Chainstarter and the fallacy of free speech

It may have escaped your attention yesterday (25th February 2019) that the founder of Chainstarter, Nick Ayton, and his sons Maxwell and Obediah Ayton, were subject to an article titled 'Chainstarter - Ignorance is not a plea'. The article was very well researched and granted a considered assessment of Nick's business venture right before Chainstarter, namely 'Friendly Pensions Limted'. It was posted by the author, Benji Clarke of Crypto Police UK and received a lot of attention - a huge amount of likes, shares, reshares and comments.

However, by 2300hrs the author had been accused of not being a 'real profile' and presumably blocked from LinkedIn, whilst the article, posted on publishing site 'Medium', was taken down for reasons unknown.

All of this brings up a massive debate about free speech and whether people should be allowed to whitewash their past, especially when it was as bad as the article not only described, but also held proof of the Ayton's previous misdemeanours.

Are we okay with charlatans (as the article clearly emphasised with credible evidence to back up its points) being allowed free reign to not only deny they have ever done anything wrong, but also to carry on providing incorrect advice to clients who are paying a king's ransom for their services at Chainstarter?

Furthermore, should we stand idly by whilst the crypto-community, a community that I - for one - am proud to be a part of and represent, is subjected to abuse and reputational damage by two members of a family who act like "playground bullies" as they attempt to undermine others' hard work in the hope of upsetting social media and SERP algorithms for companies that are clearly offering a more convincing proposition than Chainstarter?

These points make me perfectly comfortable with posting the original article (which was still available to me as I had not navigated away from the page after it was blocked late last night) in all of it's glory below.

It should be noted I am not the author (I can only dream of writing and researching this well) and the research and opinions in the article are not mine (although I have to say, I'm sure anyone who reads the article will be giving Chainstarter and it's associated ventures a wide berth from now on).

Sorry if the editing hurts people's eyes - I was working between two platforms and had to improvise. Oh, and I have it on good authority that Obediah Ayton has now changed his description of his work at Fenchurch Investments - as if to almost show a level of guilt. Fortunately I was able to get all photos saved too.

So, without further a do, and in the interests of free speech:

Chainstarter — “Ignorance is not a plea”

Chainstarter, Nick and Obediah Ayton are not all that they seem. Far beyond the bright lights of Dubai and loose associations to family offices, our investigative team have uncovered a past of fraud, regulatory negligence, fake claims undermining the efficacy of the company and a rather entertaining case of wife swapping. …………………….

Crypto Police

Feb 25

As the call to prayer filled the air of a balmy March morning last year, Nick Ayton and his family must have been feeling pretty pleased with themselves. He and his son, the braggadocio, flash and overtly loud front men of Chainstarter had no doubt thought they had hit the top. Sat on the end of his bed at the Hyatt Regency, near the entrance to the Palm Jumeriah, the troubles of back in the UK perhaps never even crossed his mind — we’re pretty sure they wouldn’t have crossed his lips as he brushed shoulders with the great and the good of some of the biggest family offices from the MENA region, wearing a pair of shorts that no doubt fit before the stresses and strains of a fraud case and company liquidation took hold of his thoughts and his wallet, threatening his liberty and indeed his waistline.

Back in the UK, a new document was being filed by Companies’ House — the government watchdog that regulates the paperwork of firms — which underlined the true extent of the fraud and failure of the patriarchal Ayton’s previous business ventures.

Before we go into detail, it’s important to realise just what we are about to introduce to you. There is no mention of it on Nick Ayton’s LinkedIn profile, no apology accompanying any articles he wrote under the (self affirmed) moniker of ‘Sage of Shoreditch’. This history has essentially been whitewashed from Nick’s public image. When we consider his garish dress sense, poor spelling and grammar, obtuse sense of self importance and outlandish claims about Chainstarter, this would appear to be a clear effort to mislead potential clients of Chainstarter and the family offices that they claim to advise.

See, Nick Ayton was a director of a company called Friendly Pensions Limited.

Friendly Pensions Limited was supposedly a ‘fintech’ firm set up to take advantage of the UK pension industry and the need for companies to ‘auto-enrol’ their employees into a pension.

This wasn’t the case at all.

Friendly Pensions Limited was, in fact, a scam. The company didn’t provide a fintech based auto-enrolment solution as they claimed to. Instead they relied on unsuspecting members of the public (contacted by members of Nick Ayton’s family — namely his sons Maxwell and Obediah Ayton, more on this later) to trust them in transferring their (already existing) pensions into new schemes, administered by Friendly Pensions Limited. These people were promised a cash bonus for transferring their pensions to under the control of Friendly Pensions Limited, on top of huge returns from the investments that Friendly Pensions Limited would place them in. The offer seemed too good to be true.

And it was.

Nick Ayton’s company instead took the money from these pension schemes transferred into their trust and, well, kept it.

The money wasn’t invested. It was fraudulently taken from people who had entrusted their retirement funds to a company under the stewardship of Nick Ayton, as director, and ended up in their back pockets.

Here’s an article on it.

And another.

And another.

And another.

Here are some of the finer details of how Friendly Pensions Limited acted, according to The Pensions Regulator:

Between November 2012 and September 2014, 245 victims were cold-called or lured by a series of scam websites and persuaded to transfer their pension funds into one of 11 scam schemes. The victims were told their pensions would be reinvested and they would be paid an upfront cash lump sum for making the transfer. They were also lied to that their funds would be put into assets, bonds and HMRC-compliant investments to meet the target return of 5% growth a year.

False documents were used to trick staff at the ceding schemes — the schemes where the victims had their pensions — into believing that the pension holders worked for companies linked to the scam schemes. This meant the staff were persuaded to allow ￡13.7 million of funds to be transferred to the scam schemes.

Now, we would expect Nick Ayton to refute these claims — after all, who would want to be associated with a company that committed over ￡13m worth of fraud? — and would tell anyone willing to listen that he had nothing to do with Friendly Pensions Limited.

So we thought it would be wise to provide further evidence.

The company is now in liquidation — as tends to happen with companies that commit massive fraud and have have run up massive debts with the assumption they’ll never pay them back.

But who’s signature appears on the administration forms? That’s right, no other than Nick Ayton. You can follow this link to the full statement of affairs, which shows just how much Nick Ayton still owes from this fraud.

Nick Ayton was responsible for Friendly Pensions Limited at the time the company committed a massive pension fraud. He is now a director of Chainstarter.

Another line of defense that may be used by Nick Ayton is that he was not aware of the massive scam happening at Friendly Pensions Limited. But just think about this as a plea.

The managing director of a company that orchestrated a ￡13,000,000 pension fraud was not aware of what was happening. This screams of gross negligence. Sleeping on the job, no less.

So, we have to ask, why would anybody really let a man like this help them to raise money or suggest projects to invest in? It appears he has absolutely no idea of what he’s doing. To paraphrase Nick Ayton himself:

IGNORANCE IS NOT A PLEA.

That’s not to say he doesn’t try however. His LinkedIn is littered full of comments of how regulation is coming to crypto assets, and how he (and his son) is at the forefront of taking a new asset class to a responsible and mature status in the eyes of investors around the world. A noble effort, you’ll no doubt think.

So you would expect any project that Nick has advised on to be regulatory compliant, wouldn’t you? Especially in, say, the UK, where he is based and is considered a thought leader and influencer of public perception.

Well, his latest effort, and indeed that of Chainstarter, to advise a project is in violation of UK securities laws. Taking into account that one of the services offered by Chainstarter is token economics (or ‘tokenomics’ if you will), along with ‘jurisdictional regulatory compliance’, then it becomes clear that Chainstarter as a company and Nick Ayton as a director have no idea of what they’re doing.

That’s right.

Chainstarter — the company that is meant to to be the bastion of regulatory responsibility in the crypto market — is actually guilty of regulatory failure in the UK. It should be noted that Chainstarter is registered as a company in the UK.

Nick Ayton has once again been sleeping on the job.

See, Nick is a member of the board of advisors for a project called Living Offset. It should be noted that it appears, yet again, Nick has tried to delete any knowledge of his involvement, but his ICOBench profile (a platform he has been outspoken about in his criticism) betrays these attempts. The whitepaper for the project also underlines that Chainstarter were partners for the project.

Both Nick Ayton and Chainstarter’s other director were advisors to Living Offset’s security offering.

As for the regulatory failure? Well, Living Offset was launched as a security and allowed anybody in the UK to invest without restriction. This means it is in violation of financial promotions laws from the Financial Conduct Authority. There was no investor prospectus available (this is the minimum regulatory commitment for a security), there was no registration with the FCA and there was no consideration of applicable laws for the UK investors that Nick Ayton will have promoted the project to (either directly or indirectly through his self perpetuated reputation).

As we can see, Chainstarter were partners in Living Offset’s security offering (other partners redacted as per author’s privilege)

Living Offset — advised by Chainstarter — openly disobeyed securities laws in the UK and across the European Union due to it’s lack of compliance to regulatory laws.

Obviously, we worry that the above link may be deleted at Nick Ayton’s convenience, so we thought it may be best to provide screenshots.

Here’s his ICO Bench profile showing he is a member of the advisory board:

As Nick Ayton’s ICO Bench Profile shows, he was an advisor for Living Offset’s Security Token Offering.

So, if you’re launching a Security Token Offering, why on earth would you trust Chainstarter to help with any aspect of your project? Neither Nick or Obediah Ayton hold any experience in regulatory compliance (underlined by Friendly Pensions Limited committing a massive pensions scam whilst Nick Ayton was Managing Director).

If you’re a family office or high net worth investor, why on earth would you look to Chainstarter, Nick or Obediah Ayton for advice on investing in projects? You’ll be handing money over to projects that will be shut down due to regulatory issues — issues that have their root cause in the bad advice doled out by Chainstarter.

You’re probably beginning to wonder by now where Nick Ayton’s sons — Max and Obediah Ayton — fit into this tapestry of incompetence and fraud?

Well, let us start with Max, as he is the elder of the two.

Maxwell Ayton

Max runs a firm named Fenchurch Investments (under the company name ‘Fenchurch Invest LTD’) which was a ‘broker intermediary’ — a firm that essentially found (via cold calling) and advised people to transfer their pensions to companies like Friendly Pensions Limited — the massively fraudulent pension firm that his father Nick ran. Maxwell Ayton essentially acted as a sales agent to get people to transfer their pensions to Friendly Pensions Limited — this was spelled out in the approved judgement against Friendly Pensions Limited.

Max Ayton’s links to the Friendly Pensions Limited fraud were underlined in the approved judgement against the company.

It should be noted that although Maxwell was carrying out a regulated activity, namely advising people to transfer their pensions, he was never registered with the Financial Conduct Authority as an authorised advisor.

So, one of Nick’s sons was essentially a sales agent for Friendly Pensions Limited, and thus another cog in the wheel of a ￡13,000,000 pension liberation scam.

But what of the other, Obediah Ayton?

Obediah Ayton

He’s very much at the forefront of bringing regulatory compliance to crypto markets worldwide — just look at his comments on LinkedIn.

Surely someone so outspoken about regulation and responsibilities of individuals and companies would be ‘whiter than white’?

Well, maybe not. See, Obediah, or Obe to his friends, also worked with his brother at Fenchurch Investments — his brother’s firm that was associated with the Friendly Pensions scandal, as above.

He also openly admits to giving regulated advice on pensions to throughout his time here. He does not list a single FCA recognised qualification on his LinkedIn profile, and was also working for an unregulated company providing unregulated advice whilst not being authorised by the FCA to provide such advice.

We’re not even beginning to delve into the half truths and total lies which appear in his posts, such as Chainstarter having operated since 2014 (it was created in August 2017 and is so young it hasn’t even produced accounts yet). This is due to the fact there is just too much to cover in a single post.

But we are happy to provide evidence of Obediah’s failings from a regulatory standpoint when advising on pensions:

Obediah Ayton openly admits to performing regulated activities in the UK. Our investigation shows he nor his brother’s company (who he was working for) held any authorisation from the Financial Conduct Authority

Obediah Ayton listed further evidence of regulatory issues on his LinkedIn profile.

So, without being regulated as a financial advisor or working for an authorised firm, Obediah Ayton was as guilty of regulatory disobedience as his father, Nick Ayton, was advising Living Offset whilst launching a security to the UK market without due deference to rules.

The FCA Register shows that Obediah Ayton has never been authorised to provide regulatory advice:

Obediah Ayton has never been authorised to give advice by the Financial Conduct Authority (or its predecessor) in the UK, yet provided regulated advice to a number of clients.

Neither was Fenchurch Invest Ltd, the company that Obediah worked for that was owned by his brother, Maxwell:

The company that Obediah worked for, Fenchurch Invest Ltd, was not regulated by the FCA either

So, regulatory negligence and involvement in fraud would appear to be a family trade for the Aytons.

We hope that this article helps to underline the issues we have in the crypto community with bad actors posing as white knights and also helps to highlight the importance of due diligence by each and every one of us when we consider who’s opinions and advice we should seek in such a young market.

Hopefully we will get some sort of response by the one of the Aytons. The evidence presented here is insurmountable and the issues highlighted so serious we hope that not only do the crypto community take note, but also family offices and high net worth investors that the Aytons and Chainstarter claim to work with.

And that's the end of the article. I hope that my sharing of this article will allow people in the blockchain industry and indeed family offices looking for investment advice to make more informed choices.