Dramatic Management Changes at VELTYCO
Crisis-hit public-listed company VELTYCO GROUP PLC faces yet another leadership shake-up. Recently, the company underwent a major restructuring with three board members stepping down, including founder Uwe Lenhoff.
In an attempt to turn things around, U.S. gaming industry veteran Melissa Blau was appointed CEO. However, just six months later, Blau has decided to leave, leaving behind a company in deeper turmoil.
A Mission Bound to Fail
On October 12, 2018, VELTYCO announced Blau’s resignation, citing her wish to “focus on other business interests.”
However, it is clear that the company’s increasingly precarious situation also played a significant role. Curiously, as of October 15, 2018, Blau had not yet updated her LinkedIn profile, still listing VELTYCO as her employer — hinting the decision may have been abrupt.
From the outset, Blau was tasked with what seemed like a mission impossible.
The Binary Options Burden
In previous years, VELTYCO aggressively expanded into the binary options sector, operating platforms like Option888 and ZoomTraderGlobal.
In September 2016, VELTYCO finalized a costly acquisition deal with Cyprus-based Novox Capital, involving ZoomTraderGlobal, valued at almost €3 million — mostly paid through company shares.
Additionally, VELTYCO provided marketing services to numerous binary options operators via intricate company structures, essentially positioning itself as a binary options hub in Europe.
However, by 2016, most major markets, including the EU, Israel, and Canada, had moved to ban binary options.
The European Securities and Markets Authority (ESMA) extended the ban, while agencies like the U.S. FBI and others pursued fraudulent operators.
VELTYCO’s involvement in this collapsing sector exposed it to major regulatory risks.
Authorities such as the UK FCA issued warnings related to VELTYCO’s associated entities, including CAPITAL FORCE LTD, the operator of Option888.
Uwe Lenhoff himself has been linked to several boiler rooms and binary options schemes, making it increasingly astonishing that direct action against VELTYCO has not yet been taken.
Troubled Finances and Questionable Receivables
The fallout from binary options reflected heavily on VELTYCO’s financials:
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As of June 30, 2018, receivables stood at €12.6 million.
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At year-end 2017, receivables were €14.4 million against total revenues of €16.1 million.
This indicates that VELTYCO’s growth was largely driven by high-risk receivables, not healthy cash flow.
Auditors flagged concerns about the recoverability of these receivables and issued a going concern warning in their reports.
The problems extended to banking relationships too. In 2018, VELTYCO was forced to restructure its banking arrangements, likely because of concerns linked to its questionable business activities — a process that remains ongoing.
Plunging Share Price
Melissa Blau’s short tenure coincided with a dramatic stock collapse:
|
Date |
Share Price (GBX) |
|
Start of Tenure |
87 |
|
End of Tenure (Oct 15, 2018) |
34.5 |
|
Loss |
> 60% |
Facing mounting legal, financial, and management problems, VELTYCO’s prospects for a stable future appear bleak.
The company is once again looking to restructure its leadership team amid severe operational challenges.
A Warning to Investors
Given the worsening situation, investors should exercise extreme caution.
The sudden departure of Melissa Blau signals deeper problems within VELTYCO that are unlikely to resolve easily.
At this point, selling VELTYCO shares seems to be the most prudent course of action.
Victims associated with Option888 or ZoomTraderGlobal are also strongly advised to act quickly if seeking refunds or pursuing claims.