ProCap Newsletter No. 77

Dear Clients,

When investors transfer money to an investment platform, they naturally assume that their funds are being received and managed by the company offering the investment opportunity.

However, in practice, financial transactions may involve several different entities, including payment processors, intermediary companies, banks and other payment service providers.

This raises an important question for investors who have suffered financial losses:

Could the involvement of payment intermediaries be relevant when investigating what happened to their money and exploring possible recovery options?

Why are payment intermediaries involved in investment transactions?

Investment platforms may use third-party payment providers to process deposits, facilitate international transfers or accept payments in different currencies.

As a result, the recipient identified on an investor’s bank statement may not necessarily have the same name as the investment platform.

This does not automatically indicate wrongdoing. The use of payment intermediaries is common in legitimate financial transactions.

However, when concerns arise about an investment platform’s activities, understanding the role of each entity involved in processing payments may become important.

Why does tracing payments matter?

One of the challenges in investment fraud cases is establishing where investors’ money went after it was transferred.

A payment confirmation may identify the initial recipient, but it does not necessarily reveal where the funds were subsequently transferred or who ultimately controlled them.

Examining the available transaction records may help identify connections between payment providers, companies and individuals involved in the movement of funds.

Depending on the circumstances, this information may also assist in identifying assets or financial transactions that could be relevant to potential recovery efforts.

Importantly, tracing a payment does not automatically establish that the recipient participated in fraudulent activity.

Can payment intermediaries be held legally responsible?

Potentially, but their involvement in processing a transaction is not, by itself, sufficient to establish liability.

Payment service providers operate under different legal and regulatory obligations depending on their jurisdiction, the services they provide and the circumstances of the transactions.

Questions concerning potential responsibility may arise where there is evidence that an intermediary independently breached applicable legal obligations or knowingly participated in unlawful conduct.

However, such responsibility must be assessed individually and supported by relevant evidence.

It would therefore be incorrect to assume that every bank, payment processor or intermediary involved in transferring funds is legally responsible for an investor’s losses.

Could payment records help investors recover their funds?

Payment records may play an important role in identifying possible legal avenues for recovery.

Depending on the payment method, the applicable rules and the time that has passed, certain transactions may be subject to dispute or reversal procedures.

In other circumstances, transaction records may be useful in legal proceedings aimed at identifying the recipients of funds, tracing assets or establishing claims against parties whose conduct gives rise to legal responsibility.

These possibilities are not available in every case, and the existence of a payment intermediary does not guarantee that transferred funds can be recovered.

Nevertheless, understanding the movement of money can be an important part of assessing potential recovery options.

What does this mean for ProCap investors?

For investors affected by ProCap, identifying the relevant financial transactions and the entities involved in receiving or transferring funds may be important when assessing the circumstances of their investments.

Bank statements, payment confirmations, transaction references and other financial records may help establish when payments were made, which accounts or entities received them and what information was available to the investor at the time.

Such evidence may also become relevant when evaluating whether there are grounds for pursuing claims against particular individuals or entities.

At the same time, we are not suggesting that any specific payment intermediary involved in ProCap transactions has been found responsible for unlawful conduct. Any such conclusion would require appropriate evidence and a legal assessment of the circumstances.

What is the current status of the ProCap matter?

At present, we have no new verified procedural developments concerning ProCap that would change the previously communicated status of the matter.

We will continue to monitor relevant developments and assess the legal options that may be available to protect affected investors’ financial interests.

Although tracing funds through multiple entities can be complex, identifying the path taken by investors’ money may provide valuable information for determining responsibility and evaluating potential recovery opportunities.

In investment fraud cases, understanding where the money went can be just as important as establishing how investors were persuaded to transfer it.

We remain committed to pursuing the available legal avenues and will inform our clients of any significant developments.

Thank you for your continued patience and trust.

Kind regards,
Attorney Zoran Miljaković