Kuetzal shutting down!

Kuetzal is effectively shutting down operations. Since I signed up for Kuetzal but didn’t end up investing in the platform I get email updates from them. This is the email I got today:

Dear Kuetzal investor,

Our team wants to apologize for delays in payments and replies to e-mails received.

Unfortunately we have to inform that Kuetzal is announcing wind-down, furthermore the company will only process withdrawals of the funds, the company is no longer accepting new project applications, investors registrations and deposits. Company’s reputation was harmed sufficiently for the past weeks, and Kuetzal management does not see a way to recover investor’s activity, therefore we may not return to usual working process. The mission of the company may not be reached anymore. 

Due to high number of reports, claims and negative messages SEB Bank and PAPAYA (the only two banks that Kuetzal used) initiated the AML check and has temporarily blocked Kuetzal’s bank accounts. Kuetzal is currently unable to perform any operations for undefined period. Kuetzal management is aiming to reestablish the activity of both operational bank accounts and perform buy-backs and withdrawals in shortest terms respectively.

Kuetzal will keep the investors informed.

We have not been able to make Kuetzal a successful player on crowdfunding market. We will however aim to exit the market quietly with minimum repercussion to our customers and the whole crowdfunding market. The website functions furthermore will be limited, only the user area will be kept. All the user area functions will continue working as before.

In case of technical issues with withdrawals or other question we kindly ask to use our contact mail instead of social networks or cellphone to receive the fastest service.

Kuetzal e-mail from 12.01.2020

So Kuetzal is effectively shutting down operations because they are unable to answer the different concerns the investors have. I’m not sure if that is basically an admittance of being shady. I think there is a high chance that there will be just another platform popping up soon with the same people behind the platform. The CEO Maksims Reutovs is very likely showing up somewhere else in the P2P lending industry.

Platform risk

The failure of Kuetzal is a good example that there are different levels of risks in the P2P Lending industry. You could draw them as a pyramid (top to bottom):

• Economic Risk: Global/Country economy crashing leading to a recession
• Platform Risk: Mismanagement of the Lending Platform due to rapid growth or lack of loan originators
• Loan originator Risk: If the loan originator faces tons of default due to lack of credibility checks of their customers and can’t cover the defaults with their margins
• Loan Risk: Effective default risk of a single loan

Note to myself, draw an actual picture you lazy guy!

I hope you see that even to cover an unlikely event like a full platform shutdown you need to diversify. Across platforms, across loan originators and across loan takers.

Leave a comment if you have experience with Kuetzal and currently wait for your money to come back. Also please subscribe (on the right hand side) if you like to stay informed about new posts.