Last week, Crowdfund Insider reported on Latvia-based peer to peer lender Grupeer’s decision to halt all lending due to the impact of the COVID-19 pandemic.
CI quoted the company’s decision:
“Regretfully, we are forced to inform you that in the current circumstances it is not possible for us to continue operations as before with an objective cause out of our control. Therefore, we hereby notify you that all payments to investors of Grupeer are currently suspended due to [an] emergency state declared in [the] European Union and worldwide regarding COVID-19 pandemic crises.”
According to Grupeer, the company has been working on a business plan for the next few months but several investors are creating “difficulties.”
To quote Grupeer:
“We have been receiving notices from loan originators that they have been contacted directly by a considerable number of investors urging not to repay the outstanding funds to us, but directly to them. These uncoordinated activities have caused understandable concerns for several loan originators. Some, in our view, in bad faith have notified us that because of the investors’ activity they are completely suspending all repayments to us. If our loan originators do not honor their commitments, we cannot fulfil ours.”
Grupeer added that some investors have contacted the company’s employees and family members threatening personal attacks. Grupeer said they have been in contact with the police due to these threats.
Grupeer said the aforementioned makes it “extremely difficult, if not impossible,” to implement a plan for the future. Management requested that investors cease activities that are “causing direct losses to everyone.”
The challenges experienced by Grupeer, as well as other peer to peer lenders, emphasize the pressing need for regulators to take a more active approach to foster a sustainable industry.