Police: Xixoio’s investors’ money went to a villa, cars and a luxurious life for his wife

So far, all that is clear is that the National Organized Crime Agency (NCOZ) raided the headquarters of financial startup Xixoio on Tuesday, and police are investigating whether Xixoio’s leading figures committed fraud or money laundering. And they haven’t caught anyone yet.

Seznam News has now obtained police documents that detail the detectives’ suspicions against the company’s majority owner, Richard Watzke, and his associates. And they give insight into the operation of the company, which the detectives themselves call a Ponzi scheme, into which Watzke has drawn at least 446.6 million crowns since 2019 from a total of 3,117 people or companies. He convinced them to spend the money for the virtual token XIX.

“All the findings indicate and confirm the fact that all the activities of the business company Xixoio and other companies controlled by Richard Watzko, his wife and other related persons, which should have been primarily intended for the regular appreciation of investors’ funds, serve exclusively to massively fraudulently attract investors’ funds ,” summarize the investigators.

According to them, the company did not develop any activity that could evaluate the savings invested by the investors. Watzke bought advertisements on the front pages of newspapers or on the web with investors’ money in an attempt to get as much money as possible from other people. As soon as the inflow of deposits stopped, the system would collapse without other earnings.

“Xixoio only carries out such activities as are necessary to maintain the media image. The lured money is used not only to maintain this system, but a substantial part of the lured funds was used for the personal consumption of Richard Watzke and his wife Kateryna Watzke,” added the police officers.

And how Watzke spent people’s savings, the investigators describe as follows: “The funds received from investors were used completely in violation of business terms, for example, to purchase real estate or luxury vehicles for private individuals, pay off personal foreclosures, finance a massive advertising campaign, pay excessive commissions to sales representatives .”

Watzke’s wife, for example, bought a villa in Těptín near Prague for 36 million crowns without a mortgage last June. However, the detectives discovered that the money came from a collection account to which investors sent their money to Xixoio for evaluation. They therefore blocked the property, which according to them, the woman had bought from the proceeds of crime.

However, according to detectives, Watzke lived in other ways from investors’ money. “The police authority did not find any income of Kateryna Watzke Lomah other than that which is ‘secured’ by her husband Richard Watzke. For the needs of himself and his family, he forwards client funds sent to Xixoio’s account, among other things, to his wife’s account,” the investigators summarized.

To the list of possible wrongdoings, they add overestimated wages for members of the company’s management and its employees and additional financing of their “expensive lifestyle”.

Seznam Zpráv reporters tried to confront Richard Watzek, who has a 70 percent stake in the company, with the findings of the detectives. However, his phone was switched off on Friday afternoon and he did not respond to the e-mail sent.

However, it was possible to reach the second largest shareholder and member of the company’s supervisory board, Jiří Machalický. He is also among the suspects. “It’s all absolute nonsense and construction. Everything will be clarified soon,” Machalický told the editors. When asked why his business partner was transferring investors’ money to his wife’s account, he replied that he did not know.

“I am convinced that money was definitely not stolen in this company – not even by accident,” added Machalický, adding that he still believes in the project and is convinced that everything will be explained.

Another suspect is Tibor Szabó, a Slovak businessman who cooperates with Xixoio through his companies. Szabó did not want to comment on the police’s suspicion that he was involved in the operation of the “plane”. “Xixoio is preparing a press conference where they will clarify everything. Due to confidentiality, I cannot answer,” wrote Szabó to the editors.

The company has already sent one non-public statement to its investors. The News list has it available. “Furthermore, there is a massive misunderstanding of our business model and tokenization as such by the investigating authorities,” the firm wrote to token holders. “Our goal is to explain the whole situation and use it to finally clear our name, tokenization as such, and also the entire community behind us,” added Xixoio.

At the same time, they claim that investors’ assets are safe because they are stored on the blockchain developed by Xixoio.

What Xixoio promises people to earn

Detectives see it differently. And they argue, among other things, about Xixoio’s business conditions themselves, which they say are disadvantageous. They say that once people use their money to buy virtual tokens from the company, Xixoio has no obligation to buy them back from them. And there is no exchange where they can get rid of them. They thus face the risk of being left with worthless ones and zeroes. “Xixoio’s terms are set up to disadvantage token acquirers,” the investigators summarize.

They also underline that Xixoio shows individual investors an increase in the value of the token by hundreds of percent. But the appreciation is only virtual, just like those tokens.

“The price of the token is determined by the issuer itself and not by the market. It presents it in the application of each user with an almost daily increase in the value of the token price to give the impression of a profitable investment and this led to repeated purchases, which as a result was and is indeed the case for many investors,” NCOZ adds, noting that Xixoio does not use the entrusted money to to build an economically sustainable project that would really value the clients’ money.

However, the co-owner of the company, Machalický, does not agree with this. “Here, money is invested in applications, technologies. Everything is expensive when you build something so robust and complex, it costs a lot of money,” protests Machalický.

Police call Xixoio a fraud in the papers. “They deceptively inform investors about a significant appreciation of their invested funds and, in the same way, on their websites, they deceptively inform the public about the benefits of any investment with the aim of keeping the project as long as possible in order to obtain additional funds,” explained the police.

In addition, according to Xixoio’s business terms and conditions, even if Xixoio makes a profit, sharing any profit with its investors is up to the discretion of the company’s management. It’s not her duty.