Abu Dhabi Global Market (ADGM) has levied significant penalties totalling $12.46 million on Hayvn Group of companies and its former CEO, Christopher Flinos, for serious regulatory breaches and misconduct. The Financial Services Regulatory Authority (FSRA) of ADGM's investigation revealed that the companies had violated regulations related to financial services, including unauthorized activities involving virtual assets.

Christopher Flinos, former CEO, banned indefinitely from holding any functions in a financial services business in ADGM.

Financial penalties imposed include:

• $3.6 million on AC Holding Limited (Cayman Islands)
  • $3 million on Hayvn ADGM
    • $1.5 million on AC Holding Limited
    • $750,000 on Christopher Flinos

The FSRA confirmed that no ADGM client assets or money were lost due to the breaches. However, these breaches were severe, especially as virtual asset activities were conducted through an unregulated entity. Flinos was also found guilty of providing false information during the investigation.

 

FSRA's Response:

Emmanuel Givanakis, CEO of FSRA, emphasized the authority’s commitment to taking decisive actions against violators of the regulatory framework. The banning of Flinos and the cancellation of Hayvn ADGM’s Financial Services Permission (FSP) signal a strong message against such misconduct. The penalties also aim to deter future violations in financial services and virtual assets regulation within ADGM.

 

Violation Details:

• AC Holding Limited exceeded the scope of its ADGM SPV commercial license, engaging in unauthorized investment company activities and cryptocurrency transactions.

• The special purpose vehicle (SPV), AC Holding, was found to be facilitating unlicensed cryptocurrency conversions and falsifying documents to maintain fraudulent accounts with banking partners.

 

Christopher Flinos' Role:

Flinos, as the CEO of both Hayvn ADGM and Hayvn Cayman, played a central role in orchestrating these breaches. His involvement extended to directing unlicensed financial services activities and providing false and misleading information to ADGM authorities.

 

Penalties Breakdown:

• $3.3 million fine for Flinos, who was found guilty of falsifying documents and misleading regulators in contravention of ADGM’s Companies Regulations 2020.

• Hayvn Group and AC Holding were found to have facilitated unlicensed virtual asset transactions that breached FSRA’s Anti-Money Laundering (AML) requirements.

 

ADGM's Commitment:

Hamad Sayah Al Mazrouei, CEO of ADGM Registration Authority, reinforced the authority's resolve to protect the integrity of business operations and financial markets within ADGM. Penalties, including bans and fines, are part of ongoing efforts to deter misconduct and uphold business confidence in the region's financial services industry.

 

Role of Lawyers:

Lawyers specializing in financial services and virtual assets play a crucial role in ensuring that companies and individuals comply with regulatory compliance frameworks. In cases like the Hayvn Group incident, lawyers are instrumental in defending clients, guiding businesses through the regulatory compliance maze, and mitigating penalties. Additionally, legal experts can provide advice on virtual assets and help clients navigate the complexities of financial services regulations.

 

NYK Law Firm Expert's Comment:

An expert at NYK Law Firm, specializing in financial services and regulatory compliance, commented: “This case serves as a strong reminder to all entities involved in financial services and virtual assets that regulatory compliance is not optional. The consequences of breaches can be severe, as demonstrated by the $12.46 million fines imposed on Hayvn Group and Flinos. Companies should always seek legal guidance to avoid such penalties and ensure full compliance with local regulations."

 

 

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