The Investigation Service of the Ministry of Finance of Georgia has launched an investigation into the so-called investment platform TSQ Investment Group (‘Henry’s Pyramid’).
As the Investigation Service informed the Netgazeti news outlet, the criminal case was initiated following a referral from the National Bank of Georgia.
According to the agency, the investigation is being conducted under Part 2 of Article 192 of the Criminal Code of Georgia, which establishes criminal liability for unlawful entrepreneurial activity.
TSQ Investment Group, which had recently been aggressively promoting itself on social media, offered clients the opportunity to invest in crypto-asset trading, promising high returns. However, in late August, reports emerged that depositors of TSQ Investment Group were unable to withdraw their invested funds.
In late August, the National Bank of Georgia issued a warning to the public regarding the proliferation of financial pyramid schemes. The primary objective of such schemes is not the genuine investment of capital into income-generating assets, but rather attracting the maximum number of new participants and their money. It is precisely these inflows from new depositors that fund payouts to earlier participants, disguised as profits from commercial activities (in this case, transactions involving crypto-assets).
In the initial phase, while there is a steady influx of people, participants may indeed receive certain payouts. Inevitably, however, a point arrives when the flow of new participants and capital dries up: the company loses its capacity to fulfill its obligations, and the scheme collapses. In such situations, investors are denied fund withdrawals under the pretext of fictitious ‘technical glitches,’ and are frequently pressured to make additional deposits, supposedly to unfreeze and retrieve their assets.
