In the world of financial services, there are always companies that operate in the shadows, bending or breaking the rules in order to make a profit. One such company that has raised significant alarm among industry watchers is the Papel Group. With its shifting legal entities, murky operations, and connections to other controversial entities like Monitox Ltd, Papel has consistently demonstrated a lack of transparency and accountability. Despite its claims to operate within the bounds of regulation, the company’s actions paint a troubling picture of unregulated operations, misleading practices, and a disregard for consumer protection. Here’s an in-depth look at the various issues plaguing the Papel Group.
A Constantly Changing Identity
The Papel Group’s history is one of continuous transformation and reinvention, with the company shifting its legal identity and business focus several times. Initially, in 2020, Papel began as a cryptocurrency exchange and payment services provider. It quickly gained attention for its bold offerings in the burgeoning crypto space. However, what it did not have was proper authorization to provide these services. Despite operating without the necessary licenses or regulatory approvals, Papel attracted users through its flashy marketing tactics and promises of quick profits.
The lack of regulatory oversight was a glaring red flag. Although the company presented itself as an innovative player in the financial services sector, it failed to comply with the basic legal and regulatory requirements that safeguard consumers and ensure a secure marketplace. Despite the many warnings, Papel continued to operate, offering crypto trading and payment services with no regulatory oversight. It wasn’t until FinTelegram exposed this fact that the company made any attempt to address these serious concerns.
Shifting Legal Entities: The Mask of Legitimacy
In 2022, Papel rebranded itself as a payment processor, operating under the Lithuanian e-Money Institution TBF FINANCE UAB, which was allegedly authorized by the Bank of Lithuania. However, this move raised more questions than answers. The company’s website redirected from the original domain, papel.com, to papel.cy, indicating that there were multiple legal entities involved in the operations of Papel. While the new entity claimed to be regulated in Lithuania, there was no clear explanation of how the Lithuanian business was connected to the Cyprus-based operations, or if they were at all.
The company’s founder, Ferit Samuray, was reportedly involved in both entities, but as time went on, he made an effort to distance himself from the company. In 2023, he allegedly stepped down as a director of the Cyprus-based Papel (CY) Marketing Services Ltd, and claimed that there was no corporate link between Papel and TBF FINANCE UAB. Despite these claims, archived websites and Google Cache reveal that TBF Finance was named as the operator of Papel until recently. This contradiction between what is stated in official letters and what is visible in the company’s public records only deepens the mystery surrounding Papel’s operations.
In the early days of 2023, the website papel.com was rebranded again, this time as a Turkish e-money institution under the name Papel Elektronik Para ve Ödeme Hizmetleri A.Ş. Although the new operation claimed to be an e-money institution under Turkish regulations, there was still no clear documentation regarding when these changes occurred, leaving potential customers in the dark about the company’s true legal status.
The Monitox Connection: A High-Risk Payment Processor
One of the most concerning aspects of the Papel Group is its close ties to Monitox Ltd, a high-risk payment processor regulated by the UK Financial Conduct Authority (FCA). Monitox, controlled by Estonian national Maksim Asanov, has come under scrutiny for its business practices, which have raised alarms among financial regulators. Despite these concerns, it seems that Ferit Samuray, the founder of Papel, also holds a directorial position in Monitox. This association raises serious questions about the level of control and influence that Samuray and his associates have over both entities.
While Papel has distanced itself from Monitox in public statements, whistleblowers have reported that the two companies are still interconnected. This connection is particularly troubling, as Monitox’s FCA regulatory approval does not provide any guarantees of safe operations. The FCA’s own guidelines on e-money institutions are clear in stating that these entities must adhere to strict operational standards, including consumer protection measures and regular audits. Yet, the fact that both companies are managed by individuals with questionable histories casts doubt on their compliance with these essential regulations.
Non-Transparency and Financial Irregularities
Another area of concern is Papel’s lack of transparency regarding its financial operations. For a company that purports to offer payment processing services and e-money solutions, there is shockingly little information available to the public. The company has failed to disclose key financial statements, and the Estonian branch, Papel Exchange OÜ, has reportedly not filed financial reports for years. This failure to comply with basic financial reporting requirements has led to warnings from the Estonian Companies Register, which has threatened the company with fines for its non-compliance.
This lack of accountability is especially alarming when considering the amount of money that flows through payment processors like Papel. These companies handle sensitive financial transactions on behalf of individuals and businesses, which makes it crucial for them to be transparent and properly regulated. Yet, Papel’s financial practices remain shrouded in secrecy, further raising concerns about the security of funds held by its users.
No Clear Ownership or Accountability
Papel’s shifting ownership structure also raises questions about accountability. The company has gone through multiple ownership changes, and its founders have made efforts to distance themselves from the business over time. Samuray’s role as a director in various entities connected to Papel suggests that he has maintained significant control over the company, despite public statements to the contrary.
What is clear, however, is that there is a lack of accountability at the highest levels of the organization. With so many changes in ownership and structure, it is difficult for consumers and regulators to track who is ultimately responsible for the company’s operations. This lack of clarity is a dangerous precedent in the financial services industry, where consumer trust is paramount.
The Risks of Doing Business with Papel
For those considering doing business with Papel, the risks are significant. The company’s dubious regulatory status, its connections to high-risk entities like Monitox, and its lack of transparency all point to a pattern of irresponsible behavior. When dealing with financial institutions, it is essential to trust that the company is operating within the law and adhering to the highest standards of accountability. Unfortunately, Papel’s track record suggests that it may not be operating in the best interests of its customers.
The lack of oversight and the questionable business practices make Papel a dangerous choice for anyone looking to use its services. Whether you’re looking for a payment processor, an e-money institution, or a cryptocurrency exchange, it’s crucial to ensure that the company you choose is properly regulated, transparent, and accountable. Sadly, Papel fails to meet these standards, and its continued operations without proper oversight could put users at significant financial risk.
Conclusion: A Call for Scrutiny and Regulation
The case of Papel Group serves as a cautionary tale for the financial services industry. With its ever-changing identity, shifting legal entities, lack of transparency, and connections to high-risk payment processors, Papel has created an environment ripe for fraud and financial mismanagement. The company’s failure to adhere to regulatory requirements and provide clear financial information should be a cause for concern among anyone who is considering using its services.
It is clear that greater scrutiny is needed in order to protect consumers and hold companies like Papel accountable. Regulatory bodies in Lithuania, Turkey, Estonia, and the UK should take a closer look at the company’s operations, and ensure that it is not engaging in deceptive or illegal practices. Until then, consumers are advised to avoid engaging with Papel or any of its associated entities, as the risks of doing so far outweigh any potential benefits.
