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The Miracle Software - Get rich quick or scam?

A man dressed all in white looks out over the Dubai skyline, standing at the edge of a pool.

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The Miracle Software - Get rich quick or scam?

A man dressed all in white looks out over the Dubai skyline, standing at the edge of a pool. Below this picture, which he uploaded to Instagram, it says somewhat pathetically: "I don't want to post stories, I want to make history."

Pretty ambitious. And indeed: the young man, whose name is Dada Pey and who is followed by almost 15,000 people on Instagram, seems to be very successful. I keep seeing expensive cars and popular travel destinations in his photos: Monaco, Italy – and again and again Dubai.

How can Dada Pey afford that? He's the CEO and founder of Trust Your Universe (TYU) - a company that's becoming well known on Instagram and YouTube for the vital way its reps solicit customers - and lure them with terms like "passive income".

A reader sent me the documents of a salesperson - a business presentation with which he wants to convince potential customers in a conversation.

There it says: "Trust Your Universe is a premium trading system in the crypto and forex market" - i.e. a software that bets on rising or falling exchange rates of currencies, including fiat currencies such as euros or dollars, but also cryptocurrencies such as Bitcoin.

It would trade fully automatically for the customer and generate profits. Additionally, a trader would monitor the software. There are no entry fees, instead the system is financed by profit sharing and keeps 40 percent of all profits.

However, 42.5 percent of the profits that Trust Your Universe would write would be distributed back to its “own community”. Because anyone who can recommend the trading software and recruit a new customer receives a share of the profit that the customer generates.

If this new customer recruits another customer, then the first salesperson would also benefit from his profit. At the same time, every salesperson can reach certain sales levels and receive bonuses, according to the promise of Trust Your Universe.

A classic multilevel marketing system. Something like this works as long as there are enough new customers. Salespeople have to be correspondingly convincing if they want to win new customers. I also notice this in the salesperson's business presentation that I have.

“Monthly expected returns of up to 10 percent,” it says there. That's a lot: If I were to invest 100 euros that would bring in a ten percent return every month, I would have almost 314 euros after twelve months.

So my initial investment would have more than tripled. In ten years that would even be almost 9.3 million euros - almost 93,000 times my initial investment of 100 euros.

For comparison: If I had invested in the MSCI World Index, the most well-known among investors, between 2011 and 2021, I would have made an average return of around twelve percent a year. So 100 euros would have become just under 311 euros in ten years.

So did I accidentally discover the holy grail of investing here? Niels Nauhauser from the consumer advice center in Baden-Württemberg is skeptical. "Promises of returns of ten percent a month are always dubious," he says.

There is no trading strategy that reliably produces above-average returns. "Any form of advertising for such strategies is a warning signal and a clear indication of dubious, if not fraudulent, machinations."

Harsh words - I confront "Trust Your Universe" with them. Their CEO Dada Pey answers me personally.

He wanted to distance himself from the choice of words "promise". "We don't make any promises or guarantees, just statistically understandable expectations," he emphasizes. The average monthly return would be 10.49 percent, of which 40 percent would go to TYU.

But 10.49 percent on average - is that possible? Are there really new, technical possibilities to achieve excess returns? TYU advertises a fully automated trading software with artificial intelligence. Can this work?

I ask Dirk Neuhaus, Professor of Information Systems in Financial Services at the University of Finance

In other words: It is not impossible to achieve better trading results with the help of AI software. But that's not entirely uncomplicated: Among other things, the network has to be trained. For example, it is important that all key figures, courses and boundary conditions have an influence on the predicted course development.

So a lot of effort. If a network actually existed that replicated the stock market almost perfectly, the developer would certainly not publish it, emphasizes Neuhaus. "You would just register that someone somewhere is getting rich very quickly."

Peter Scholz, professor of business administration at the Baden-Württemberg Cooperative State University in Mosbach, has a similar view: "If I were to invent such a tool and knew that it worked, I would invest my own money on a large scale or open a hedge fund instead laboriously attracting private investors.”

He doesn't think investors would make money from the TYU system in the long run. In the best case, developers would test their new system here by risking not their own money but that of investors.

In the worst case, the money would not be invested at all with the help of software, but would simply be paid out to the salespeople.

It is therefore questionable whether I will earn a monthly return of up to ten percent in the long term. Can a company advertise with such numbers at all?

I ask Gernot Schmitt-Gaedke, a lawyer specializing in competition law. “I think that statement is grossly misleading,” he says. The ten percent return would not be firmly promised. But investors would take the statements in such a way that a return of ten percent per month is possible.

Peter Solf from the German Association for the Protection of Economic Crime doubts the advertised chances of success of profit advertising.

In order to proceed with claims for injunctive relief, however, it must be proven that this statement is false.

But he points something else out to me: He suspects that the multi-level marketing system violates Section 16 of the Competition Act.

Because there, in the second paragraph, it says that it is punishable to induce consumers to purchase goods with the promise that they would gain special advantages if they get others to conclude similar transactions - also with the promise of receiving advantages, if they would recruit more customers.

Does that mean TYU is breaking the law with its multi-level marketing scheme? At least that's what Heiko Müller, a specialist lawyer for capital market law, suggests.

"In my opinion, the model on offer is clearly a snowball system," he says. That is forbidden in Germany.

At the top of a pyramid scheme is an initiator who introduces a supposedly innovative product, such as a particularly promising investment.

However, this product will not be the point at all, because the focus of the system is the acquisition of new customers - and these customers should also acquire new members.

In order to become part of this system, new customers pay a kind of start-up fee – this can be, for example, an investment in the advertised financial product, which is said to be high-yield.

As long as more and more new customers are now paying into the system, things are going well and the members receive bonus payments. But as soon as the number of customers stops growing, the majority of them lose the money they have invested.

But does that really apply to TYU? After all, according to the advertisements, the distributors are paid out of the profits - so the system seems to work because of its trading software.

The capital market lawyer Heiko Müller also says: "The decisive factor in determining whether it is a pyramid scheme is whether the money is actually invested or not."

TYU founder Dada Pey firmly rejects the accusation that it could be a question of a Ponzi scheme. "We do not and never will have commissions or other rewards based on the amount our customers deposit."

TYU would also not violate Section 16 of the Competition Act. The paragraph would presuppose that the recommending person must be a customer himself – but that is not the case.

After verification, the user would have "all the functions of the platform available, regardless of whether he wants a recommendation link, has invested, or just wants to look around."

But TYU's website states: "Passive income in three steps: Use the product and see the results for yourself." Honestly recommend Trust Your Universe. Help your new customer set up the product.” That gives me a slightly different impression.

The TYU founder also emphasizes that trading on the platform has been proven to take place. And indeed, at first glance, Trust Your Universe seems to focus on transparency.

On the website, the company advertises with the following promise: "More than two years of externally verified trading results." A third party called MyFxBook would independently document TYU's trading results.

In fact, I can see there: In September, TYU's trading strategy returned almost 13 percent, in October it was almost six percent.

According to MyFxBook, the trades have been tracked since September 2020. But why was the website domain behind TYU only registered in August? On the Trustpilot rating platform, customers have only been writing reviews of Trust Your Universe since June.

When asked, the founder Dada Pay explains to me that the trading team has been trying out the strategy since 2020 and is tracking the performance. "In professional forex trading, risk management strategies are first traded on trial accounts with no capital, then on regular accounts with capital before being made available to clients," he says.

But that's not the only question raised by the overview on MyFxBook. For example, why can't I see exactly which trades were completed? Daniel Bauer from the Protection Association of Investors, who took a closer look at TYU for me, also criticizes this.

Important key figures would not be made public - and other information would in turn not appear conclusive. "I therefore do not believe their representation without having seen further documents," he says and draws the conclusion: "Hands off!"

TYU founder Dada Pey, on the other hand, explains to me when asked that the missing trading histories and key figures have a simple reason: The trading strategy is the core product of the company, so they are not allowed to publish too much information, otherwise the trading mechanics would be easy to reproduce.

But for investor advocate Daniel Bauer, the entire structure behind Trust Your Universe is confusing - and to be honest, for me too. It starts with the headquarters of Universe Trading LLC, the company behind TYU.

According to the imprint, he is in New York – at least a few days ago. A different address is now given there, based in the tax haven of St. Vincent and the Grenadines.

For fun I put the address in google maps and read the google reviews. My impression: It seems as if the building is a popular headquarters for dubious companies.

A user writes, for example, that this is also the seat of a trading platform that the German financial market authority BaFin warns about.

Confronted with this, Trust Your Universe boss Dada Pey is surprised. "The address is purely a coworking space, which is extremely popular with start-ups," he says.

He thanks you for pointing out that there are apparently companies with dubious business practices based there - they would try to move in a timely manner.

He also has an explanation for the New York address. “In the middle of the year we planned to move into a representative office in the USA and received the provisional approval of a US representative for this. However, after some internal company evaluations, this step was not taken for cost reasons.”

Under the imprint, in the small print, Trust Your Universe explains that it uses BlackGateBroker as a trading platform.

BlackGateBroker is regulated by the Ministry of Finance and can therefore offer brokerage services in all EU member states. I don't find out which Ministry of Finance regulates here. On the BlackGateBroker website I read that the company is based in Kazakhstan.

What surprises me: I can't find BlackGateBroker in the BaFin company database - although I can actually find cross-border service providers there as well. But I discover an explanatory text on the website of the supervisory authority on the subject of the European passport.

There it says: Securities institutions that are authorized within the European Economic Area (EEA) can also conduct their business in other EEA member states if they meet certain conditions. But Kazakhstan is not part of the EEA.

Also very surprising: BlackGateBroker is not even mentioned in the terms and conditions of Trust Your Universe.

There is talk of a company called Leverate Financial Services. Leverate is based in Cyprus - and even has a license there that allows it to offer brokerage services within the EU.

Which broker does Trust Your Universe work with? Leverate Financial Services Ltd's parent company denies any association with Trust Your Universe.

This information is "misleading to the public in a form that constitutes a criminal offence," a spokesman for the company said.

Dada Pey, on the other hand, says that the cooperation with Leverate Financial Services ended last Monday, "for various reasons." Before that, Leverate provided the software and technology.

However, Trust Your Universe has been working with BlackGate Broker since the very beginning. And although the trading platform is not part of the EEA: "A Kazakhstan (sic) broker with a license is allowed to accept clients from all countries (sic) that are not sanctioned by Kazakhstan."

BlackGateBroker also responded to my request with this information. And indeed: On the BaFin website I find a statement on the so-called passive freedom to provide services. This regulates that transactions by a foreign financial service provider are not subject to the authorization requirement if the customer requests their services on their own initiative.

Clever - I have to hand that to TYU. Finally, Dada Pey also has experience with financial services advertised via multi-level marketing. Because after a quick search on his Facebook profile, I see that he was already active on iMarketsLive.

The financial market authorities in Spain, France and Great Britain, among others, warned against this company, which I reported on in mid-February. In the meantime, iMarketsLive has renamed itself: IM Academy.

But the principle is similar: learning platforms for foreign exchange trading are sold by salespeople who earn more and more per new customer. When asked, Dada Pey emphasized that he immediately distanced himself after hearing about the warnings against the company.

It doesn't matter whether it's lucrative investments, dental splints or coaching offers: anyone who uses social media is overwhelmed with product recommendations. What's behind it? How serious are you? You can find out in our podcast "Die Netz-Checkerin". Subscribe to Spotify, Apple Podcasts, Deezer, Amazon Music or directly via RSS feed.

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