At the beginning of 2020, several crowdfunding platforms that were registered in Estonia and had attracted millions of euros from thousands of investors across the borders to fund various investment projects went under.
Perhaps, they failed to foresee and manage the pandemic’s risks. Yet, arguably, even the most cautious entrepreneurs could not have predicted or hedged against a closure of the worldwide economies for such prolonged periods.
The EU broad crowdfunding regulations will kick in very soon and are expected to provide more protection and transparency for all the parties involved in a crowdfunding process. Still, it is difficult to imagine that if such an unforeseeable event happened again, investors and businesses would be better placed to recover their losses.
This article, however, will not be about the reasons why these platforms failed and whether it was preventable. This article will discuss the possibility that these same investors who have lost money are lured into pouring in even more money to fund legal cases designed to profit just one party in the process – the law firm that leads them all.
Like many investment projects advertised on the affected crowdfunding platforms, Magnusson Law promises overly optimistic results without any proven track record, or a single case of money recovered for investors. Yet, this does not stop them from advertising themselves as the successful defender who will recover all investments.
In 2021, CEE Legal Matters reported that claimants in alleged Estonia-based crowdfunding platform fraud cases had raised EUR 200’000 to finance lawsuits against Envestio.com, Keutzal.com and Monethera.com. You guessed it right – all this money went to a single law firm, Magnusson Law.
As several investors backing the cases attest, over the two years that the firm has managed the cases, invoices keep streaming in, while the optimistic results promised by the Magnusson lawyers are yet to be seen. They keep being postponed under the pretexts that there is just one more step, one more payment, and then you will get your money back. This, of course, never materialises. Wisefund.com and Lenndy.com lawsuits are similarly covered by this same law firm, meaning the money Magnusson Law makes just keeps multiplying.
This leads to a fair question – could it be that rather than wishing to help and protect the interests of the investors, Magnusson Law is simply monetising on a crowd of desperate people and has turned itself into the fraud that it portrays the crowdfunding platforms to be. Hiding behind Magnusson Law confidentiality clauses, investors backing a specific legal case are forbidden to disclose the outcomes of their particular proceedings. This strategy ensures that investors of other cases never find out that neither of the cases Magnusson Law is leading against crowdfunding platforms has yielded any material results. Indeed, if any case was won, this would be on the front pages of the Magnusson Law news releases.