Kuetzal and Envestio Scam Reports to National Conduct Authority


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Since late 2019, the Estonian crowdfunding sector, especially regarding lending-based platforms, has seen heightened scrutiny and potential fraud. The difficulties appeared so far at two platforms operating out of Estonia, specifically Kuetzal and Envestio Scam. ECN has received a large number of inquiries by concerned investors who have not been able to withdraw funds from their accounts nor claim to have received any communication from the platforms. ECN cannot judge at this point in time if the platforms have acted in breach of law. But the overall situation does not seem adequate. We hope that the situation at both Estonian platforms, Kuetzal and Envestio, is temporary and wish both investors and platform a quick and positive solution.

Kuetzal: ECN has over the past weeks repeatedly been contacted by concerned investors in lending-based crowdfunding platform Kuetzal, Estonia. It has become apparent that at least since a change in management in the second half of 2019 the operations of the platform is lacking in its response and conduct with investors. ECN has reached out to the platform’s new management for clarification but did not receive satisfactory information that would clarify the situation. ECN cannot judge if the platform has acted inappropriately toward its investors. ECN has notified the relevant authorities with regard to Kuetzal and a criminal investigation has been launched by the General Prosecutors office: https://www.prokuratuur.ee/en/contacts/office-prosecutor-general

Envestio: Similarly, on 21 January 2020 lending-based crowdfunding platform Envestio has shut down its website and posted inconclusive messages on Facebook with regard to technical issues. ECN has reached out to the platform for clarification but not received any feedback. In the meantime, many investors have also reached out to ECN. ECN cannot judge if the platform has acted inappropriately toward its investors. ECN has notified the relevant authorities with regard Envestio on 21 and again on 22 January 2020.

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Kuetzal and Envestio Scam Background

To-date, there is no specific legislation for crowdfunding in Estonia with the exception for activity which corresponds to subsection 2 (2) of the Creditors and Credit Intermediaries (CCIA), according to which: “The provisions of this Act concerning a credit intermediary also apply to such a person that intermediates credit granted by a person that does not operate in its economic or professional activities as a creditor and is not a creditor for the purposes of this Act.).”


The general consumer protection provisions are stipulated in the Estonian Consumer Protection Act (CPA; an unofficial translation (on some vintage web site, you may need an old browser for this) of that act may be found here: https://www.riigiteataja.ee/en/eli/521082017004/consolide/current while additional information can also be found on the website of the Consumer Protection and Technical Regulatory Authority, and here, which also explains how to submit a complaint: https://www.ttja.ee/en/consumer/submission-complaints.

Please be advised that as a consumer, with the current situation with both platforms, you are best advised to assume fraud or suspected crime and should make a relevant claim with the Estonian Police and Border Guard Board, which can be reached here: https://www.politsei.ee/en

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However, investing in crowdfunding platforms should be done with great care, relevant due diligence of the platform operations and past performance, and not based on promised returns alone.

Kuetzal and Envestio Scam Investors and ECSP

For now, crowdfunding regulation is applicable on a national level and each EU Member State has its own rules and supervision. We are glad, that in December 2019 the European Commission, the European Parliament and the Council have agreed on our long term goal of rules for a harmonised European regulatory framework, providing improved and strict investor protection across Europe, which can be expected to be rolled out in 2021.

Investors should be aware that the change in the regulatory framework is likely to disrupt some platforms, if not a majority, and that we likely will see consolidation in the market, which could increasingly include the closing of or mergers between platforms within the next 18 months. The new rules under ECSP will provide relevant investor protection, but there is further need for adequate and enforceable self-reporting by the sector. ECN will seek relevant institutional stakeholder support to ensure that consumer protection remains a key aspect of market development. However, investors should ensure that they have diversified their investment and spread their risk exposure wide enough.


Depending on the business model of any specific crowdfunding platform operation in Estonia, a number of private and public laws must be adhered to. These include:

Any crowdfunding company operating in Estonia must evaluate its business model to the extent whether it has to comply with the aforementioned laws and whether there may be signs in its activity that it is necessary to apply for a license or to register its activities in the Estonian Financial Supervision Authority (https://www.fi.ee/?lang=en).

For a review of European regulatory regimes, stand late 2017, we suggest to read our Review of Crowdfunding Regulation 2017 which has been kindly provided by numerous law firms across Europe.

ECN Membership

ECN membership is in support of our own work and goals. Membership is limited to one calendar year and must be renewed at the beginning of every year. Our members, in general, join in support of our vision and engage actively in developing a professional crowdfunding market through regulation and best practices. At no point does ECN endorse any of its members or their activities. ECN does not and cannot validate the professional conduct of its members, we have neither the legal mandate to do so nor the capacity. We urge our members to operate in accordance with the applicable national laws and expect the implementation of best practices and transparency according to our Code of Conduct. Oversight is the role of National Conduct Authorities.

The only wish after these Kuetzal and Envestio Scam cases – We would like to see the real regulations for P2P Lending and Crowdfunding platforms, guarantee fund and deposits for new platforms like banks do, investors should be guaranteed up to XXX XXX.00 EUR. We need clean market and I am sure, that now it will takes a long time until market will recover, also investors will look shady even to legit investment platforms.

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