS in January 2022 — but not MTFE, which kept its registration until September 2023, a month after the scheme had folded.

A cluster of MSBs

It’s not clear who the masterminds behind MTFE were.

One of the company’s registered directors, Hongbing Wang, listed an address in China. The second, Randy Mathieu Lane, had a listed address in Richmond, B.C.

The IJF and CTV tried to find and interview those people without success.

The paper trail led to another business on the other side of the country.

The IJF and CTV examined corporate filings for all 97 of MSBs incorporated at 500-7030 Woodbine Ave.

We found 75 of those companies had a director who used the address 150-10451 Shellbridge Way – the same address used by Lane.

The 150-10451 Shellbridge Way address was also listed by MTFE on its website, according to an archived webpage from the Wayback Machine. The address was changed sometime before August 2022.

That is the address of Raydwell Consulting, a Richmond “business service provider” whose website markets “virtual addresses” and dedicated phone lines for registered companies.

The company’s director, De Wang, wrote in an email to the IJF that his company had never worked for MTFE or any of the other companies whose directors used Raydwell’s address.

Listed phone numbers for those MSBs — which all used British Columbia area codes — did not respond to calls.

Iuso suspects some of the directors may not exist — or that they are using false identities.

“They’re all fake. Fake, fake, fake,” Iuso said.

Bad actors

Experts interviewed for this story say its findings raise serious questions about Canada’s regulation of MSBs.

Peter German, a former RCMP deputy commissioner and the author of two reports on money laundering in British Columbia, says the incident shows the limits of Fintrac’s mandate and authority.

“By creating this registration process, you do recreate a certain air of legitimacy to those who register that maybe they don’t deserve. And that can be misleading,” German said .

Some said it also speaks to a greater trend of criminals exploiting Canada’s reputation and corporate infrastructure without obvious consequences.

“I guarantee this group (MTFE) that you’ve discovered, they’re still operating” Iuso said.

Fintrac declined to answer specific questions about MTFE.

Finance Minister Chrystia Freeland originally declined to be interviewed for this story.

When asked about some of the investigation’s findings at an unrelated press event in Markham, she highlighted recent regulatory changes cracking down on activity like money laundering. But she acknowledged the status quo was not perfect.

Finance Minister and Deputy Prime Minister Chrystia Freeland answers a question from CTV News during a press conference in Markham, Ont. on Tuesday, July 16, 2024 (CTV News)

“We do have more work to do here in Canada, both in terms of ensuring we have the tools we need to crack down on fraud and money laundering and also that enforcement agencies across the country are doing their jobs,” Freeland said.

But any changes come too late for victims like Arif, who is still getting his life back on track.

As of April, Arif said he had finally finished paying back his parents for the money he lost on MTFE. It didn’t come easily: he had to cut back on almost all his expenses, he said, and miss out on time he would normally spend with friends.

And he’s cautious about ever investing again.

“People are vulnerable when they’re trying to escape their poor life and get a better life for themselves and their family,” Arif said.

“Everyday, now, people are falling for a new scam.”